The problems at Misys have been well documented and the announcement by the Chairman in SIBOS week was not well timed but the intention in the message was clear. The buck stops here! Although the management and technology problems will take them some time to totally solve, the first step is the hardest, when to own up to the problems and second set about resolving them.

 

Misys appear to be already in gear and the heartening message emanating from SIBOS 2006 for Misys shareholders and customers is they appears to be  well on their way to emerging from their recent problems. A vibrant market awaits new Misys where customers and prospects are ready and willing to be assisted to get through the massive market structure changes brought about by new regulations and new initiatives.

 

Misys senior management have already appreciated the huge business opportunity that is in their grasp because of MiFID and SEPA and their strategy is revolving around building strong customer relationships and a consultative approach to developing technology solutions. Misys are operating a seminar programme for their customers and prospects that are more to do with earning a partnership relationship with their clients rather than the old hard sell. There is much to admire in a company that has the confidence and is willing to expose its vulnerability in its quest to build systems that their customers want rather than take the risk and cost of delivering what it thinks its customers need.

 

With a huge customer base and technology covering so many different business sectors the ability of the management at Misys to maintain profitability under a cloud of rising costs has been hugely challenging. However, the strength of Misys is their breadth of market coverage and their depth of systems functionality. The potential revenue for Misys in the immediate future is enormous as the EU undergoes changes to meet the political agenda item of a single market. They are one of the few software firms that can cover all bases in the market and they just need to deliver and announce their immediate and long term strategy to begin the climb back.

 

Both MiFID and SEPA are key technology opportunities for Misys with their proactive approach to getting to grips with the market issues by interacting with their customers already setting up clear business rewards.

 

Misys has been utilising regulatory consultants to assist them gain a complete understanding of MiFID which bodes well for their capability of producing systems solutions that achieve regulatory compliance and coupled with the in-house customer seminar programme can lead to innovation that has tangible business rewards for their customers.

 

SEPA is an equally attractive proposition for Misys with their existing customers stretching across most of the EU states they have an obvious opportunity to lead the implementation. The company are aware that SEPA has already been taken up by the largest banking institutions but it falls away sharply for the small and mid tier banks. It’s in this area where Misys may have their biggest successes in the future.

 

If Misys has been in the doldrums in the recent past with a share price hurt by its inability to capitalise on the strength of its huge customer base and with technology not considered top class in the market, the buck has now stopped! Misys shares may not be on the sell list of fund managers for long if they are able to implement their new plans and take advantage of the new regulatory landscape in the EU and the following globalisation of the industry. SEPA may become a significant business opportunity, but they do have some serious competition in this space, that needs to be overcome to ensure they meet their revenue potential.

 

If there are any Misys sell orders within the investors out tray it might be worth putting a hold on them for now? This company looks like a hold, whilst its new strategy is implemented, especially as so many of their existing clients will require enhanced or new technology because of new regulations and as the new European market structures emerge. Thus Misys can very quickly change the current market perception and should move rapidly from a hold to a purchase, as they get new orders and get to grips with the market opportunity that is surely theirs, if they don’t drop the ball with the goal line at their mercy.      

 

By Gary Wright