Telekurs Weighs Sharing FIMS/Finvest With Third Party

Telekurs is seeking to license its so-called strategic local data distribution and display products to a third party, or perhaps a planned subsidiary company, in order to accelerate what has been thus far a sluggish rollout. Observers are interpreting the plans as a virtual sell-off of the development effort and speculate that as a result, the company's long-term future in the market data business is uncertain.

Rumors have circulated for some time suggesting that Telekurs was looking to sell its so-called FIMS data distribution product and Finvest workstation. A sell-off of the products -- or any part of Telekurs -- has been consistently denied by Georg Kramer, executive vice president at the Swiss vendor (Dealing With Technology, July 15).

But in response to a recent round of questions from IMD sibling publication DWT, Kramer comments that Telekurs has talked with third parties about "possible cooperation in the field of FIMS/Finvest-development, licensing and systems integration. The discussions are still going on."

Kramer confirms that systems house Logica Plc. was one vendor with which discussions were held. Sources say that negotiations between the two parties were conducted over the summer and would have included Logica's licensing and further developing the products. But the two vendors failed to agree on a price. Some sources suggest that these negotiations are now at an end; others say that they could be revived were Telekurs to modify its financial requirements.

Logica is thought to have shied away from paying any significant sum to license the products. In May, the systems house conducted a technical audit of the FIMS/Finvest development and its subsequent report speaks of the products in glowing terms (rather too glowing, according to some sources familiar with the internal design of the products). But Logica sources suggest that FIMS and Finvest are still not considered to be complete products, and installations to date have been minimal. Logica officials didn't return calls seeking comment.

Sources say that the lack of rollout success of the products has led to considerable friction within Telekurs -- notable between the (mainly British) development team and the individual country marketing groups. Sources say that the marketing groups have declared that the products require further development, especially with regard to the display of real-time data.

As a result, Finvest has been marketed as an enhanced version of Telekurs' existing Investdata product, which is used mainly in middle and back offices, and in bank branches, supplying snapshot data only. When they were conceived, FIMS and Finvest were designed to attack the front-office trading market, in conjunction with new data feeds, which are as yet unreleased.

Kramer says there is "no internal disagreement" regarding FIMS and Finvest, claiming that the first version of the product has been installed at several customer sites, and that a second version is scheduled to be released next month.

But sources say any sales of Finvest fall well below the 1,200-position target that was set for the current year. And while Union Bank of Switzerland is thought to have a pilot FIMS installation in Zurich, none of the major Swiss banks has made a commitment to roll the products out on any wide scale.

As an alternative to licensing a third party, Kramer says Telekurs may form a "fully owned" subsidiary in order to develop and promote the products. Some sources suggest that such a subsidiary would allow for key personnel to have an equity participation, but Kramer says that such a setup "would not make sense."

Others suggest that a level of employee ownership would help to lock in key development personnel, many of whom, sources say, are becoming frustrated with the lack of sales and the internal bickering. That the development team should remain intact would be an important issue for any licensee.

However Telekurs presents its recent activities, industry observers say that any proposed licensing deal would amount to a sell-off of what Telekurs once touted as its strategic information products. The development of FIMS and Finvest was embarked upon in 1991 following a widespread review of the vendor's business strategy.

But the FIMS/Finvest project was marred -- and set back -- by the failure of Telekurs' partnership with Teknekron Software Systems Inc. (IMD, Sept. 13, 1993). In the wake of the Teknekron bust-up, Kramer took over interim control of Telekurs' Financial Information Division, while former head Chris Nokes was moved sideways to a strategic development role. Nokes left Telekurs in July. A full-time head for the information division has yet to be appointed.

Observers suggest that any pull-back from its information strategy could cause the vendor's bank shareholders to take action, as they did following financial losses in 1989 and 1990. Kramer was brought in during 1991 to spearhead a major restructuring of the company; and new information and data feed products, together with various value-added applications, were expected to be in place by the end of this year.

But that scenario is looking increasingly unlikely. Apart from the lackluster performance of FIMS/Finvest, planned data feeds -- MDF for real-time data and VDF for inter-day and corporate action data -- have yet to materialize. And a foray into the world of risk-management applications -- notably in partnership with Chicago-based Systems Development Corp. (SDC) -- also ran aground (Trading Systems Technology, April 18).

Telekurs' problems with its new products and initiatives come against a backdrop of increasing pressure on its traditional customer base. Consolidation in the Swiss banking industry is hitting the Investdata customer base, and competition -- especially from the likes of Reuters -- is having an increasing impact on the company's bottom line.