IT's stock is soaring at the LSE

Lester: There will be many IT projects happening in the next two years

Executives at the London Stock Exchange (LSE) are bracing themselves for a period of intense activity. Despite the gloomy economic environment, there is no slowdown at the LSE, after its recent merger with counterpart Borsa Italiana.

LSE currently processes 30 per cent of Europe’s electronic trade and is preparing to bring a number of new services to market under the consolidated operation, which is expected to deliver £10m in savings to the business.

Technology is a critical part of the process as the exchange plans for a huge increase in business volumes. Its chief information officer (CIO), David Lester, tells Computing about his achievements so far and plans for the future.

How is the IT integration with Borsa Italiana progressing?

The TradElect electronic trading platform project will be fully implemented by the first half of 2009. We also want to decommission the Italian system that was used for information distribution by the end of next year and migrate all our Italian and UK products to Infolect. Another major work stream is the integration of post-trade systems, web sites and data warehousing systems onto one platform. We are also looking into integrating our networks and derivatives platforms.

Have you identified many redundant roles when uniting the UK and Italian IT teams?

We have not identified a great many overlapping positions. While we will still deliver some IT synergies that could involve headcount, the merger was about broadening the business and creating more revenue opportunities for post trade, derivatives and fixed income. Staff are busy integrating, while business heads, including myself, are coming up with new ideas and projects for expansion. So there will be many IT projects happening in the next two years, for which I now have a lot of capable resources. We will look at IT plans for the next couple of years and decide where those resources will be deployed.

You insourced your IT service delivery function last year. Do you have any plans to bring other parts of LSE’s outsourced set-up in-house?

When I started at LSE, technology was completely outsourced. But now, 35 per cent of the entire project work for Infolect and TradElect tends to be done offshore. Borsa Italiana was also heavily outsourced, but by the time of the merger, we were already insourcing because IT is so key to this business and having in-house specialists is therefore essential. Is insourcing finished? There are no plans to insource anything further, but needs and desires can change. There is always scope to do things differently.

Have you revised your supplier contracts following the merger?

During the past year we have renegotiated all our major supplier agreements, particularly at the point of integration. Part of the synergies that we have delivered are due to the rearrangement of these deals and changing the scope of some of the services provided. Integration projects are always a good time to have a go at these things, and get suppliers to sharpen their pencils. They are facing up to a much larger organisation and have many more opportunities to do different things for us.

What have been your leadership challenges during the integration so far?

The scope of the business has more than doubled and now I have to ensure that I spend a cross-European team to run, therefore I have to ensure that I spend time with a lot of people in Italy and the UK. What used to be a solely trading and information business has become much more wide-ranging and IT is one of those areas where every single resource needs to be joined-up because there are synergies to be gained, so another key challenge is being able to get a level of understanding of all of these businesses to bring them together, so it is a much more complex and diversified role.

But when it comes to cultural differences, it was clear from the start we would use London-based systems TradElect and Infolect. It was also obvious that we would use Borsa’s expertise in web services, data warehousing, as they surpassed the expertise we have in London and had a skillset we didn’t have previously. Because it has been a merger in every sense, any cultural issues, where they exist, have become really minor.