There is little doubt that we are in the midst of a technological sea change as the world moves from an Internet that was tethered to PCs, to a world where the Internet can be accessed from anywhere, through a wide array of always-on smartphones and tablets. We've all heard the impressive statistics that support this trend with just over 400 million smartphones expected to be sold globally in 2011, and Gartner forecasting that the mobile web will grow to 1 billion smartphones and 320 million tablets sold in 2015.
A Consumer-Driven Revolution
To date this has been very much a consumer-driven revolution with the vast majority of Apple's 1 billion monthly app downloads being aimed at the consumer. This, however, is beginning to change with more and more consumers demanding the convenience of mobile devices and mobile apps inside the enterprise. We are now seeing growing enterprise adoption with Apple reporting just this week that 92% of Fortune 500 companies are either testing or deploying the iPad. This is an astounding number especially since the iPad product itself did not exist 2 years ago. Closer to home, according to Good Technology, a firm that manages mobile devices for large companies, financial services firms accounted for almost half of all new iPad activations in the second quarter of 2011.
So as this mobile app revolution inexorably makes its way to the buy-side there are a number of questions to be answered:Â How will buy-side mobile apps affect the technology landscape? How will buy-side mobile apps change the way people do their jobs? How will buy-side mobile apps allow firms to better serve their clients?
Monolithic Management Systems Meet Buy-Side Mobile Apps
Today, when we look at the applications used by the buy-side we can see that it is still dominated by the same trading, order management, and portfolio management systems, that have been around for the last 20 years. It could be argued that not much has changed. Buy-side employees are still spending most of their day working with these large monolithic management systems. Of course, there have been advances particularly in the areas of trading, workflow, integration, and Software-as-a-Service, but the components that make up the software infrastructure of the buy-side have essentially remained the same.
We believe that the arrival of mobile apps to the buy-side will have a profoundÂ impact on the buy-side's technology, employees, and ultimately the way clients are serviced. This revolution is different than other over-hyped technology fads because it is being driven by the end-user rather than by some easily-ignored top-down management dictum. Buy-side employees have already experienced the power of mobile apps as consumers and will begin using them at work, whether they are approved by their IT department or not.
We see the impact of buy-side mobile apps evolving in three distinct phases:
Phase 1 - View-Only Buy-Side Mobile Apps
Most of today's buy-side mobile apps build on the anywhere capability of mobile devices and are strictly view-only type offerings, that display the same data that users see on their trading, order management, and portfolio management systems. These research, P&L, and client information apps augment the existing monolithic management systems and are many times used by employees outside of work during commutes or client visits.Â The apps are Â frequently designed to look like dashboards with the ability to drill-down to more detailed information. There are many examples out there but some of the most widely used are Bloomberg Anywhere for iPad, Merlin's Compass for iPad, and Fidelity's WealthCentral Â Android/iPhone Mobile Apps.
Phase 2 - Action-Oriented Buy-Side Mobile Apps
This phase goes beyond the view-only capabilities of Phase 1 and allows the user to act on the information presented by their mobile app. Users for example may be alerted to a trading opportunity or a back-office reconciliation issue that they can then immediately act-on, just as if they were sitting in front of their office PC. Again this phase really just serves to augment or duplicate the existing monolithic management system functionality.Â Many of the above-named firms are now in the process of releasing these newer more action-oriented Phase 2 buy-side mobile apps.
Phase 3 - Proliferation of Buy-side Mobile Apps/Decomposition of Monolithic Management Systems
The final phase is when mobile apps will really come into their own and we will see them begin to replace rather than just augment pieces of monolithic management systems.Â This phase will produce buy-side mobile apps that combine the anywhere/view-only nature of Phase 1, the action-oriented ability of Phase 2, with other unique qualities that only mobile apps can offer. A hint of this future is the StockTouch app (www.stocktouch.com), that is powered by Xignite market data. StockTouch uses the touchscreen interface of the iPhone and iPad to bring to life a visualization of the stock market. Their mobile app offers functionality that no traditional buy-side application can emulate.
Over time we will see a proliferation of these smaller buy-side mobile apps that focus in on specific functionality.Â This will lead to a fragmented app market just like in the consumer world. As users spend more and more of their time using these mobile buy-side apps we will see the monolithic management systems become less relevant, ultimately leading to the their decomposition.