Capnetix - Simplifying Finance

Capnetix and the Cloud

2011-03-18T15:12:00.001-04:00

I read this article today in the Wall Street Journal Technology Report entitled "Get Off My Cloud". I'm sure that many of the questions raised in the article affect the decision making of the executives at the fund companies who are evaluating InvoiceConnect as a solution to their problem with invoicing with distributors.

People may be curious why we developed Fundix first (institutional Transfer Agency, international, SaaS based), but we are coming to market with InvoiceConnect first. One of the reasons is pointed out in the article.

"Cloud computing is not about taking what people are doing already and moving it to the cloud," Mr. Lynch says. "In general, if something is working in IT you don't mess with it (1). Where cloud becomes really interesting is with new things where you have the option of doing it on your own server in-house or going with the cloud(2). Then you're much more likely to move those to the cloud than traditional IT."

In Capnetix case, Fundix addressed a Transfer Agency problem that "is working in IT" (1). People already have TA2000, or Envision, or some other workhorse that's been around for years. Yes, the old way is expensive and inflexible to run, but it is perceived by potential customers as a fixed problem.

However, the intermediary fee invoicing situation is a completely different situation. The business problem causes pain for all fund companies, and there is no real solution on the market for the problem.

InvoiceConnect is an e-Invoicing solution that works. It absolutely is "a new thing you have the option of doing it in the cloud".

Security

There was another mention in this article about the wish for security, and also the mixing of data between companies. I can't go into it here, but we've done a very good job of securing data in several ways. Come talk to us about it when you're ready.

Capnetix has begun the search for funding - VC FAQ #1 - Mass Customization prevents commoditization

2011-02-23T05:26:00.001-05:00

Capnetix is at the point of market entry, and is now searching for the right investor to help us capture this market. As we speak with investors, they ask us questions about our company, and in order to be efficient, we wanted to start an FAQ so subsequent investors can benefit from our conversations with earlier ones..

"Our view is that ‘connector’ companies tend to commoditize quickly and it takes a lot more engineering after that to keep customers happy"

The VCs question was excellent, and we were very fortunate that it points right to an "Unfair Advantage" that Capnetix brings to the financial services record keeping and reconciliation sector, but that we had not yet documented. Please let me explain.

Prior to founding Capnetix, I started another firm, whose core value add was to package and deliver snap together supply chains for mass customized manufactured products. If you are not familiar with mass customization, think of how you purchase a Dell computer from their website. You start with a base product line, then make selections of different options to customize the product for your specific needs. Each of the product options is "pre-engineered" to work correctly. Once you place the order, the manufacturing system dynamically creates a Bill of Materials which defines exactly how your computer will be built, that may be different from all other computers made on the line that day.

As the final manufacturing line assembles your product, it communicates to it's connected supply chain for replenishment.

So how does this apply to Capnetix and InvoiceConnect?

Here is the analogy. Mutual fund companies deliver their funds to end investor through a "supply chain", which is their specific network of intermediaries. The "options" are the parameters that specify the contract between the fund company and the intermediary for reimbursement. Capnetix provides a unique way to quickly and accurately define this combination of multiple products and the parameters associated with the billing. Our ability to quickly and cheaply "mass customize" combinations will differentiate us from the competition and provide a barrier to market entry by larger competitors.

This unique capability prevents commoditization, and allows for very low cost customization (specifically the engineering required to specialize a particular product/parameter combination). To our knowledge, no other competitor can provide this capability, and it is the key to the value proposition that Capnetix provides.

If you are an investor, and would like to learn more, please contact Charlie Peppler at cpeppler@capnetix.com.

Solving a more immediate problem - Intermediary Invoicing

2011-02-07T11:31:00.000-05:00

Capnetix developed it's first product (Fundix) as an off the shelf, SaaS delivered, configurable record keeping solution for institutional transfer agency. In bringing this solution to market, we learned a lot about how people think about back office of record keeping technology. We learned that no matter how great the value Fundix could provide to streamline TA record keeping, improve customer service, lower cost and risk, the hard business fact is, people are not yet ready to think about changing their institutional transfer agency record keeping approach.

So, what's an innovative company to do? Well, find a new, bigger problem that's on a lot of people's minds, and solve it for them

In August of 2009, I was invited into a phone call between Hubbard Garber, principal at Barrington Partners, and John Mari, VP - Global Strategy and Business Intelligence for Janus. During the phone call, John explained the immediate (and large) business problem associated with intermediary fee invoicing.

Without going into the details here (we're working on a whitepaper now to give you all the background information if you're interested), the basic problem is this.

Mutual fund companies (like Janus, Oppenheimer, MFS, Eaton Vance...) pay intermediaries (like Schwab, Merrill Lynch, Ameriprise, Edward Jones) to distribute their funds to end investors. The problem lies in the way that distributors send invoices to fund companies, how contracts are structured, and how the fund companies have to validate, allocate and pay those invoices.

The bottom line....it's pretty much all manual, expensive, and full of operational risk for the fund companies. The people in accounting operations push forward with all manner of custom Excel spreadsheets, but there is significant business pain. That pain is now affecting C level executives of fund companies, who want to scale their distribution, without scaling cost or risk.

Today, Capnetix is bringing the solution (called InvoiceConnect) to market as a configurable, SaaS delivered record keeping service. What used to be a manual data handling nightmare, is now highly organized, accessible, and easy to use solution, removing pain from both the fund company executives, as well as the operations people who have much better things to do.

Although Fundix is a fully working solution, ready to go, you will see a shift in the conversation to a more immediate problem for executives, which is how to streamline the handling of intermediary invoices.

Seeing is Believing

2011-02-04T16:09:00.001-05:00

I'm learning a lot about how people think in the back office of the financial services world. I talk to a lot of people about the problems they wrestle with, and have frequently heard the quote "There has to be a better way to do this". And yet at the end of the day, they are resigned to the fact that they have to "get the job done", there is no other way to do it on the horizon, and turn around and hammer through another manual spreadsheet the same they did it last month.

I was talking with one gentleman, and he really liked what we were talking about, but he had stuff to get done, and was about to put the new solution on the back burner "to think about" until I explained to him a very simple concept. What if, instead of seeing a generic demo with fake data, he could see the actual solution running with his own data, without effort on his part.

The tone in his voice changed. He realized there might be a way out of doing the digital equivalent of carrying sandbags one more time. He said, sure let's setup a webex and take a look.

No more manual data munging. Click a button to process invoices and see reports. No budgets to worry about. No IT hassles. No 6 month implementations. He would be able to show his boss a great way to get things done, save money and cut risk.

And sure enough, he will be able to see it working with his own data. No limbs to step out on. No risks to take. No time spent, until he actually sees it running.

And that's what's called "Seeing is believing".

Smaller steps to introduce a new TA Technology

2009-08-05T14:51:00.000-04:00

Now that Fundix has become a working transfer agency solution for a number of investment management, custodial and asset servicing groups, we have turned our attention more fully to how this kind of technology can be accepted in the market.

Boy, have we learned a lot.

First of all, we are starting to really understand that there has not been a lot of technology innovation in the back office world of financial services for quite a long time. People are really not used to seeing a new way of doing things. I'm finding that people don't really believe that a new technology will not only work, but that it can in fact make their business work better.

We met with one executive summarized the problem quite succinctly. Even though he and the people around him saw the significant business advantages he could not move forward. By the introduction of Fundix, he could eliminate 4 legacy technologies that are burdening his company. The business case was very powerful!

The money quote from our meeting?

"If I introduce another technology, my boss is going to kill me!"

OK, so it's going to take a while for people to get used to the idea of introducing one new technology that can obsolete multiple more expensive and inflexible ones.

So, we need to help these people get across the gap. Even though we are introducing new solutions that can simplify these peoples lives, we need to start with smaller steps.

Innovating in a Downturn

2009-03-03T13:26:00.000-05:00

You might wonder, why would you take any kind of risk during a downturn? Why would we change horses, try anything new, introduce a new technology, or make any changes whatsoever? Good question, and I'm glad you asked.

One of the things that proves true again and again is that businesses act in cycles. Some group of people makes a bad judgment call, which screws things up for a bunch of people...in the short term. A bubble bursts, a greedy executive gets busted, a new administrator introduces new taxes and non-productive spending at the worst possible time.

However, the market as a whole is made of really smart people. They get tired of hiding under a table worrying about how the sky is going to fall, and figure out how to get back in the game. However, there's always a lag time between panic and rebound.

What do you do while you're waiting for things to come back? Use the time well. Innovate. Come up with new ways to lower expense and increase your service capability. Retire an old broken down system with a new way to deliver information. Find new ways to please your customer, without spending a huge amount of capital.

Then, things start to come back. The innovation is in place, you are ready to take market share while everybody else is just starting to crawl out from under their desk. You've made the adjustment, and are ready to go.

Get out from under your table. The sky may be dark for a while, but it's not going to fall in on you. Figure out a way to position for advantage when the darkness breaks.

Go for it.

Awesome blog for TA systems

2008-10-20T09:03:00.000-04:00

I just found this incredible blog for automated systems, including references in the TA space.

It's called Ronald Knecht Financial. I want to connect with this guy. I found an article that was particularly interesting about a TA Roundtable. In it, there is some incredible input from some real industry experts about where they see the future of TA going. There was an entire section in there about the European marketplace. I'm thinking that Fundix' ability to provide flexibly configured TA systems, delivered via a SaaS model may really help in Europe (particularly in Lux and Dublin).

Stay tuned for more.

SaaS and the Enterprise Customer

2008-08-28T12:27:00.001-04:00

Mass Technology Leadership Council, SaaS Seminar

Wednesday October 22nd 2008, 8-10am (registration at 7:30)

SaaS and the Enterprise Customer

The evolution towards SaaS deployment of applications to end users has become well established in specific application areas on the edges of the enterprise.

What happens as corporate decision makers consider this trend as it applies to application deployment inside the enterprise itself? Economic advantages include lowering or eliminating capital expenditure for licenses, hardware, and installation, low or no cost upgrades, matching expense to revenue through “pay for what you use”, and overall reductions in IT costs. It also opens up new opportunities for outsourcing non-core competency business functions, with in-house and outsourced parties working on a central data set.

At the same time, the computing world inside the enterprise presents unique challenges, including integration between systems, trusting a vendor with the security of your data, and customizing applications for your company’s particular business practices.

Come join us for an open dialogue with industry experts who are involved with wrestling with these issues. Bring questions as we begin to explore this new area together. If you have specific questions that you would like to be considered in the forum, forward them ahead of time to cpeppler@capnetix.com.

As moderator of the discussion, Charlie Peppler brings 25 years of experience designing, developing, deploying, marketing and supporting mission critical enterprise information systems in multiple industries, including advanced manufacturing, biotech, and financial services. Charlie founded Capnetix, which is presently bringing to market “Fundix”, a SaaS based Transfer Agency solution for investment management and insurance firms, third party administrators and custodians. Capnetix is delivering Fundix on a SaaS 2.0 platform, designed specifically for deploying back office applications in the financial services industry.

Looking for the connectors

2008-03-28T23:51:00.000-04:00

I just attended a good event put on by the Massachusetts Technology Leadership Council (MassTLC) entitled "Software as a Service: Collaborative Infrastructure and the Virtual Enterprise". Jeff Kaplan was the MC, and introduced Sean Poulley who was the main speaker. I really like the MassTLC, and the SaaS cluster within it. However, when I read the intro to this event, I had somehow gotten it in my mind that the "Virtual Enterprise" would have more to do with the automated data connections between different companies, using Service Oriented Architecture (SOA), and how applications in different companies would be talking to one another.

The presentations were about how to get groups of people to collaborate virtually, allowing those inside a company (and it's firewall) to connect and do shared work with those outside the company, creating virtual teams of people. Human collaboration using virtual working tools is absolutely necessary, and is how people will get work done now and in the future. What I was looking for was the next step. After you get the teams of people to work together, how do you get applications to connect with one another, across enterprise boundaries?

I'm looking for the connectors. I know they're out there, and companies are using them, but they have not yet filtered down to the "best practices" (using consulting lingo) level, where companies can just "hook them together".

At the last company, we were using the older technology of using File Transfer Protocol (FTP), to pass data files between companies, and then parsing them into databases. It had the same effect of automating the flow of critical business data between companies, and it worked, but it was pretty clunky, and took a lot more code than should really be required to have "my computer talk to your computer".

We have these cool web services that we can build to securely expose APIs to other applications, and I'm looking for the people who are using these in production applications. We've prototyped using web services, but I'm looking for the experience of other companies that have used web services heavily in production, connecting them into automated business processes that transcend corporate boundaries, and have war stories that can help the rest of us learn about their strengths and weaknesses, and whether we need additional infrastructure (like a Tibco, or other messaging infrastructure) to do it reliably in production and for more real-time interaction between applications. This is going to be key for really being effective in linking the computing business flow.

General Corporate Description

2007-10-27T11:48:00.000-04:00

Capnetix provides outsourced record keeping and accounting solutions and systems integration services to the investment management industry. Our company has built it's first product, Fundix™, targeted specifically at providing outsourced record keeping for financial services firms, using the latest "Software as a Service" (SaaS) model for delivery. Capnetix also realizes that all corporations have a large investment in legacy systems. These investment management firms need help integrating existing in house systems, with an eye toward migrating toward the more flexible, lower cost SaaS model in the future. Capnetix provides consulting and systems integration services specifically for these types of companies.

For further information, visit: http://www.capnetix.com

Welcome to Capnetix

2007-10-27T11:10:00.000-04:00

Capnetix is a new firm (started in April of 2007), created in order to help bring about a revolution in how systems support people to make a more efficient investment community. This concept has several dimensions, all of which are worth exploring, and I would enjoy entering into a dialogue with you, as you agree, or disagree.

Some of this will be philosophical. Much of this will also be practical. We may get into business concepts (including sales and marketing, the SaaS market, Business Process Outsourcing), and some of it may have a little technology thrown in. I'm hoping this will be interesting for a wide variety of people, so feel free to join in. It's all about the relationships and the dialogue, in life and in business.