The following IBSPublishing report also confirms that Accenture was a big part of the issue:
The question of whether London Stock Exchange (LSE) will replace its £40 million ($65 million) TradElect platform, supplied by Accenture, has finally been answered: yes, it will. This hardly comes as a surprise – the issue of the platform’s speed and efficiency as well as Accenture’s support has been a hot topic for the market in the last couple of months. [...] the stock exchange went down the route of purchasing a vendor and utilising its technology to replace TradElect, Infolect and other applications.[My comment: Accenture's support? What about Accenture's design and implementation?]
Compared to the bill of $65 million for TradElect, MillenniumIT, a Sri Lankan developer, is a bargain at $30 million. LSE gains a 100 per cent shareholding in the company, an offshore development centre (located near Colombo) with 451 specialists (around 300 in the software division) and the technology, which boasts high productivity, flexibility, robustness and considerably lower costs than TradElect. LSE predicts annual cost savings of at least £10 million ($14.7 million) from 2011/12. ‘The new technology is a lot lighter, nimbler and easier to install,’ says David Lester, director of information and technology at LSE. It will also enable faster releases, he adds. The current wait is three to six months.[My comment: Yes, sure. I wouldn't bet too much on that neither. I hope they succeed, but I will follow this story, as the outcome is not so clear to me. Also, my experience is that it's very difficult to work with non-collocated teams. So if you add the time difference, culture clash, take over issues to the distance, the outcome is less than clear.]
This acquisition represents a major shift in LSE’s strategy regarding its technology – from outsourcing as much as possible (over 95 per cent, says Lester) to bringing it all back in-house. ‘The world has changed a lot since TradElect’s design in 2003 [the system was deployed in 2007], and it continues to change. We need to invest in R&D and control our destiny in terms of software development,’ he explains. And with the stated aim of becoming one of the top three global exchanges by market capitalisation in the next few years (although Lester admits that at the moment LSE is far off) the pressure is ever-mounting.[My comment: the world hasn't changed that much actually, but it's always good to be able to admit our own mistakes and turn the page to look for a solution.]
The new platform will be based on Linux and Solaris, while TradElect is based on Microsoft’s .Net technology. The choice of the latter, which has raised quite a few eyebrows in the market, is defended by Lester. He claims that LSE is coming off TradElect not because of the .Net technology itself (although its trading speed is 2.7 milliseconds compared to Linux-based Chi-X’s 0.4 milliseconds), but ‘for more control, less costs, and the ability to build and innovate’. Furthermore, he describes LSE’s experience with .Net as ‘very positive’. With LSE and its Italian subsidiary, Borsa Italiana, converting to Linux, Microsoft’s .Net offering is left with virtually no takers – the only remaining one being Johannesburg Stock Exchange (JSE). ‘JSE has been aware for some time that the LSE has been considering its trading technology options,’ says Leanne Parsons, JSE’s chief operating officer. The South African exchange ‘will be holding discussions’ with its UK counterpart regarding the latter’s technology replacement project. However, it is ‘a bit too early in the process’ to go into any detail, she adds.[My comment: the message is clear and you barely need to read between the lines]
A Norwegian exchange, Oslo Børs, which was supposed to start using TradElect in February 2010 (as a result of a service provider agreement signed by Oslo Børs and LSE in March 2009), will now also migrate to MillenniumIT’s offering.
Quick follow-up on the LSE - Microsoft fiasco
LSE-Microsoft: what was ment to happen happened