Service provider's Linux system, which dethroned .Net, has its big test at the weekend

The Linux based core trading system which persuaded the London Stock Exchange to take over a software company will have a dress rehearsal this weekend.

The London stock exchange liked the MillenniumIT trading platform so much it bought the company for £18m.

The core trading system replaced Tradelect, which was .Net based. MillenniumIT, which is Sri Lanka based, continues to sell to other companies and is a revenue generator in its own right.

The £18m acquisition seems a steal when you consider the stock exchange was paying Accenture £20m a year to maintain .Net based Tradelect.

Do you have to buy suppliers to get the best software? After all suppliers keep the best stuff for themselves.

300 Sri Lanka based developers are now part of the London Stock Exchange group.

It is interesting because it is an example of a business wanting something from a supplier but wanted to retain control. The first post I did in this blog was about this.

Mark Lewis, a prominent lawyer in the outsourcing sector had this to say at the time: “This is an interesting development: it is the reverse of the trend where companies that have created captives sell them off to suppliers. So the LSE has bought in an offshore captive, and will turn it into the ‘insource/outsource’ model. This was fashionable about 20 years ago. For example, Barclays Bank had a company called Barclays Computer Operations. It supplied IT and services to the Barclays group, but was also tasked with providing services to third parties. I suppose what the LSE/MilleniumIT deal shows is that IT is absolutely critical to exchanges: in other words, it is core business. So you don’t outsource it, you have it in-house. Is this the start of a trend? Could be very interesting for M&A in the sector!”

I met the man who formed MillenniumIT, Tony Weeresinghe, in May. Here is a blog post that followed that meeting.