1. We’re now on solid ground in North America
When I joined in 2012 we made it a priority to make ground in North America. We’d established ourselves in other markets, and now needed to get a larger share of the world’s largest asset management market. Entering such a huge market is never easy, and it wasn’t any different for us. We had made some progress before I joined and for a while it looked good.
After a year it became clear that a change was needed and we decided to make a significant change in the leadership. We found the right leader and then invested in building the right team and adding new functionality specific for the North American market. I believe we are now at a very mature phase. We’ve had firms such as Fannie Mae select and go live on SimCorp Dimension during this time and added other clients such as Franklin Templeton. So the outlook is certainly rosy, but our market share is still only 5% in the region, so we are still putting a lot of effort into exploiting the huge potential we have in North America.
What I have learned here is that establishing the right team is vital from the get-go. And that’s not just the role of Managing Director, but also key positions throughout the organization. When you enter a market you need local talent to execute your strategy. This requires a lot of trust in the people, so making sure you get the right people in the right positions is an investment that pays off in the long term.
2. We’ve managed to grow CAGR by 8.1% in 5 years
Growing our customer-base is of course vital, but we have also worked hard to become the trusted business partner to our 200 SimCorp Dimension and SimCorp Coric clients.
It is a declared target to grow our revenue double-digit every year, and we have done that three years in a row now. Along with this revenue growth, we’ve also remained committed to investing 20% of revenue into R&D. This is something that is strategically important to us and which makes me proud. We operate in a constantly changing industry, and if vendors aren’t investing in their solutions, it will impact the client’s bottom line later down the road.
What I have learned is that running a publicly listed company is a delicate balancing act. On the one hand, you have to satisfy your investors every quarter, while at the same time making the longer term plays that can take years to pay off or develop (especially in an industry with long sales processes). I think it’s a balance that is healthy for a company as it keeps us focused and makes sure we prioritize our efforts.
3. The importance of technology in financial services is only going to grow
Since I joined SimCorp, there has been a fantastic boom in FinTech and RegTech startups. While the majority aren't targeting the buy-side industry yet, I think it is really inspiring to see all the innovation that is going on. It has done two things. One, inspire companies like us to look at the new technologies coming out and adopt them where possible. Two, it is showing the financial services industry as a whole just how important and valuable your technology foundation is.
When I joined SimCorp I was seeing a few companies with the same business model and others that were not growing anymore. I expected that to generate a wave of consolidation of the legacy systems and only leave a few strong vendors of modern systems standing. I think that this has largely come true with for example, SS&C buying up many of the legacy system vendors and then leaving them to die while the customers find ways to migrate to modern platforms.
I’m proud to be part of a team that sees our customers as partners and where we are investing for the future. The role of technology is only growing, and I think it’s fantastic to be in a company that is having an impact in this area and leading the way for asset manager to digitalize their business operations.
4. We operate in an extremely complex industry
With my educational background in Computer Science and stints at Oracle and Microsoft, I have gained a good understanding of technology, but when I joined SimCorp I underwent a steep learning curve to get up-to-date with how the buy-side investment management industry operates.
Having spent a lot of time speaking with industry and SimCorp experts, as well as clients and potential clients around the world, I quickly found out that the complexity faced by buy-side firms related to regulation, data, reporting, new instruments, etc. was enormous. Since then, this complexity has only grown. Again, this is where the role of technology can play an increasingly important role in easing the burden of this complexity.
This is where understanding your customer is really important. We are not an asset manager, but we need to really understand their pains and challenges so that we can also offer them solutions in the quickest possible way. Today, it is fun to be able to talk to the customers about their business as well as technology challenges.
5. Asset managers need to start consolidating their platforms
Five years ago, SimCorp didn’t have a state-of-the-art front office offering. That has changed now. We have worked extremely hard to build a world-class front office offering that ties in seamlessly with the rest of the system to form a front-to-back solution that is unmatched by any other vendor in the market.
While our tagline is 'One system for a complex world', we understand that it is not the reality for all and that it takes time. Firms can't rip and replace their entire system in one go, so they start with one section, and buy-in to the concept of consolidating down to as few systems as possible.
Other industries, like retail, logistics and manufacturing where complexity has been rising and where margins are thin, have been implementing integrated IT systems for years to deal with this complexity and streamline their operations. My prediction is that in the next five years the increasing complexity and cost pressure will see the investment management industry also move towards integrated solutions rather than best of breed systems.
I look forward to being part of that transition during the next five years and I think SimCorp will stand even stronger when I write my ten year anniversary blog.