The Era of Open Architecture
Dr. Jan-Carl Plagge, Head of Applied Research
In the age of connectivity and digitalization, closed networks are doomed to fail.
Today’s most innovative products and services are increasingly able to adopt and utilize capabilities from outside sources so they can enhance the final product.
In our era of connectivity and digitalization, more and more operating systems interact with one another to function. As technologies advance, the possibility of choosing external applications and modules ‘a la carte’ to incorporate them into an existing framework – a format known as Open Architecture – has become a common practice, if not the rule.
Removing proprietary constrains
The concept of Open Architecture was early developed around information technology and computing. Open Architecture has been defined here as “a type of computer hardware or software architecture that allows users access to all or parts of the architecture without any proprietary constrains. Open architecture allows adding, upgrading, modifying, and swapping components.”1
In software, the Internet and elsewhere, so-called Application Programming Interfaces, or APIs, have become a necessity. They allow systems with different protocols to communicate with each other and exchange data.
The term Open architecture is also used in financial services, referring to investment platforms that incorporate products from a wide-ranging network of providers. The idea and terminology of open architecture, in any case, is to be found in a large number of disciplines.
An inclusive approach to index creation
STOXX actively applies an open architecture approach that allows to connect with premium partners, whose data enable the design of novel projects. Thus the iSTOXX FactSet Thematic Indices based on FactSet Revere data, or the STOXX Climate Impact and Climate Awareness Indices based on CDP data, were born.
The open architecture approach allows STOXX to offer new indices in an ever-growing suite of themes and applications in investing that feed on continuously new sources of data. With innovative and high quality data available in the market place, STOXX can build and launch derived products quickly and efficiently.
By selecting partners through rigorous standards of quality, investors in STOXX’s partnered indices can enjoy the same reliability as with all other products, and equally seamless functionality.
However, should external data availability not fulfill our expectations, we set out to develop datasets in-house.
Doomed to fail
Systems that close themselves inwards and use only homegrown technologies run the risk of being impractical or uncompetitive. These systems can’t feed from other sources and impede users the benefit of connectivity and operability under different environments. They can’t optimize results. As such, they are doomed to fail sooner or later.
An evolutionary process where the best predominate
The more know-how is shared, the faster the innovation advance, as best-in-class technologies will tend to predominate. In this sense, Open Architecture facilitates the evolutionary process that is helping shape the new digital world – from computing to the ‘Internet of Things’ to financial services.
iSTOXX FactSet Thematic Indices
iSTOXX Europe Factor Indices
STOXX Climate Impact and Climate Awareness Indices
1 ‘Concise Encyclopedia of System Safety,’ Clifton A. Ericson II, Wiley.