The Number 1 in Innovation

This article originally appeared in Information Week Mexico in July 2008. Translation was performed by JackBe and any errors are unintentional.

The great work that the IT department of Accival (http://www.accival.com.mx/) has done to become the innovation leader is certainly not the result of work of only one year, or even a few. The organization has participated and won an award in each of the eight editions of the 50 Most Innovative Companies from Information Week Mexico, and in the lastest edition they were are pleasant surprise by leading the list.

"It's the result of work of more than a decade. The infrastructure we have today in Accival is world-class, and it was not created in one year; it has been continuously renewed since 1994, "said Humberto Jimenez, Director of Technology.

It is a fact that today Accival has a platform capable of running IT processes in a matter of milliseconds, using advanced technology to significantly improve the execution of orders in the Mexican Stock Exchange (BMV) and even entering the new generation of electronic services, Web 2.0. The objective, according to Luis Andrés Rodríguez Mena, Director of Administration / O & T Accival, is to strengthen the leadership of the organization with a new user experience and efficient business processes enabled by automation.

This is a set of solutions all implemented under the same premise: being customer-oriented and based on standards to provide not only flexibility in the delivery, but also agility to fulfill requirements from the business, by providing new experiences on the use of web platforms.

It is not just acquiring technology. The project submitted by Accival that helped them win [this year’s award] is named Trading 2.0 - AcciFix. It was born from a combination of a number of initiatives that support the business strategy of the company to its institutional clients (local and foreign) based on a market perspective that emerged in 2006 which included, for example, the entry of the Afores (retirement funds) to the stock market and the historic maximum levels of the market that happened in that year and the next.

The strategy began with implementing a flexible channel for receiving financial transactions. Previously, said Raul Hernandez Stefanoni, Deputy Director of Operations Systems at Accival, the client captured the instruction and the transaction had to go through several hands and re- entry before reaching the BMV (market). "This meant that the process usually took minutes, and there was a high probability of error," he says. "The problem is on the side of market efficiency, because the customer saw an opportunity and started the process, but when it finished the opportunity may no long existed."

Recently, the company implemented ‘FIX’ as a standard language so that point-to-point communication with customers, vendors, or any institution that speaks this protocol, flows directly (always under the umbrella of the existing legislation), with no errors, in a more agile and efficient way. "Not only have we automated the communication to the stock market (BMV), but also the buy/sell operation, which takes place in real time and the whole process is done in a matter of milliseconds," explains Hernandez Stefanoni, who also adds that the report for the client is automated and that if the process takes more than a few seconds it’s because there are certain regulations that are market-related and not Accival’s.

Jimenez says that the adoption of FIX – which Accival already uses with its foreign customers – will allow the company to acquire new financial services provided by third-parties who implement it, and that this gives the company a  better chance to connect new clients. "Accival already communicates with any other product that speaks FIX. If companies are used to seeing their Bloomberg screen or their own institutional application, they can capture their orders through them since we are speaking a common language."

In addition, they completed the re-architecture of its transactional platform that today is based on an complex events processing architecture (CEP), as well as the implementation of services (SOA) orchestrated though BPM.

From the standpoint of business, Accival built over that infrastructure a composition of algorithms that are being standardized globally and in turn optimized for the local markets, which means that the technology includes a lot of local experience. "Herein lies the true success of the project," Jimenez believes. "It was a stunning combination of having the business highly involved, transmitting their knowledge, of having a world-class infrastructure, and to have all the IT skills needed to implement all the business requirements in algorithms. "

Both Jimenez and Hernandez Stefanoni agree that the achievement is not in the algorithms, the Enterprise Service Bus (ESB) or the technology itself, but in taking the best of their suppliers and creating a range of services and composition algorithms attractive to institutional clients (which is built upon on its IT infrastructure) as well in the orchestration of all components. "Everyone has an ESB, and we are not the first to handle algorithms, but the innovation is the way in which everything was set for the trader (who performs operations in the stock market), who must make decisions in milliseconds, to process all the information and decide according to the strategy, the best possible operation for their clients, "says Hernandez.

Futuristic Vision, Great Results

For Accival’s Director of Technology and Systems, Jimenez, innovation is not optional, and constant innovation has resulted in an organization that is the number one in the trading industry and its closest competitor is a year away. "Those who do not come to innovative initiatives such as SOA are losing market opportunities," he says emphatically.

Current topics such as Web 2.0 and green IT are also included as part of the innovative framework of Accival. Regarding the latter concept, when they acquired HP servers with AMD, it was considered supportive of the commitment the company has for green IT. "One of the criteria for selecting suppliers was that the technology involved had increased processing capacity but at the lowest possible energy consumption. The servers from HP provide us with a growth of 400% in performance, achieving a better transaction rate per watt by using the new generation of AMD processors that increases three times the processing power and reduces by 40% the energy consumption," says Hernandez.

In this regard, the chairman and CEO of HP Mexico, Carlos Guzman, added: "We have been a technological partner of Grupo Financiero Banamex since the beginning of the 90’s, helping them to achieve their goals with high-tech and end-to-end solutions. In particular with Acciones y Valores, HP has participated in IT projects that help them to be more dynamic in their efforts to become a versatile and leading edge brokerage house. With our high-performance servers, HP Superdome, we have succeeded in providing the uptime of 99.99% over the past three years."

With the launch of the new technology platform, both the internal traders of Accival and their institutional clients began to demand greater functionality in their web applications. The response of Accival was resilient, once again focused on innovation: with the idea of speeding up the delivery of data it was put in place a new set of collaboration and operation Web tools that ended with the evolution of their transactional and asset management portal, ‘Accitrade Institucional’, to create a Web 2.0 ecosystem that brings a new user experience through Rich Internet Applications (RIA).

In the same screen, now the user can have real time stock market monitors and it’s possible to interact with analysts that publish their analysis through blogs, And through mashups (this is, by the way, it’s first implementation of financial services mashups) users dynamically integrate information from different sources, both from stock market and from news RSSs.

The whole initiative (including the implementation of FIX, the new transactional platform and the Web 2.0), coupled with a good sales strategy, has already brought benefits to Accival, particularly considering that it has been in operation for one year. The sales related to trading grew by 400% in the first half of the year, the institutional customer base has grown 20%, and placement of operations in the capital market 300%. Also, the cost per transaction fell 30%, and the total transaction time (STP) decreased from four seconds to 10 milliseconds on average, which represents an increase in efficiency of over 400%.

And that’s not all. Luis Andrés Rodríguez Mena, Director of Administration / O & T Accival, says that the new platform is also prepared to support the continuation of this growth. This is an architecture that enables the company to create services in less time (particularly trading algorithms optimized for Latin American markets), which gives Accival the benefit of a reduced time-to-market.

The strategy includes plans to start releasing new services during the last quarter of the year. "Having mobility services on a platform where in milliseconds institutional customers can operate high volumes is key,” says Rodriguez Mena, “but in future we will bring it to individuals. Already with the infrastructure we can begin to add new services also, as well as turnkey solutions for specific customers."

Definitely, this multi-year project has not been easy. For Jimenez, managing the risk of change management has been the most challenging. "It involves the entire value chain (processes), and there are always risks in this area," he considers. Another complex issue is governance, but the director knows this task: "Our challenge as an IT team is to know the business, so we must go hand in hand and even beyond, to offer the business better solutions than they had thought."

The technology behind the innovation

Front End

• Standard communication (FIX)
• Rich Internet Applications (RIA)
• Technology scripting

Middleware

• Complex events process architecture (CEP)
• Business Process Management (BPM)
• Service Oriented Architecture (SOA)
• Intelligent routing
• Enterprise Service Bus (ESB)
• Web Services
• Algorithmic trading

Green IT

• Servers with new generation of processors, providing higher performance with lower power consumption

IT Suppliers

• AMD
• Bloomberg
• HP
• JackBe
• Microsoft
• Sonic Software