It seemed like courting controversy. But when Martin Coen told delegates to the recent Web Services on Wall Street conference in New York that Web services were not the way forward, few seemed to disagree.
Coen-who is global head of sales at the London- and New York-based software specialist Iris Financial, a Sun Microsystems technology partner-was giving a talk on service-oriented architecture (SOA). His focus was the trading floor-and in that context, he argues, Web services are just too slow.
"Pure Web services, based on standards such as XML, SOAP, and WDSL, allow you to build very flexible systems, but they curtail performance," says Coen. "They're good for post-trade back-office applications, where the turnaround can be one or two seconds, but they are just not applicable to systems in the front or middle office."
Web services-technology that enables applications to interact and update themselves automatically-have come into their own on sites such as Amazon, Coen says. There they provide the mechanism for placing items from third-party retailers on Amazon's site, for handling orders, and for processing payments. It's a different world from the trading floor, where response times are measured in milliseconds.
Web Services vs. SOA
By contrast, SOA, an architectural approach based on loosely coupled components, works well on the trading floor. These architectures allow systems for, say, position keeping or risk management to be re-created as "services" that talk to each other through clearly defined interfaces. Such an approach allows firms to integrate legacy systems with newer applications by wrapping them in one of these interfaces. It also lets firms break up monolithic applications and run them on different systems, evolving parts as necessary, without rewriting all the code.
"A service architecture should make you more agile from a business standpoint, because you can take a service you have built in one place and deploy it in a different context, reusing the logic," says Coen.
Yet, when asked how much SOA is currently used in the trading environment, he replied, "Almost never!"
For many, SOA is synonymous with Web services. That's a problem, Coen argues, because developers soon find that many of the processes they'd like to automate via these technologies have too much "overhead" if done within these emerging standards.
Take, for instance, the steps involved in a trade, from blocking it up and analyzing the risk associated with it, to routing it, tracking it, doing the internal allocations, and notifying the market. "Those processes used to be built as one big application, but you can break them up into separate services," Coen explains. "Each of those logically separate processes is reasonably 'cheap' computationally, but if you try to link them using standard Web services protocols, the overhead for the communication between them begins to dwarf the cost of the computations themselves. That is, they will spend more time telling each other what they are doing rather than actually doing it."
Flexible Trading Solutions
The solution is to think of Web services as just one of the ways to keep a service architecture humming. Iris Financial, in fact, allows business services to be connected using a range of mechanisms, including in-process object passing, common message buses and queues, and Web services. For Coen, what's important is that companies realize the usefulness of service architectures in the current business climate.
"The trading environment has changed," he says. "Securities firms have to go to market more quickly with products. They have to innovate more frequently and, because profit margins are down, more cheaply than before. They are also handling higher volumes, so they have to continually replumb their systems and scale applications across more processors. A service architecture plays to all these things."
There are clear benefits to breaking down monolithic applications. Coen points to one client using the Iris architecture for matrix pricing in fixed income. Over time, the calculation frequency increased so dramatically that it slowed down the system, but having an SOA meant the client could pinpoint the bottleneck, isolate performance issues, and provide a fix. "They were able to replumb the system without changing the logic to solve a problem that occurred when volumes rose."
Coen believes that the fact that few people disagreed with his comment about Web services is an indication of the market's realism. More and more developers on Wall Street are now working with these technologies, and understanding how and when to make the most of them, he says.
"It's what happens when you actually try to apply things," he concludes. "You become a pragmatist, not a zealot."
