J.P. Morgan & Co. is working with New Era of Networks to upgrade the bank's transaction data flow software.
The new technology, called "event explode," will link the bank's business transaction systems with its accounting and financial reporting data bases.
The software will standardize the data flow within J.P. Morgan. It will be installed over the next five years, starting with the Sao Paulo, Brazil, office next month.
Officials at J.P. Morgan and New Era of Networks, an Englewood, Colo.- based company known as Neon, declined to disclose the price of the system.
The bank will design the software with Neon, which will then do the programing. Neon plans to market the product to other companies.
J.P. Morgan, with $220 billion of assets, already uses a form of event- explode technology-which takes one business transaction and "explodes" it into the necessary accounting data for the general ledger.
The bank now uses a number of different computer systems, requiring the institution to support them all, said Don Nickel, a financial group vice president at J.P. Morgan.
With Neon, J.P. Morgan can set the software to record transactions from any of its locations and translate it into accounting information.
Once the Neon system is in place, J.P. Morgan will standardize its data maintenance procedures, Mr. Nickel added.
"Through standardization, we hope to minimize the effort involved in moving data and translating it into accounting and reporting transactions," Mr. Nickel said.
The bank's financial department, as well as other divisions, uses accounting data to generate public reports, internal documents, and information for regulators, Mr. Nickel said.
Accounting department employees will have more control over the technology with the new system because they can set the posting, routing, and formatting of transactions with their own terminology, not computer programming, said Neon officials. This feature makes the system more attractive to finance departments, said Rick Adam, Neon's chief executive officer.
Neon's partnership with J.P. Morgan is a milestone for the technology company. It marks the first time Neon is working with PeopleSoft general ledger software, which the bank is installing at the same time.
The firm's deal with J.P. Morgan is also good news for the enterprise software industry, said Rehan Syed, vice president for software research at Cowen & Co. in Boston.
It validates the potential of message-oriented middleware technology, which links software on different computer systems, he continued. And it is a sign of confidence in Neon, a fast-growing company with $4.8 million in revenue last quarter. The firm went public in mid-June.
"This is one more proof point in Neon's ability to grow into a much larger company," Mr. Syed said.