Wall Street Systems Acquires IT2: Beware the ION Black Hole
The recent, somewhat unexpected announcement that Wall Street Systems (WSS) is acquiring
IT2 Treasury Solutions from private investor CapMan Technology has all the connotations of déjà vu. In April 2011, Wall Street Systems was itself acquired by ION Trading; while the premise for a successful combination of ION and WSS solutions was (as noted in my blog post on the subject) quite high, almost two years have passed, and ION’s plans regarding WSS’s renowned capabilities in the treasury management systems (TMS) space remain unclear. Does the same foggy fate await IT2?
ION is a product-centric and technology-oriented company that shies away from roaring, top-of-the-news announcements. The company philosophy – building solutions that work and avoiding over-promising – reflects its attention to its customers. But that same behind-the-curtain approach also largely shrouds information about what ION is brewing for WSS. It is clear that ION’s software product development capabilities will likely bring additional skills and capacity to WSS’s product development strategy. With what now ION has under its belt from the WSS acquisition – Software-as-a-Service (SaaS) technology from Wall Street Treasury, cash management from Treasura, electronic bank account management (eBAM) from Speranza, and WSS’s go-to-market product from City Financials – the future will presumably see the deployment of a portable technology to integrate these solutions, but this is largely speculative.
While informational prudence and commitment to not overpromising undoubtedly represents an asset of one sort, these policies may not align well with the TMS market. Far from having become a commoditized or consumer market, TMS software applications are undergoing a radical change (more about which in this report) that calls for specialized players that possess the stance, innovative vision, and organizational flexibility to build and sell solutions that are changing the TMS software market landscape. The value of treasury transactions is not in their execution but in the information that accompanies each transaction – intelligence that will one day serve as the foundation of business decisions. Treasury intelligence management systems (TiMSs) will integrate and extend the traditional, operations-driven functionalities of a TMS with features that allow better information to generate intelligent decision-making, and TiMS definitely requires a development strategy that does not fall within ION’s tradition of engineer-to-order, customer-bespoke systems.
Indeed, my research finds that corporate treasurers expect treasury systems vendors not only to build and sell software but to generate thought leadership, share knowledge, and disseminate information across the community of treasurers. Long past is the time when software vendors engineered and built products in secret and protected laboratories to sell to anxious buyers. Corporate treasuries are demanding that vendors deploy energies and vision to build support systems for better decision-making rather than gigantic suites that further automate the execution of traditional treasury operations.
IT2 has always demonstrated great maturity and readiness to play in the space of TMS innovation. The freedom to explore new avenues in the TMS domain and the talent and skills of its technical resources to leverage IT innovation posed this player among the ones to watch. By selling IT2, CapMan has made a great deal – some speculate that it will make about four times its initial investment – but CapMan may well have done a disservice to the TMS market by likely causing the removal of one its most active and influential players into ION’s communication black hole. It is unclear why WSS would have wanted IT2 for its already rich solution set; on the contrary, WSS had the interest to remove a competitor, an offering provided by CapMan on a silver plate. If the ION/WWS/IT2 deal does repeat the ION/WSS acquisition, IT2 will soon disappear from the scene, the TMS space will suffer a great loss, and advances of solutions in the new TiMS ecosystem will slow down significantly.
Current IT2 customers must not fear. It is very likely that ION-WSS will ensure continuity of service and assistance of existing IT2 installations. It is prospective clients – those looking to buy from IT2 a software suite as well as also knowledge and practice leadership – who must now be cautious. This is perhaps the best time for the few remaining independent TMS vendors (e.g., Kyriba, Bellin, Financial Sciences) to stand up and take the software-developing baton to drive the evolution toward the TiMS ecosystem according to the needs and requirements of their corporate client base. It is, of course, possible, that the ION/WSS/IT2 battleship will soon navigate the unexplored waters of TiMS; if ION will not change its profile and become more transparent and collaborative, however, it is likely that treasurers seeking for treasury innovation will move their attention elsewhere.