AlacraBlog

Deloitte Report on Global Financial Services Offshoring

Most of Alacra's largest customers have outsourcing/offshoring arrangements in India.  Deloitte just published a 10 page Global Financial Services Offshoring Report 2007 which outlines the offshoring "journey" and offers advice on best practices.  The report summary also provides a link to a press release: Financial services companies increase overseas headcount 18-fold as offshoring accelerates and evolves.

Highlights include:

• India remains offshoring's hub but is likely to lose share in the future

• China's growing competitiveness may dampen salary inflation among Indian offshoring industry workers
• Knowledge-process offshoring, such as investment banking analytics and research, has grown along with transaction processing, finance & HR

Given the amount of work and stress the offshoring trend has caused financial institution's information centers, this report is worth-reading.  There's not much new but it does crystalize, from an outsider's perspective, what it takes to make offshoring work.

New Life for Portal B

In 1999, long before Google became the dominant search engine it is today, Alacra launched a search engine called Portal B.  The goal of Portal B was to provide better search results for business-oriented searches without advertising.  The business model was that we would charge enterprises for the search engine and embed it in their intranet.

Why was Portal B better?  We had our editorial team hand-select the 40,000 web sites that were the most rich in business information.  The team then indexed each of these sites by type (law firm, business/trade publication, business school, for example); by geography and by industries covered. We also allowed the user to search for specific types of documents, just as Google does today.  Three of the sample searches we frequently demonstrated were:

• “Asbestos litigation” information published by a UK law firm in a PDF. 
• “Economic value added” information published on the site of a US educational institution
• “Hedge fund returns” published by a commercial or investment bank

Despite how helpful this type of searching was, our business model was viable for only 2 years.  We actually had annualized revenue approaching $1 million at the peak.  But the dot-com bust and the emergence of Google killed our business model so we wound up integrating Portal B into Alacra at no charge.  Most customers switched to Google for all their searches but we still have a number of dedicated Alacra Web Search users and we have maintained our indexing over the years.

Now Portal B is back in the form of eight Google Custom Search Engines:

• Business & Trade Publications
• Law Firms
• Commercial & Investment Banks
• Consulting and Accounting Firms
• Educational Institutions
• Market Research Firms
• Trade Associations
• Venture Capital & Private Equity Firms

These are available at www.alacra.com/alacrasearch as well as within Alacra.  By switching to Google Custom Search Engines we’ll be able to provide faster results plus all the benefits of Google’s technology on our well-researched site indices.  This will be free to all users and will be supported by advertising, as you can see on the screen shots here.

Each index has a set of facets so that results can be filtered.  For example, the Law Firm index can be filtered by geography and the Business & Trade Publication index can be filtered by industry.  So you can look for results from European Law Firms or you can search for information on Wimax published by telecommunications trade publications.

(Shown below: search for "green electronics" across market research firms index)

Business & Financial News - Big Investments & Premium Prices

It's usually a good idea to avoid investments in products that are rapidly being commoditized.  But while the quality and quantity of "free" business and financial news continues to grow through services like Google News, Topix, Seeking Alpha, TheStreet.com, MarketWatch and others, established media and financial informaton companies continue to make huge investments to improve their news offerings.  Access to high quality news organizations are behind the News Corp bid for Dow Jones and the Thomson acquisition of Reuters.  The FT reported yesteday that Bloomberg was going to expand its reporting staff by over 200 in the coming year.  Bloomberg news editor Matt Winkler said "“News is a very important driver of the terminal business."  And recent deals in the space - the FT buying mergermarket and Dow Jones buying efinancialnews.com - indicate that news organizations can command premium prices. 
News products that command a premium have at least one of these three differentiating characteristics - it must be market-moving, idea-generating or providing a significant amount of decision support, like services for algorithmic trading.   Expect the competition for these types of services, which is already heated, to intensify over the next few years.

Alacra is Hiring

Alacra is currently recruiting for positions in its New York headquarters.

Details of the positions are as follows:

• Quality Assurance Analyst with 3+ years experience in the software and/or content industries.
• Account Manager with knowledge of the financial information business
• Senior Software Developer with strong C/C++, XML and SQL experience

Full details for each position are available on the Alacra jobs page.

Some Snappy Stock Charts

In addition to the deals with nice premiums listed in the previous post, FactSet, D&B and Reed Elsevier all have some pretty good look price action. 

Not All Valuable Content is User-Generated

I haven't read Barron's in years, but SeekingAlpha has this neat feature which provides annotated  summaries of Barron's articles.  One of summaries was Why CNET, TheStreet.com, WebMD, PlanetOut, The Knot and Answers.com Won't Be Acquired. 

Tech Trader author Eric Savitz wonders: Why are we not seen any takeouts of internet content providers? His thesis: Buyers want user-generated content, not paid-content creators. Internet giants will gladly pay a premium to invest in tools that help users create content for fellow users (a-la MySpace, Photobucket, YouTube [all already gone] and FaceBook). Deep-rooted social networks keep users coming back to hear what their friends have to say -- and to socialize -- with a stickiness factor paid-content sites can't reproduce. 

This is a pretty silly thesis.  There have been plenty of deals for producers of paid content, at all ends of the size spectrum and there will be plenty more.

• D&B recently bought First Research for $22+ million
• Dow Jones recently bought Financial News for $50+ million
• Pearson recently bought mergermarket for $190+ million
• Informa is buying Datamonitor for $990+ million
• Thomson is buying Reuters
• News Corp is bidding for Dow Jones

Admittedly, I only read the summary of the article, but there's plenty of M&A activity in the paid content arena.  And there's a lots of venture capital activity as well.   To believe that user-generated content is the end-all be-all in content space is absurd. 

 

SLA 2007 Photo Album

Carol Ann put together a really nice album.  If you stopped by the booth or joined us for dinner, check it out here.

More On People Data

A couple of weeks ago I blogged about IntellectSpace, a new entry in the "people data /six degrees of separation" arena.  Sandro Gevlesiani, one of the firm's co-founders, sent me a link to this New York Times article over the weekend: Quantifying the Role of School Ties in Investing.  The article covers a recently published National Bureau of Economic Research working paper called The Small World of Investing: Board Connections and Mutual Fund Returns by Lauren Cohen (Yale), Andrea Frazzini (University of Chicago) and Christopher Malloy (London Business School).  From the Times article:

Mutual fund managers invest more money in companies that are run by people with whom they went to college or graduate school than in companies where they have no such connections, the study found. The investments involving school ties, on average, also do significantly better than other investments.

The authors of the study offer two possible explanations — one benign and one decidedly not. Fund managers may simply know more about their old classmates, including which ones are likely to make good executives. The alternate explanation is that those executives may be passing along inside information to the fund managers.

While the paper is an extremely interesting example of "investigative economics," from an information industry perspective it reveals yet another case of the value of social networks/people data and the never-ending amount of data waiting to mined. 

Thursday's ContentNext Mixer: Subdued but Successful

Rafat held another New York mixer Thursday night at the Hilton.  The crowd was much more civilized than the last New York event and on Thursday night you could actually have a conversation.  I met a couple of old friends there and might actually do some business as a result.  Thanks, Rafat.

SLA 2007 Denver

Honestly, after the great turnout in Baltimore last year for SLA my expectations for the Denver edition last week were modest.  But the conference was truly outstanding for Alacra, in large part because many of our special customers from outside the US made the trip.  Clearly the highlight for the Alacra team was the dinner we hosted at Solera, which was expertly organized by our resident event planners Fran Falchook and Carol Ann Thomas.  Although we were thinking about leaving the restaurant after dinner for another venue, about 30 of us wound up closing the place at 2:00 AM.  It was fantastic. 
Over the next couple of weeks I will be blogging about the new products and enhancements we were demonstrating at SLA.  Carol Ann will also be posting pictures of from the booth and from the dinner. I have included one of my favorite photos from the show - Nanette Johnson of AIG with all the premiums she was bringing back to her team that couldn't attend.  My understanding is that Nanette does this every year.

UPDATE:  SLA 2007 Photo album is loaded.  Scroll down on the right or click here.