For all the legacy-busting promise of innovation like SaaS, cloud computing and virtualization, there's at least one big complication: Even the simplest of transactions can get lost in a sea of virtual servers and shared platforms, making it tough to locate and troubleshoot costly delays, reduce trading latency and ensure SLA compliance.

"In the world of just a few years ago, a single transaction such as looking up an account balance or executing a trade would run on a few servers. Today, even checking a balance or making a payment may require dozens of systems and servers, interaction with external systems and dozens or even hundreds of tiers," says Russell Rothstein, a vp at OpTier, a tech firm backed by Cisco, Morgan Stanley and VC cash that's part of a burgeoning tech market aiming to bring serenity to an often maddening new world of retail and capital markets transaction monitoring, where the stakes are high.

"A lot of the applications that banks run are tremendously time sensitive," says Julie Craig, research director in charge of applications for Enterprise Management Associates. "Latency in the milliseconds for a trading applications can make the difference in hundreds of thousands of dollars as a financial instrument fluctuates."

Firms like OpTier, Nastel Technologies, CA, HP and others have developed new versions of monitoring software that each firm claims can navigate complex applications to track transactions from end user to execution, seeking and destroying bottlenecks, prioritizing and clearing traffic for "important" transactions, rightsizing staff deployments and reducing server and energy use. Beyond Morgan Stanley - which is using the technology to monitor the performance of an institutional fixed-income platform, OpTier's attracted the business of DeutscheBank; Nastel's clients include Citigroup and Credit Suisse; and CA's roster includes Union Bank of California. HP did not release clients, but product manger Joe Fox says a bank in Luxembourg is using HP software to monitor trades in flight, trades scheduled to be completed by various stock exchanges, and trades that need to be closed by the end of a trading day as per an SLA.

In OpTier's case, an institution's entire IT environment is mapped, and transactions of all kinds are followed through various tiers and environments - including mainframe, open systems, application or Web server, Unix, etc - to prioritize transactions and locate bottlenecks and delays, which show up on a graph. "It automatically detects all of the flows of a transaction," says Rothstein, whose firm charges for the software based on the size of the IT environment that's being mapped.

For example, Deutsche Bank is using OpTier's software to monitor thousands of transactions per minute across more than 20 applications, with plans to expand use to more than 40 percent of global currency transactions, or millions of transactions per minute. The technology also allowed the bank to recently spend only 20 minutes identifying a glitch in migrating a project between datacenters that had reduced transaction throughput 30 percent and increased transaction time by 30 percent. Based on the information provided to Deutsche by OpTier's technology, the bank was able to improve elapsed transaction time on 14 other applications with similar problems.

"You're seeing a bridge between systems monitoring on the IT side and business activity monitoring," says Mark Knox, a research director for banking and investment services for Gartner. "It's a bridge that's been missing."

Nastel's software matches operational and transaction tracking to locate delays, compare those delays to the parameters of an SLA, and explain the delay to the bank. "You can figure out why it's 4 p.m. on a Friday and you haven't reconciled with the Fed and still have 'x' number of transactions in you know you need to take action to correct that. And you can take action before users feel the impact," says Charley Rich, a vp at Nastel, which charges a standard annual maintenance component that is a percentage of the software costs.

Citi has deployed Nastel's technology to manage 150 applications globally, including cash management, electronic funds transfer and equity trades with a staff of about eight people, covering the U.S., Brazil, Argentina, India, Singapore, the U.K., Mexico and Korea. Credit Suisse is using the software to monitor all aspects of its messaging environment including trade booking, validation, clearing, settlements, payments and to ensure service levels are being met.

Most of the new platforms work by identifying the unique text codes, or "footprints," of a retail or capital markets transaction. By matching these codes to specific transaction type - such as payments, transfers, trades, or balance inquiries - banks can monitor and prioritize transactions to ensure trades or payments get made in "real time," while balance inquires can wait a few fractions of a second. "The real value is knowing that you have 250,000 transactions every two hours, 100,000 of which are mission critical," says Rod Nelsestuen, a senior research director at TowerGroup. "That's where reducing server capacity comes in. You're not just looking for macro slowdowns."

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