Tradition transforms broker performance management

Analysing the costs, profitability and performance of business units and individual brokers

Published on 16-Jan-2013

"At the group level, our Cognos projects are being watched with great interest – if we achieve all the benefits that we’re expecting, we may well see Tradition’s American and Asian business units adopting a similar approach." - Steve Umpelby, Chief Financial Officer for Europe, the Middle East and Asia, Tradition

Customer:
Tradition

Industry:
Financial Markets

Deployment country:
United Kingdom

Solution:
BA - Business Analytics, BA - Business Intelligence, BA - Risk Analytics

IBM Business Partner:
Cubewise

Overview

Compagnie Financière Tradition is one of the world’s leading inter-dealer broking firms, with a presence in 27 countries. In the past decade, the company has significantly expanded, primarily through organic growth.

Business need:
Tradition depends on the individual performance of its brokers. The company wanted to manage its business more effectively, but was unable to gain a sufficiently detailed understanding of costs and profitability.

Solution:
Tradition worked with Cubewise to develop a modelling foundation based on IBM® Cognos® Express software. The solution provides in-depth analysis of individual broker profitability, and provides a mechanism for allocating IT project costs to each desk.

Results:
Automates reporting processes, which should save three to four days of manual work each month. Should provide a full return on investment within six months of deployment.

Benefits:
Enables Tradition to maintain profitability by monitoring individual desks and brokers, addressing problems swiftly.

Case Study

Compagnie Financière Tradition is one of the world’s leading inter-dealer broking firms, with a presence in 27 countries. In the past decade, the company has significantly expanded, primarily through organic growth.

Tradition globally employs approximately 2,400 people, most of whom are brokers. Their job is to act as an intermediary between institutions that want to trade derivatives and other financial instruments. The brokers are grouped into departments, or “desks”; and each desk focuses on a specific set of financial instruments or markets.

Steve Umpelby, Chief Financial Officer for Europe, the Middle East and Asia, comments: “As a brokerage firm, we have two main costs: people and IT. Our brokers are usually employed on fixed-term contracts and are remunerated based on the profits they bring to the company. The performance of each desk also increasingly depends on the development of new IT systems for automated trade matching, which can require significant time and effort from our in-house IT team. To manage the performance of the company more effectively, we wanted to gain more visibility of the profitability of each broker, and understand the likely profit impact as a result of specific IT projects.”

Rick Muir, Senior Financial Analyst, adds: “With our existing financial accounting system, we were able to gain insight into sales and our general ledger, but it was difficult to correlate this information with data from other sources – such as our HR system for salaries and bonuses, and our IT department’s timesheets, which were held in a series of spreadsheets. We needed an analytics platform that could not only integrate data from multiple sources, but would also enable us to manipulate the data and perform calculations.”

Scaling beyond spreadsheets

To some extent, Tradition’s finance team was able to perform these types of analysis manually, using spreadsheet-based processes. However, this was time-consuming and laborious; with manual data processing, the risk of introducing errors meant that analysts had to spend many hours checking figures and ensuring that the resulting reports were accurate and reliable. As a result, they were not able to spend as much time on useful analysis.

Steve Umpelby says: “We wanted to put an end to management by intuition alone, and introduce a culture of evidence-based decision-making within the finance department. We not only needed to find a more efficient way of producing the numbers – we needed a solution that would combine our knowledge and experience with accurate, timely data. By simultaneously challenging and complementing received wisdom, this approach would reveal new insights about the best way to improve the performance of our business.”

Selecting a solution

The finance team evaluated a number of products from leading business intelligence vendors before selecting IBM Cognos Express.

Steve Umpelby explains the decision: “The key reason for selecting Cognos Express was that we wanted a ‘modelling foundation’ – a single tool that could support many different types of analysis, from management reporting to budgeting and planning. A lot of the solutions we considered seemed very over-engineered to serve specific purposes. Cognos Express was a much more versatile and flexible option.”

Finding the right partner

To help with solution design, technical implementation and project management, IBM recommended working with Cubewise, an IBM Premier Business Partner that specialises in business analytics solutions and IBM Cognos software.

Rick Muir worked closely with the Cubewise team. “The Cubewise consultants had a lot of experience of projects like ours, and we were impressed with their approach,” he says. “We worked closely together to understand the requirements, agree the objectives and create a detailed plan for the implementation. During the project itself, we emphasised governance and best practices, and were meticulous about our weekly progress updates, which helped to keep the project on track.

“Cubewise also provided a clear estimate of time and workload for the project, which turned out to be extremely accurate: we finished the project on schedule and within budget. Thanks to excellent project management from the combined Tradition and Cubewise team, we actually implemented more functionality in the first phase of deployment than we had originally planned. Our partnership showed that when both sides get things right, it’s relatively easy to get the job done.”

Analysing broker performance

The new solution provides a platform that will enable Tradition to analyse corporate performance not only at the group, company and desk level, but even down to the individual brokers themselves. By combining data from the sales, general ledger and HR systems, the finance team is now able to generate full profit-and-loss accounts for each broker.

Steve Umpelby explains how this helps the business: “Previously we could easily measure how much revenue each broker was bringing in – but it was much more difficult to get a full understanding of the costs they were incurring. Now we can see which brokers are generating the most profits for the company. When contract negotiations come round, we’ll be in a much stronger position to reward our top performers, and address any issues with those who are less successful.”

Accurate cost allocation

Tradition and Cubewise have also built an analytical application that replaces the old spreadsheet-based system for tracking IT project costs. Instead of sharing the costs equally between all the desks, the company can now make each desk accountable for the projects it commissions. This should provide an incentive for the brokers to think more carefully about their use of IT resources, and prioritise the projects that are most likely to boost their desk’s profitability.

From the point of view of Tradition’s financial analysts, this IT resource allocation system should also prove to be an important time-saver. Producing reports manually for all the front-office desks, for Tradition’s CFOs and CEO, and for the members of the finance team who actually perform the allocations, used to take three to four days each month. With the IBM Cognos Express solution, once the appropriate reports have been designed, they can be generated automatically within a matter of seconds.

Rapid return on investment

Rick Muir comments: “As we get up to speed with the automated reporting capabilities, IBM Cognos Express is going to save us a huge amount of time. This aspect of the project alone should help us achieve a full return on investment for the project within 6 months of the initial deployment.”

Steve Umpelby concludes: “At the group level, our Cognos projects are being watched with great interest – if we achieve all the benefits that we’re expecting, we may well see Tradition’s American and Asian business units adopting a similar approach. Ultimately, this modelling foundation should help us transform the business into a more information-led organisation, not just in terms of broker performance, but even in areas such as business planning and the deep analysis of individual trades.”

About Cubewise

Cubewise is a global professional consulting firm that specialises in the design and implementation of custom business planning, reporting and analytical applications, utilizing the flexible and powerful IBM Cognos platform. Cubewise’s skilled business consultants can both build systems and mentor companies to build them themselves. Its leadership in best practice in solution implementation and unique value-add tools allow Cubewise to stand apart from others in this field.

Cubewise has implemented some of the largest Cognos Express and TM1 systems in the world in terms of users, data size and complexity and has also won IBM’s TM1 Partner of the Year Award multiple times. Cubewise has one of the largest Cognos consulting teams in the world across its offices in Europe, Asia and Australia, who work with customers across many industries including Retail, Financial Services, Logistics and Healthcare.

For more information about services and solutions from Cubewise, please visit www.cubewise.com

About IBM Business Analytics

IBM Business Analytics software delivers data-driven insights that help organisations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualise trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organisations can align tactical and strategic decision-making to achieve business goals.

For more information

For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Express

Legal Information

© Copyright IBM Corporation 2013. IBM United Kingdom Limited, PO Box 41, North Harbour, Portsmouth, Hampshire, PO6 3AU, United Kingdom. Produced in the United Kingdom. January 2013. IBM, the IBM logo, ibm.com and Cognos are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. IBM and Cubewise are separate companies and each is responsible for its own products. Neither IBM nor Cubewise makes any warranties, express or implied, concerning the other’s products. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.