Sun Microsystems Inc. wants to write the banking industry's ticket to the future.
Emerging from the high-tech world of workstations that it helped invent, Sun is beginning to make the noises of a more dedicated and specialized "industry partner" - historically the claim of IBM and other traditional purveyors of big computer iron.
A competitive and combative bunch, Sun people from chairman Scott G. McNealy down are on a crusade to be what IBM was, in terms of influence if not sheer size.
They have the banking industry, and financial services generally, in their sights, perhaps the most attractive of any potential market target. Sun is convinced its skills, knowledge, and technology are perfect prescriptions for the pains of industry transformation.
The Mountain View, Calif., company is one of the foremost repositories of expertise on the Internet and related electronic commerce developments. Its desktop data powerhouses are ubiquitous on Wall Street and several big commercial banks use them, usually for tough number-crunching in trading and risk management.
But is the mainstream of banking ready for Sun? And can a company steeped in Silicon Valley values happily find a niche among the pinstriped?
The answers are obvious to a cadre within Sun that focuses on financial opportunities.
"The fact is that the technology we deliver to the trading floor is transferable to remote banking, branch automation, and on-line transaction processing applications," said Robert I. Theis, worldwide financial services industry manager of Sun Microsystems Computer Co., one of the Sun operating units.
"They all require guaranteed delivery, fault tolerance, and a high level of security, and that's where we have synergies."
It's not just talk. Sun Microsystems already has built a $500 million "vertical business" in financial services, accounting for about 10% of total sales. The figure grew 38% in the fiscal year ending last June 30, while total corporate revenues rose 9%, to $4.7 billion.
Financial services, telecommunications, and manufacturing are three commercial lines into which Sun is putting significant resources, growing out of its historical concentration on technical, engineering, and academic markets.
Sun, founded by Mr. McNealy and others only 13 years ago, got to this point in the financial world without much fanfare. Mr. Theis and others suggest Sun's banking presence is just beginning to be felt.
Thanks to the company's timely adoption and advocacy of open computing architecture based on powerful microprocessors and the Unix operating system, "we became the clear leader on trading floors," Jill Rubin, global manager, financial services industry, said in a recent conversation.
"Now you see us moving from the front office toward the middle and back office," Ms. Rubin said. "People are looking for more client-server solutions, moving to T+3 (securities settlement schedules) and global cash management, consolidating their data, establishing risk profiles and managing risks" - all needs that Sun fulfills.
Sun's financial services group keeps pointing to its securities industry accomplishments - all of the top 25 firms have Sun installations. The point is not to scare off commercial bank prospects, but to open their eyes.
Over the last eight years, the masters of the securities universe proved the mettle of Unix systems in so-called mission-critical applications. Now Sun wants to make the same leap into commercial banking and other corporate activities that it made from laboratories into Wall Street.
Sun cites market research showing it has 55% of the Unix market in trading, 41% in securities, and 25% in banking. With banks and other firms moving increasingly in the Unix direction as part of the networked client- server phenomenon, Sun expects to capitalize.
"The message got out that if you applied the technology properly, you made money," Mr. Theis said. "They proved on Wall Street that if you bought more Sun systems, you made more money."
"Keep in mind that banks have lost a lot of customers to securities firms and other companies that are crossing over into their business," said Laurie Yoler, a former Visa marketer who is worldwide marketing manager in Mr. Theis' group.
"If bankers look at the investment firms, they will see an industry that reacted quickly to customer demand and market changes, which is exactly what (bankers) are going through," Ms. Yoler said.
Just this month, Sun announced a major contract with Travelers Inc.'s Smith Barney subsidiary to supply more than 1,000 systems for a new trading floor. Smith Barney sees them as a step beyond networking and trading toward multimedia systems and object-oriented programming - two trends just beginning to catch many bank planners' eyes.
"The lines are blurring," Ms. Rubin said. "Merrill Lynch, for example, is in every aspect of financial services."
Sun has been there with the Merrill Lynches and Smith Barneys, and wants to usher commercial banks down a similar path.
It recently made a $20 million sale to Bank of Boston. Mr. McNealy said this was especially gratifying as Sun beat out rivals Digital Equipment and Hewlett-Packard.
In common with other vendors that want to be more than hardware peddlers, Sun's financial services team tends not to begin conversations talking about their flagship SPARCstation and SPARCserver products. First they talk broad strategy and industry understanding.
That came across to Smith Barney senior vice president Peter Fischer. He said open network computing will "enhance the competitive advantage," but added, "Technology alone is not the answer to staying competitive. You need the right partners.
"We chose Sun for its leadership in key areas such as networking, price/performance, and Unix, and for its expertise and experience in the financial services market."
"Sun was set up to be a business partner," chief executive officer McNealy said at a recent press conference. He was speaking in the context of a product introduction of SunSoft Inc. - but it's a recurring theme.
Sun's software unit was making a pitch for the management of enterprise networks - the increasingly complex webs of computers within companies - with a product line called Solstice.
Fulfilling the prophecy of its corporate slogan that "the network is the computer," Sun wants to make the management of networks as straightforward as was the centralized control of data centers in the mainframe era.
"IBM was a great partner to have for data center management and load management, but now you need a new partner for a network-centric computer model," Mr. McNealy said. "We're going to help customers run enterprise networks the way IBM helped them run data centers."
Solaris gained endorsements from an all-star array of technology companies and users including Legent Corp., Oracle Corp., Sybase Inc., and Tele-Communications Inc.
That is just an inkling of the horsepower on Sun Microsystems' client and partner lists.
Securities and insurance customers include Charles Schwab, Fidelity Investments, Goldman Sachs, Aetna Life & Casualty, and Metropolitan Life.
All of the top 10 U.S. banks are Sun users, plus AT&T Universal Card Services, Barclays Bank, Fannie Mae and Freddie Mac, Sanwa Bank, Swiss Bank Corp., and the Federal Reserve System.
Swift, the global bank telecommunications network, chose SPARC/Solaris as the "platform of choice" for its first back-office securities application, Asset Reconciliation. Broadway & Seymour, one of many "channel partners," has been showing prototypes of a powerful customer information system for retail banks driven by Sun technology.
AT&T Universal has taken Sun systems into its award-winning customer service functions. Similarly, Citibank in Bombay supports credit card operations on a SPARCserver with an Oracle relational data base system. The bank has cited benefits including high rates of transaction throughput and shorter product development cycles.
While Sun tries to make its mark on consumer and corporate banking, it is intent on staying an information highway pacesetter, which it sees as an advantage in attracting on-line transaction processing businesses of all sorts.
The customer list includes a Who's Who of home banking and other forms of electronic commerce: CommerceNet, First Virtual Holdings, Interactive Transaction Partners, Netscape Communications, Open Market Inc., Visa Interactive, and many more.
The Internet, for many companies uncharted territory, is part of Sun's heritage. All its corporate electronic mail flows over the Internet, and it operates the largest of all commercial web servers.
"A survey we conducted through the Internet Society showed 56% of network servers were Sun," said Kathy Webster, manager of Internet market development. That's one reason the company acts as an educational resource as well as vendor, and why a year-old, internal Internet Commerce Group is beginning to assert itself outside.
"Within three years, there will be no fundamental differences between computers, telephones, fax machines, and televisions," said Geoff Baehr, Sun's ultra-connected chief network officer.
He said he sees a trickle-down revolution in network technology.
"We see companies adopting something like this first because it makes their life easier and they can afford it," said Mr. Baehr. "Next it spreads to smaller companies and, when the costs get very low, to consumers.
"Over time, connectivity becomes easier and easier, just like the way Cirrus and Plus (ATM networks) evolved. In fact, we have fundamental connectivity today. The Internet will spawn 'complexity hiders' that make things easier, allowing thousands of companies to offer services to other companies, smaller companies, and eventually consumers. True electronic commerce."
