Interesting research from the Tabb Group on how the buy-side is split on the concept of the combined OMS/EMS Solution. Not surprising that many of the buy-side firms surveyed liked the overall concept of the combined OMS/EMS, but they were not so keen on moving towards these types of solutions due to trader preference, etc. We have always maintained that, for the diversified buy-side asset manager, an EMS solution is largely a commodity and most buy-side traders have single or multiple EMS solutions already in place that work well for them and, given the connectivity that already exists between these systems and major OMS solutions, there is not much of an impetus to switch EMS’s. What typically makes more sense to the buy-side trader is to have the closest possible OMS integration with their preferred EMS, rather than an “all in one” solution and some EMS’s are better at integrating than others.
What was surprising from the Tabb Group’s research findings was that a majority of the buy-side firms surveyed considered switching OMS’s as “very difficult.” While the cost of the new OMS might be an issue with some vendors, the actual conversion and implementation of an OMS is really not that difficult, especially compared with an endeavor like switching portfolio accounting systems (we at INDATA have the pleasure of doing both). For example, the data aspect of the OMS conversion is relatively easy and so is the end user training, assuming that the OMS a firm is switching to has comparable or better functionality than the vendor being replaced. As we have also noted in past blogs, there is a convergence of functionality amongst major OMS providers and key functionality is also becoming commoditized from vendor to vendor. Putting all of this together, buy-side firms should not be intimidated when considering switching OMS providers, especially if there is significant long-term cost savings to be achieved by switching providers.