Choose your ecosystem

Some things are made for each other. Love and marriage, bread and jam, and late-stage life insurance with long-term care riders. There are other things that work well together, too: the iPhone and the iPad.

There’s a reason why Apple Inc.’s products work so well together but don’t play particularly well with others. It’s called the “technology ecosystem.” And, whether you know it or not, this ecosystem affects the way financial advisors buy their technology.

The dictionary defines an “ecosystem” as a community of organisms, all functioning together as an ecological unit. The same holds true for the technological version.

Technology companies have a variety of components to work with, and can engineer them to work together so seamlessly that users will find it difficult to escape from these products’ web.

The first step in determining whether you should stick to one ecosystem or keep your hodgepodge of devices is to understand the current technological landscape.

“What is Apple? Is it a hardware or a software company?” asks Peter Wolchak, chief analyst in Toronto with Branham Group Inc., a technology consulting firm based in Ottawa. “These are now ecosystem companies, pushing the vision of a connected and interactive system.”

What does a connected and interactive system look like? We’ve seen it before, in different forms. In the 1970s, when mainframes and mini-computers were the only options available, and teletype terminals the only way to access them, computer vendors designed their systems specifically to lock customers in.

Often, the same companies that produced the hardware also produced the software run on that hardware. Company staff wrote not only the operating systems but also the applications that user businesses were forced to use. These information technology (IT) companies defined the data formats, the storage media that customers had to buy and even the network protocols that let computers talk to each other. In that world, everything worked well together because it was provided as a sealed, tailored offering. But woe betide the customer who tried to connect different vendors’ computers together.

Then, along came the PC, and things began to open up. PCs ran on Microsoft Corp.‘s MS-DOS and Windows platforms and, suddenly, any company could write software for them.

Not long afterward, the IT industry agreed on an open communications system, so that computers could talk to each other on the same networks. The modern World Wide Web evolved on top of that, and the foundations for open computing seemed safe.

Nothing is ever that easy, though. Companies found ways to create their own ecosystems, luring customers into ongoing relationships through various means.

What are the components of a digital ecosystem? Operating system software is one; applications are another. Content – whether it be music, books, magazines or video – is a rapidly evolving third. And a fourth, harking back almost half a decade, is hardware.

–Ecosystems include the cloud

More recently, there has been another component, says George Goodall, senior consulting analyst with Info-Tech Research Group Inc. in London, Ont.

“I would define it as hardware, software and a cloud play,” he says. “It’s more than having a new device and having to migrate data. In an ideal world, I get a new device and I input my credentials and it just works. So, it’s about hardware, software and service.”

Storing data and applications in the cloud is a relatively recent development, but a development that is crucial for resource-constrained financial advisors, many of whom work in small teams with little official IT support.

Buying new devices in the past meant an excruciating migration process, often involving discs and cables, to get software and data from one machine to another. In the cloud, it just works – but, in many cases, the vendors own the cloud. (See story on page B17.)

–Microsoft’s ecosystem

Microsoft has been particularly effective at building a cloud presence and integrating it with Microsoft software. The company came relatively late to this process with the introduction of Office 365, its online collection of software and services based on the Office software suite, officially launched in 2011.

“[Office 365] has been hugely influential and gained so much market share because it has such a huge existing installed base there,” Goodall says. “It’s consistent with what people run right now, and with devices and procurement strategy.”

There are downsides to some ecosystems, however, especially when they include a cloud component. While subscribing to online services such as Office 365 may be cheaper initially, over time, it may prove more expensive than simply licensing software and keeping it for an extended period.

“Someone asked me if it’s cheaper, Goodall says. “I’d say, ‘Over five years, no’.”

–Apple’s ecosystem

More so than Microsoft, though, Apple has proven to be one of the most adept at building ecosystems that lock in customers. Apple has developed hardware for almost every aspect of professional life – from your desk to your pocket.

The company has sealed up its own ecosystem tightly. Macs, iPhones and iPads all work well together, especially with the forthcoming versions of the OS X and iOS operating systems (Yosemite and iOS 8, respectively). Apple devices will recognize each other when they are physically close, enabling you to answer iPhone calls and text messages on your Mac, for example.

Apple also has invested heavily in iCloud, its cloud-based storage and computing service, launched in 2011. This service acts as an online storage system for Apple email, contacts, calendars, bookmarks, notes and reminders. The system also stores documents created in Apple’s set of applications that were designed as an alternative to Microsoft Office.

Steve Jobs designed iCloud that way. In 2010, he wrote a letter to certain employees that stated an ambition to “tie all of our products together, so we further lock customers into our ecosystem.” That letter also cited a “holy war with Google.”

Jobs was never short of vision; Google Inc. now is one of the most significant ecosystem players, thanks in large part to its cloud offering, which encompasses apps, services and online storage. With Google’s phone hardware and its desktop hardware based on the Chrome OS operating system, the company clearly is building an ecosystem empire.

Which technology you choose often depends on your situation, says Dianne Lapierre, vice president of IT with Raymond James Ltd. in Vancouver, which both employs its own advisors and deals with independent ones.

“The independent advisors have to purchase their own software or hardware,” Lapierre says, adding that this expense is factored into their compensation. “So, they’re making decisions based on cost. Whereas because it’s part of the full-service package [employee advisors] have with us, [they] are looking for functionality.”

Raymond James has introduced more flexible technology policies for its captive advisors, allowing them to choose the most appropriate computing solution for themselves.

“Our business standard is a BlackBerry system,” Lapierre says. “But not that long ago, we started to accept a ‘bring your own device’ policy, and we’re moving into the Apple space. We are open to bringing iPads onto our network, even though we’re a ‘Microsoft shop.’ The iPad is such a great, ubiquitous mobile device for business.”

–Personal choice

For many advisors, especially those who bring their own devices to work, personal preferences affect their professional technology choices. Wolchak, for example, loves his Google products, but won’t relinquish his iPhone because Apple’s ecosystem excels at music and podcasts. (Half of Wolchak’s phone time involves audio consumption.)

“People are very particular about the technology they use,” Goodall says. “We have Apple zealots and Google zealots. People will say, ‘Why can’t I use this type of machine or that type of machine?’ We end up with resistance there, especially in a small organization in which we don’t have a blanket policy coming down.”

The problem for advisors in small offices is that they will lose functionality if they’re not all on the same system. Different devices can be made to work together, but just not as well as they would if they were all manufactured by the same company.

–Bridging the ecosystem gap

In some cases, IT vendors are beginning to help by extending their offerings, making them more compatible with others. BlackBerry Ltd., for example, has begun to help customers such as Raymond James manage non-BlackBerry devices on the latter’s enterprise servers, which used to handle only BlackBerry hardware.

BlackBerry, an ailing smartphone vendor, also recently struck a deal with Amazon.com Inc. to make that online retail giant’s catalogue of 250,000 Android applications available on the BlackBerry 10.3 operating system.

Microsoft also has extended its (metaphorical) hand to Apple users, offering a version of Office that links the Mac and the iPhone – albeit with markedly different functionality. There now is even a version of Office for Android phones. And these versions all integrate with Office 365.

While hardware and software vendors may do their best to integrate with others’ software, the cloud component of the stack is often less open. You’ll have trouble integrating Office 365 and Google Apps, for example, and there are no links between those two and Apple’s iCloud, either.

–Investment firm choices

As advisors wrestle with their ecosystem choices, how can advisors’ firms help? Some fund-management firms have tried to pick ecosystem winners. Toronto-based Invesco Canada Ltd., for example, launched its own app for the iPad in June 2012.

“We intentionally chose to develop exclusively for the iPad based on a couple of key factors, the first being security,” says Bruce Borgundvaag, the company’s assistant vice president of digital strategy. “Safeguarding our client information is extremely important to us. Apple’s closed ecosystem and rigorous approval process means [the iPad] is very secure.”

In general, fund-management companies that do offer native applications are improving their ecosystem coverage. A recent report on mobile applications for fund management from MyPrivateBanking GmbH of Tagerwilen, Switzerland, indicates that 43% of fund-management firms offer at least iOS and Android versions of apps to access information regarding their products. But there still is room for improvement; only 14% of those firms offer iOS, Android, Microsoft Phone and BlackBerry versions of their apps.

Dealer firms don’t have to make a choice on their advisors’ behalf. These firms also can use their own web-based service providers to increase flexibility for advisors, especially the independent ones.

Investment Planning Counsel Inc. (IPC), based in Mississauga, Ont., uses independent advisors. That independence makes it difficult for the firm to dictate the technology that advisors use, says James Lee, IPC’s vice president of information services. Instead, the company strives to make apps available to its advisors in a technology-neutral way.

The answer? Put them in a browser.

“The way that the applications are offered are all web-based,” Lee says. “So, whatever the desktop platform is – whether it’s Mac, PC or some other OS – because it’s all offered through the browser, we’re able to satisfy the preference that an advisor wants to use.”

Toronto-based Manulife Financial Corp. also has been keeping its IT web-centric for the past eight years or so to avoid picking ecosystem winners. Manulife announced what it called an “iPad app” for advisors in 2012. But the app wasn’t really an iPad app at all.

“The software was optimized for the iPad. But, really, it was a mobile website,” says Andy White, the firm’s vice president, application architecture and standards, and chief technology officer in Canada. It would just as easily run on an Android tablet, although there were not that many around. “The iPad was the only real tablet of choice at the time.”

–The irresistible ecosystem

Ultimately, the benefits of buying into a technology ecosystem are only going to get greater – and more seductive. Wolchak argues that ecosystems stretching from phones to cloud services soon will become an integral part of our everyday lives.

He offers Google Now as an example. This service uses data such as your phone’s location, travel information that you’ve logged with Google and typical trips that you make to begin providing notifications without being prompted.

“Google Now will tell you if your plane is late,” Wolchak says. “That’s an amazing level of technology. That is going to happen in more areas of life. And it is going to be a big deal for users in the next few years.”

Apple soon will offer you the ability to work on one device and later pick up the task on another device without being prompted – another example of the ways in which ecosystems make life more convenient and business more efficient.

As IT vendors get better at stitching their ecosystems together, we’ll see these advances continue. And you will be even happier to be locked into them. Images of birds and gilded cages come to mind.