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Caption: Ridgeline's trading experts Chris Flynn and Andy Pheifer with Ridgeline customer Argent Capital Management's Jayme Herbstreit at our recent Base Camp conference.
So, you want to build an institutional-capable Trade Order Management System? That’s no easy task, and very few vendors have brought a new OMS to market in the past 30 years. Over my 15-year career in the buy-side order management system space, I’ve seen the good, the bad, and the ugly. At Ridgeline, I’ve been fortunate to lead the team of product managers in bringing a completely new, clean sheet of paper OMS to market. We knew there could be no shortcuts when building a modern, powerful OMS from scratch. And now that we've done it, here's advice we'd give to anyone else who wants to try it.
- Assemble the Right Team - Building an OMS takes a village. Building a rock-solid OMS as quickly as Ridgeline has takes nothing short of top talent. As such, staffing is your top priority. The best team is a diverse team that combines deep domain experience and those with deep technical expertise. You don’t want just to recreate the legacy, on-premise systems that stagnated and underperformed for years. Rather, the goal is to combine a rich understanding of the history and evolution of OMSs with fresh design, workflow, and technology perspectives. At Ridgeline, we’ve purposefully sought to build a team of both fintech leaders and enterprise SaaS talent. The result: a high-performance team that’s reimagining how shared problems across investment managers can be solved with the best and latest technologies.
- Create Empathetic Alignment - Once your team is hired, you now need to organize them effectively. The best way to do this? Align teams to serve individual front-office personas. This means that you should have a team dedicated to problem-solving for portfolio managers that’s separate from those aligned to traders, compliance officers, and operations. Too many organizations make the mistake of creating teams defined by technical componentry (e.g. front-end vs. back-end). In that setup, ownership stops where the data leaves a service. Persona-aligned scrum teams, on the other hand, own the whole solution. They will go wherever is needed in the tech stack to deliver the feature or workflow that solves the business need. This structuring creates more customer empathy, avoids siloing, and unequivocally delivers better results.
- Narrow Your Vision - Want to go to market serving every type of investment manager, trading any asset class, and in any market across the globe? Wrong! You need to narrow your vision. The goal should be to win a targeted market segment first by serving them in a unique and differentiated way. The result will be a tight-knit group of happy, reference customers that will sing your praises from the mountain tops to the rest of the industry. Narrowing your target will allow you to invest more heavily in the platform upfront, creating leverage for you in the future. Don’t try to boil the ocean. You will create a franken-product if not outright fail. Instead, lay out a roadmap that gives time and space to invest in infrastructure and core functionality first and then ramp up the sophistication, depth, and reach of product capabilities.
- Leverage Design Partnership - Your best shot at success is to attract a cohort of early adopters who share the same vision as you and believe what you believe in terms of a better future solution. These firms understand that the relationship you’ll have with them will extend far beyond the traditional customer/vendor boundaries. They will spend an outsized portion of time with your team getting to know the ins and outs of their firm’s business. Beware of any firm that intends to funnel all communication to you through a limited number of people in IT/Technology. The best early adopters are those who provide unfettered access to business users to connect directly on requirements. At Ridgeline, we’re lucky to have an incredible group of early adopters in our first group of customers to go live, many of whom now feel like an extension of our team.
- Partner Intelligently - The barrier to entry for a new buy-side OMS is incredibly high. If you attempt to build it all yourself, you will miss market opportunities. In picking and choosing where you want to play, you should also decide where to have technology partners. Partnering on non-core capabilities provides an effective way to add velocity. At Ridgeline, we’ve decided to partner early on with Broadridge and their market-leading NYFIX network for trading connectivity to the global sell-side community. Additionally, we signed up for our Quality Engineering team to be outfitted with their FIX testing tool. We also signed on to be an early adopter of Broadridge’s Connectivity, Onboarding and Monitoring Service, which gave us expert capabilities on day 1 to enrich and monitor FIX messages. These decisions saved us months - or possibly, years - of development time. We reallocated that time saved towards building differentiated portfolio construction, order management, and compliance functionality for Ridgeline customers.
- Invest in Quality - There is a single factor that will bring your go-to-market progress to a screeching halt: quality issues. Given what’s at stake, this industry has a very low tolerance for bugs. A single large trading outage could wreak havoc on your market reputation. Less destructive but all too common, a consistent stream of low/medium priority issues can undermine user trust. If you want to deliver exceptional product quality, you need to be intentional about it. Great quality is achieved by investing heavily in automation and shifting left - a strategy to design quality into projects from their inception.
- Prioritize Non-Functional Requirements - you could have the most feature-rich OMS on the market. It could calculate trade allocations with dozens of algorithms and parameters from which to choose. It could provide a trade blotter that’s highly customizable and perfectly tailored to individual user specifications. It could even automate order execution and route to any destination, including algos, dark pools, or high-touch desks. But if it doesn’t sufficiently cover the non-functional requirements of the buy-side front office, users will not actually use your solution. The performance and scalability of the system must be treated as critically as any functional requirement. Your OMS must be real-time all-the-time (as we’ve designed Ridgeline to be) or else users will be making decisions off stale data. Additionally, the user experience and workflows can’t result in inefficiencies, like extra button clicks or navigating away from primary screens. Treat Design with a capital “D”!
- Release Frequently - The unfortunate status quo in the industry is to remain on a single version of software for years. Traditionally, upgrades have been painful and expensive. Operating in a multi-system, multi-vendor environment means data must be intricately stitched together. One wrong move and the delicate nature of how your systems interface with one another can be compromised. The industry has clamored for a better way, and now it’s finally here. At Ridgeline, we operate a CI/CD (Continuous Integration/Continuous Deployment) model that allows product teams to deliver code to production immediately. In practice, this means that all customers receive weekly feature releases and patches. For emphasis, Ridgeline customers do not have to do anything. They receive a weekly Ridgeline service update. No more upgrades. Releasing frequently delivers end-user value faster and speeds up iterative cycles for your engineering team to refine and enhance continually with immediate feedback. If you want to compete with the new entrants in the OMS space, releasing semi-annually or even quarterly means you’re a dinosaur.
- Service Exceptionally - For your first few live customers, you should follow their trading activity and day-to-day usage as if you were personally investing their money. The goal is to very quickly figure out what’s working and what isn’t. Don’t pretend like what you’ve built is adequate. Rather, gather market evidence on how to improve it. Ensure that you can effectively monitor remotely as well. If a user encounters an issue, your engineering team should be alerted to that proactively, which is a crucial benefit of modern SaaS platforms. Ridgeline takes full advantage of that. Product & Engineering works alongside Customer Experience on the front lines to eliminate any distance from the customer. We also make sure there’s a dedicated on-call person at all times who can triage and pull in other experts as needed. Servicing your customers exceptionally means doing whatever it takes to provide value above and beyond expectations and previous vendor relationships.
- Experiment Often - To be disruptive, you need to constantly be experimenting. It should be a first-class pillar of your engineering culture. Embrace failing fast and pivoting quickly when things don’t work as you’d planned for them. The best engineers in the industry want to work at the most innovative and experimental companies. Whether it be with automation, machine learning, or GenAI, lean into problem-solving in ways that the industry hasn’t contemplated before or has felt out of reach. Allow time and space for hackathons and tinkering with the latest tech. This is where you will provide moments of “Wow!” to your customer base. At Ridgeline, we’re “All in on AI” and have partnered with OpenAI to provide ChatGPT enterprise for all employees, as well as licensing GitHub Copilot for all engineers.
There you have the ten-step plan for building an OMS that we have diligently followed at Ridgeline. Now, all you need is a heavy dose of grit combined with a team of the right people. Incidentally, if you’re reading this and got inspired by our mission, we’re hiring! Come join our team as we build a lasting, durable, and market-leading OMS.
