Mellon Adds Contracts Management Tool to Vendor Program

PITTSBURGH—Mellon Financial Services has introduced a contracts management solution to further strengthen its vendor management, a process the bank has institutionalized in the past couple of years to more effectively manage relationships with data vendors, officials tell Inside Reference Data.

Mellon has selected Contraxx, developed by software vendor Ecteon, for its contracts application, with Ecteon partnering with contracts management company Techman Solutions to deliver the solution.

The contracts tool supports the vendor initiative and enables the user to image all documents relating to one vendor. By centralizing the system, Mellon has been able to improve the contracts process, meaning that data acquisition is quicker than previously.

"Before, the vendor was managing us. Now, the process works the other way around. Not only are we managing the vendor, but we're also managing the vendor in a productive, strategic way," says Amy G. Harkins, Mellon senior vice president and director of global asset servicing, who, as managing director of Mellon Market Data, leads the vendor management process.

Harkins says Mellon now uses a standard contract language. "Each contract will look different because it bears the imprint of the relevant vendor, but we've been able to come up with common items that we've learned will work and want to have in all of our contracts," she says.

In 2005, Mellon funded the creation of an office of data management, the enterprise-wide governing body that along with the individual members of the Market Data Committee looks at the compliance and the process around all of the vendor management. "We had the office of data management in place by 2006. When the team started working together on the creation of a data management system, we realized we needed a better tool," she explains.

They started looking at contracts tools in March 2006, procured system components by September, and had it up and running by February this year. "The time from purchase to implementation was less than three months," says Harkins.

But the process to create an enterprise-wide vendor management system had been ongoing for five years. In 2002, senior Mellon professionals suggested that vendor data should be looked at as one for the whole corporation.

Harkins says vendor management was deemed key to Mellon, as data is vital to the products the bank offers. "We treat reference data as an asset. It is important and critical to the products and services we provide to our clients," she remarks.

With Mellon also expanding internationally, centralizing vendor management was seen as important to effectively handle new data needs.

"As our operations become increasingly global and financial markets continue to grow in complexity, we continue to encounter new regulatory requirements specific to particular geographies or securities markets, and if you have not developed a strategic relationship with your vendors, you might not have ease of access to that data," says Harkins.

Prior to the vendor initiative, the process was more siloed. "We decided that we really need to look at things globally with the vendors, so we brought representatives from business lines, corporate sourcing and legal together," she says.

Harkins explains that the program initially involved 15 people and eight business lines, but has now grown to include 20 business lines and 50 participants. "The number one benefit is business lines talking to each other," she says.

But for the vendor community, it is the strategic relationships Mellon has been able to build after centralizing the process that have been noticed. "Mellon treats vendors like partners," says Barry Raskin, president of Telekurs USA, who is working with Mellon to bring the Telekurs reference data product, VDF, into the financial institution's Eagle/PACE environment.

He says Telekurs has a jointly developed business plan with Mellon. "It details how the relationship will work and what goals we are trying to achieve," Raskin says, explaining that they also have bi-weekly project meetings moderated by a third-party facilitator, who keeps everyone on track with their individual tasks.

For Harkins, these improved relationships have also resulted in cost savings for the organization. With a changing regulatory environment leading to new data needs, business lines have been able to use hard dollar savings to procure additional data to cover some regulatory requirements.

"I do think that business lines need to adopt a centrally coordinated, shared resource vision when it comes to vendor data; buying into such a vision keeps their expenditures down while also allowing them to adapt the resource to their particular needs. It also leaves the door open when they need new information," she says.

The Mellon office of data management has a staff of three, overseen by the 47 members of the Market Data Management Committee, the latter group comprised of market data representatives from multiple Mellon lines of business, as well as two legal and two corporate sourcing professionals.

"If, for example, we're having a problem with one vendor dealing mostly with cash management, the market data rep from Mellon's treasury services sector is working with the office of data management, corporate sourcing and legal to get the problem resolved," Harkins explains.

With all of Mellon's asset management and asset servicing businesses having an active role in the vendor management process, the initiative has given all business lines a voice in the same committee.

"What happens is, when we're doing an ­enterprise-wide contract with Reuters or Telekurs or Interactive Data, all that information is shared in the market data committee," says Harkins, remarking that each business line outlines their requirements before the office data management negotiates the contract with the relevant vendor. All representatives then sign off on the contract, meaning that the agreement is subject to approval from the committee, she says.

To follow a negotiation process, participants receive meeting minutes and bi-weekly updates. The committee also used to meet every week, then every two weeks, but now it meets every three weeks, with weekly minutes going out every Friday.

Yet urgent requests can be pushed through the process. "If a business line came in to me today and said they need to get CBS market watch data and I need to get it into this application in three weeks, we don't have to wait until the market data committee agrees," says Harkins. In these situations the office of data management sorts the problem out, with the case being summarized in the next market data committee meeting.

In general, Raskin says, there is a huge movement towards centralizing reference data in major institutions, with enterprise-wide contracts being the consequence. "They no longer want to buy the same data three or four times and have inconsistent databases across their firms from which applications are retrieving information. All that fragmented databasing and data acquisition leads to ­inefficiencies. The institutions realize this, and as a result have moved towards enterprise data management," he says.

Raskin adds that an enterprise-wide contract was suitable for the Mellon project he is currently involved with. "Mellon is implementing their solution to support their custodial clients' reference data needs. Therefore an enterprise-wide contract, for Mellon, makes perfect sense since their middleware is centralized while their users and clients are global," he comments.

Meanwhile, Harkins concludes that managing vendor relationships is like walking a tightrope. "You have to make your way very carefully, being sure to maximize the data's value to the corporation while at the same time incurring the least amount of expense and risk," she remarks, also advising other firms to look at their vendor data spend: "I recommend that slow and steady is going to win the race here."

Tine Thoresen