Tuesday, 13 November 2012

Bloomberg takes its next step into the cloud

Back on the Bloomberg Beat

Regular readers will know that I blogged a lot in September about Bloomberg. In a nutshell its the $45bn cloud computing giant which everyone forgets about, and one that's increasingly competing against its biggest customers - the investment banks. If you missed it I've compiled the full series into a free 20-page report available to download here.

A key part of my thesis was that Bloomberg are one of the underappreciated pioneers of cloud computing. They were doing Software-as-a-Service for some of the world's most demanding enterprise customers decades before the Cloud existed. However what is even more interesting was that they are now turning into a credible Platform-as-a-Service (PaaS) by opening up their API (BLAPI). This is big news as become the industry-standard PaaS is pretty much the holy grail for any cloud computing vendor.

And yesterday they took the inevitable next step by announcing their version of the iTunes App Store, the Bloomberg App Portal:

Bloomberg opens the door to third party apps...

This portal (accessed by the snappy Bloomberg function APPS) lets users purchase and install third party apps, running on top of the Bloomberg platform. The developer is free to set the price (obviously this is paid on top of your $20k Bloomberg terminal fee), of which Bloomberg takes a 30% cut.

At the moment Bloomberg says there are 45 apps available, expect to ramp up to 50 by the end of the year. They say they are working with 300 app developers. At this stage app curation sounds quite heavy-handed (again not surprising give this is a v1.0 product), with Bloomberg working directly with the developers and vetting apps to make sure they do not duplicate existing Bloomberg functionality.

The initial selection of apps is relatively narrow. It focuses largely on analytics apps for traders (the sort of things which allow you to draw funky trend lines on your stock charts, albeit with a dash of PhD level maths thrown in). These are relatively static "dumb" apps. Bloomberg say they are deliberately shying away from more complex apps involving live trading execution until the platform is more mature (sounds sensible). However they do say apps will be access data integration and collaboration functions within the Bloomberg platform.

To get a flavour, here's some apps I uncovered after a quick scarf round the web. As I said , the majority of these seem to be technical analysis tools aimed specifically at traders:

The Market Map visualisation app
  • Market Map: A market visualisation app which lets you view stocks/markets in the form of heat maps.
  • Stealth Analytics: Software which drills down into current trading of a given security such as the bid-ask flow rate to give a real-time view of market sentiment.
  • ExtremeHurst: A technical analysis app for traders.
  • Kase Statware: Gives trading indicators to allow traders to time entry and exit points into stocks.
  • DeMark Indicators: Technical indicators for traders ($500 /month).
  • Updata: More technical indicators for traders.
  • Forecastis: Trend prediction for traders.
  • Cycleintelligence: Quant-based forecasting system.

Why this matters

At first sight little about this seems groundbreaking.

Most of the apps seem to be repackaged versions of apps previously available on a standalone basis, rather than new offerings. As such it is unclear how much these are genuinely operating on Bloomberg's platform. My suspicion is that the majority of them will be downloaded and running locally, but making data calls to Bloomberg through the API. In essence these programs are mainly using the App Portal as a glorified click-to-download button and billing system.

However for a smaller vendor (and most of these seem to come from small single-solution companies) the distribution platform alone is a massive step forward. A big hurdle for any startup software provider is credentialising yourself with gorilla-like enterprise buyers. As the CEO of Updata says "One of the massive issues for us as a company is deployment. When you're dealing with a lot of large institutions, as a smaller company, getting your application approved and into the operation is quite a big issue, so that was really key for us".

In theory a Bloomberg PaaS platform offers the seller the credentialisation and the buyer the promise that it will work seamlessly with the existing infrastructure. In theory if I had a bright idea for a killer trading software startup, I would be beating the path to Mr Bloomberg's door to sign a distribution deal.

Also if Bloomberg has got their PaaS architecture right then if offers to scope for developers to do really interesting things if they can integrate with the data, security and customer credentialisation that Bloomberg offers at the back end. This, hopefully, lies ahead of us.

Finally for Bloomberg if they can get a flourishing ecosystem to work this is a massive win for them, not only against competitors such as Reuters and Markit, but also in terms of embedding themselves more deeply into their customers' business processes. As I wrote previously, Bloomberg's biggest challenge is that the majority of their customers only use basic functionality (news, quotes, charts) which makes a Bloomberg terminal an expensive luxury rather than an essential tool (bad place to be in a downturn). Adding a pack of hired guns via the App Portal helps shift it towards the "essential" category.

If Bloomberg are serious about being a cloud leader, the App Portal was a step they had to take.

Reality check - what happened to the SAP Store?

Of course I'm not going to get too starry eyed about this. The portal is in way-early stages and much of the content could (uncharitably) be called "reheated Excel plugins". Also technical detail on the platform remains scant - I suspect because Bloomberg themselves haven't figured out where they are taking it yet.

The SAP Store: Not setting the download charts on fire.
I'm also aware that its easy to open an App Store but hard to fill it. Just look at SAP, which launched its SAP Store offering apps running on its Business ByDesign cloud platform a good year or so ago. At launch: A bunch of sexy looking apps. Since then: Deafening silence (such that even bloggers on SAP's own website are making rude comments about it). There is clearly a chance that the Bloomberg App Portal ends up the same place twelve months from now.

I'd like to think that won't happen, for three reasons.

Firstly the terminal platform which the Bloomberg App Portal runs on is Bloomberg's key business. This contrasts with Business ByDesign which is a relatively new product which only accounts for a tiny part of SAPs revenues.

Secondly the functions Bloomberg are offering (at least at this stage) are relatively simple ones which customers are already using, whereas SAP as pitching new categories on apps such as cloud ERP plugins and mobile analytics.

Lastly the trump card is Bloomberg's relatively Darwinian internal culture, where product managers compete (often against each other) to champion their respective offerings. It is interesting to note that the point man for the Bloomberg App Portal (which I would have assumed should be a relatively major corporate initiative) is actually a thirtysomething ex-McKinseyite (and purveyor of soccer gear) who's only been with the firm for two years. The impression I get is he's been handed this baby and told that he has to either make it work, or look for new work.

In this sort of culture I suspect that this product will either succeed big time, or cease to exist.

Good luck mate!


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