Notes from Monaco (2)

(By Anthony Miller – Wednesday, 6th May 2009 4:00pm). The highlight for me at the Temenos Client Forum today was meeting Brent Jackson, CEO of Australia-listed banking software and services player, Rubik. In September last year Rubik – with just 90 employees – acquired the exclusive rights to provide hosting services for Temenos T24 in Australia, New Zealand and South Pacific. Rubik has over 300 clients, mostly in Australia, though a few in the UK. They have 90% share in the Australian phone and mobile banking market and are big in the Aussie Credit Union industry. It’s there, with the tiny Maleny Credit Union, that Rubik already scored its first win in December with its hosted T24 service, nattily branded ‘Bank in a Box’. From what I can see, Bank in a Box is a ‘true’ SaaS system, i.e. multi-tenanted for the core application with separate databases for each client. Rubik expects Maleny to be live by the end of the year with other credit union clients not far behind.

Rubik is not Temenos’ only hosting partner – they have some hosted clients in the US and are soon to sign their first in the UK, which was to be hosted by ex-partner, US-based Metavante, until its acquisition by Fidelity blew that relationship out of the water! But Rubik looks like it could become the template for Temenos’ fledgling SaaS strategy in some of its country markets.

The relationship between Rubik and Temenos illustrates the dilemma software players find themselves in when launching a SaaS alternative, and especially so when the service is delivered by a partner organisation. Rubik acquired a standard Temenos licence which lets them support up to 2m accounts across multiple institutions. They price Bank in a Box to their clients basically on a per-account basis. Given that Aussie credit unions tend to be quite small (Maleny has 4,800 members and some 15,000 accounts), it will take some time before Rubik has to pay Temenos for an upgrade licence! Temenos also sells direct in Australia, but currently has just a handful of customers. When I spoke to their regional head, he was quite sanguine about the risk of Rubik converting its on-premise customers to Bank in a Box – it’s all about getting market share. However, Rubik’s first priority is of course new business.

SaaS does not necessarily appeal to all SMEs. I had many conversations over the past couple of days with the CIO of another Aussie credit union who is in the final stages of selecting a core banking package to replace its legacy RYO (‘roll your own’) system. Although he has just 50 staff, he is definitely not looking for any form of outsourced solution. It’s basically a control issue and one I suspect is not unique in SMEs. Indeed, he is keeping tight control on the vendor selection process, which sounds like it is down to Temenos, Finacle (Infosys), Bancs (TCS)and SAP. IBM is the incumbent system supplier.

It would be fair to say that Temenos is only dipping its toes into SaaS waters at this point, but at least it is making a start. As we have said many times before, we do not expect all software to move ‘to the cloud’ but see SaaS as an alluring alternative for customers making new or replacement decisions on enterprise applications. Indeed, we forecast that as much as 40% of the UK enterprise applications market could be cloud-based by the end of 2012 (TechMarketView subscription service clients can see the detail in our recent AnalsytViews notes). I will let you know how Rubik – and Temenos – get on.