Sal Auditore is a Director and senior consultant with extensive experience in advising investment firms on SimCorp Dimension’s investment management software solutions.  He recently agreed to share his experiences and lessons learned given his involvement in numerous engagements.

1. Sal, can you tell us the kinds of SimCorp Dimension engagements you’ve worked on?

I have worked on 6 SimCorp implementations at asset management firms and pension plan sponsors both in the US and Canada.  These engagements covered most of SimCorp’s modules.  The implementations involved complex account structures and all security types including OTC derivatives, bank loans, and alternative investments.

2.  Can you share the key factors for technology and operations executives who may be considering a systems conversion?

The first key factor is to identify where your operations and technology is deficient, taking into account both your current and anticipated future state requirements.  A gap analysis, which should encompass all areas of the firm, from portfolio managers and traders to back office personnel, is essential.  This holistic approach eliminates the possibility that something critical is missed.  Many firms over the years have cobbled together disparate technologies, taking a best of breed approach.  While this distributed systems architecture was often necessary or preferred, it has almost always led to data synchronization issues.  Multiple systems lead to data discrepancies, increased risk, high cost, and at times, lost investment opportunities as data issues can impede trading and lead to costly errors.

After conducting a thorough gap analysis and needs assessment, the second key factor is to identify technology that meets current and anticipated requirements.  Finding the right technology partner is a significant undertaking, and requires careful planning and committed resources.  A thorough RFP is an essential step in identifying the right partner at the right price.  My experience has shown that technology partners who can provide seamless “one stop shopping” have a significant competitive advantage.  Real time data integration and data integrity have become essential for asset managers to be successful.  Technology firms who can deliver fully integrated, robust investment modules will be the winners.  SimCorp Dimension has a fully integrated system, from front to back office investment management systems.

3.   As an independent consultant, can you share SimCorp’s competitive advantages?  Are they behind in certain areas?

SimCorp – based in Copenhagen – has grown considerably in the North American market over the past several years. They support all security types and recently released new and improved Collateral, Performance, and Reconciliation Modules.  They have also enhanced their Client Reporting module, which is a significant step since it integrates the Investment Book Of Record (IBOR) with client reports.  SimCorp now offers an ASP version for clients who do not want the hardware and maintenance costs associated with running the software in-house.  While every technology company has areas to improve, SimCorp does a good job of listening to their customers and prioritizing their enhancements accordingly.

4.   Everyone in the industry is currently focused on data management; can you share your views on SimCorp’s data structure and control environment?

No doubt, timely and accurate data is the key to every system.  From transactions to historical positions to pricing, accurate data across systems is critical.  This is why SimCorp’s integrated solution is in the industry forefront since it enables the investment manager to have a real time data repository, enabling real time reporting especially for cash and transactional data.

5.   SimCorp’s suite of solutions enables investment managers’ to select modules supporting front to back office processes.  Which component modules have been the most popular and scalable?

The Portfolio Accounting module is the most commonly used today.  The Performance, Collateral, Settlement, and Client Reporting modules are also popular and provide immediate scale for the investment managers given that they are integrated solutions.

6.  SimCorp releases upgrades two times per year.  In general, how much effort is involved for clients to upgrade?

Surprising little, as most of my clients upgrade once per year in order to keep abreast of the new changes in the marketplace.  Of course, a comprehensive project plan is essential to minimize risk.  While timing varies, typically a new release will take 1 to 3 months with minimal staff resources assuming a strong testing environment is in place.  Also, with the new ASP version, clients can have SimCorp perform the upgrade and provide test results.

7.  What are the top 3 lessons learned from your SimCorp engagements?

First of all, develop a realistic and focused project plan.  Avoid scope creep at all costs as it delays implementation and seek short-term wins to keep consumers engaged.  SimCorp offers multiple modules and different ways to integrate them thus a clear path is important to hit your target dates.  Fully test run the system so you’re certain your security firewalls can be open and data can run through.  I have seen firms chase “red herrings” when the fault resided in the firewall rules.  Ensure your hardware is sufficient to support your businesses processes now and as your firm grows and volumes escalate.

Secondly, know your data sources (benchmarks, indices, security updates, prices, corp. actions) and how it will be represented on SimCorp.  The systems jobs must be constructed accurately and timely into and out of SimCorp to ensure downstream data integrity.

Lastly, keep control of your implementation.  Set rules for data or code migration.  Remember, ultimately the responsibility for a transparent integration or conversion falls on the investment management business executives.  Active engagement and due diligence are essential business practices regardless of the size of the project.

8. How does Adeptyx add value beyond the SimCorp team or other consulting firms?

Adeptyx adds value to SimCorp engagements in many ways.  Since we are an independent consultancy, we can provide unbiased guidance and honest assessments.  Our 25 consultants average over 20 years of industry experience and thus we have been involved in hundreds of engagements.  This experience and perspective leads to a faster and more thorough analysis of issues.  Because of our expert level knowledge of the SimCorp solutions, our consultants immediately add value to any engagement.  There is no training or wasted ramp-up time.  We hit the ground running and help clients achieve their project goals more effectively and efficiently.