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SunGard Data Systems Inc. -
Data Processing - Category Main Page
484-582-2000
680
East Swedesford Road
Wayne, PA 19087
www.sungard.com
Sales
$3
billion
SunGard Data Systems is a global leader in integrated software and
processing solutions, primarily for financial services, and are also the
pioneer and leading provider of information availability services. We are an
efficient operator of resilient information technology solutions. Our
efficiency comes from the economies of scale in serving multiple customers
on shared platforms. We support more than 20,000 customers in over 50
countries, including the world’s 50 largest financial services companies. We
currently operate our business in three segments: Investment Support
Systems, Availability Services, and Higher Education and Public Sector
Systems.
In Investment Support Systems, we primarily serve financial services
institutions by processing their investment and trading transactions. Our
investment support systems are used by customers on both the buy-side and
sell-side of the global financial services industry, as well as corporates,
energy companies and governments. The principal purpose of most of these
systems is to automate the many detailed processes associated with trading
securities, managing portfolios and accounting for investment assets. We
deliver many of our systems as an application service provider.
In Availability Services, we help information-dependent enterprises of all
types to ensure the continuity of their business by providing a portfolio of
business continuity, managed IT and professional services. We provide
information availability services for all major computing platforms, as well
as end-user workstations. We also provide managed application and
data-center outsourcing, including hosting services for a number of our
investment support systems. To service our availability services customers,
we operate more than 3,000,000 square feet of hardened, secure facilities at
over 60 locations in more than 10 countries, and a global network of
approximately 25,000 miles.
In our Higher Education and Public Sector Systems, we primarily provide
specialized enterprise resource planning and administrative solutions to
institutions of higher education, school districts and nonprofit
organizations, as well as local, state and federal governments. These
solutions include accounting, personnel, fundraising, grant and project
management, student administration and reporting for educational and
nonprofit organizations and accounting, personnel, utility billing, land
management, public safety and justice administration for governments.
Our customer base is concentrated in the financial services industry but is
widely diversified from a revenue contribution perspective. Of our more than
20,000 customers, not one accounted for more than three percent of our total
2003 revenue. We seek to establish long-term relationships with customers by
selling our products and services under multi-year contracts and by
emphasizing customer support and product quality and integration. Our
services revenue, which is largely recurring in nature, is derived from
availability services, processing services, software support and rentals,
professional services, broker/dealer fees and hardware rentals. Our services
revenue accounted for approximately 90% of our total revenue during 2003.
Our operating units are organized into groups that generally mirror the
business lines of our customers in order to facilitate product integration
and cross-selling. Individual operating units are responsible for sales and
marketing, development and customer support of their own products and
services. In conjunction with the efforts of our individual operating units,
our global account managers focus on our largest customers that use multiple
products and services. Our executive management team provides oversight and
identifies opportunities to integrate our products and services in order to
bring further operational efficiencies to our customers.
BUSINESS STRATEGY
We are focused on expanding our position as a leading provider both of
integrated software and processing solutions for financial services, higher
education and the public sector, and of availability services for a broad
base of information-dependent enterprises. In pursuit of these objectives,
we have implemented the following strategy:
- Upgrading and Enhancing Our Products and Services. We continually support,
upgrade and enhance our systems to incorporate new technology and to meet
the needs of our customers for increased operational efficiency and
resilience. We continue to introduce innovative products and services, such
as straight-through-processing solutions and Web-based technologies, that
complement and improve our established products and services and also
address the specific needs of our customers. Our enhancements and upgrades
result, in part, from active dialogue with current and prospective customers
and customer user groups, some of which are independent and others that are
sponsored by us. As we seek to take advantage of new technologies and to
improve our customers’ operational efficiency and resilience, we are careful
to preserve the functionality of our proven products and services. Our
strong, recurring revenue base allows us to continually reinvest in our
products and services. For example, in 2003, we spent 11% of revenue from
Investment Support Systems and Higher Education and Public Sector Systems on
product development.
- Acquiring Complementary Businesses. We seek acquisitions that broaden or
complement our existing products and services and strengthen our leadership
positions. We believe that our success in identifying appropriate
acquisition candidates enables us to capitalize on consolidation trends,
especially within the fragmented market for investment support systems. We
have detailed, standardized procedures for evaluating and implementing
acquisitions. Before committing to an acquisition, we devote significant
resources to due diligence and to the development of a post-acquisition
plan. First, we focus on the acquisition candidate’s ability to generate
profits by itself and then we attempt to identify and quantify potential
cost savings. We also carefully review the acquisition candidate’s potential
impact on our financial results and balance sheet. Generally, we seek to
make acquisitions that will be neutral or positive to our earnings within
the first twelve months.
- Providing Straight-Through Processing. Historically, processing
investments and trades could not be completed in real-time. For example,
trades could be executed and partially processed throughout the trading day,
but the final processing, including confirmations, clearing and settlement,
would be completed overnight or over the course of several days in what was
called a batch process, often with manual intervention. Our products and
services eliminate the need for most batch processes and manual
intervention, which facilitates real-time processing of investment and
trading activity. We also focus on integrating our solutions with each other
and with other vendors’ systems. For example, we build interfaces that allow
multiple systems to exchange data without manual intervention. As a result,
we can provide straight-through-processing solutions, not only within a
single customer’s operations, but also across multiple firms using the
SunGard Transaction Network. Using our real-time, integrated solutions and
SunGard Transaction Network, members of the investment community can
automate not only the investment process for trading in equities, bonds,
money markets, commercial paper, certificates of deposit and mutual funds,
but also the routing of orders between investors, brokers, issuers and
mutual fund companies. All of these solutions help our customers to lower
costs, reduce errors and provide better service to their customers.
- Building Strong Customer Relationships. We believe that one of the keys to
our success is our focus on developing close, well-managed, long-term
relationships with our customers. Our operating units are focused on key
customer types, which facilitates integration and cross-selling of our
products. We not only focus on meeting our existing customers’ needs, but
also on attracting and retaining new customers and continually improving
customer satisfaction. We believe our operational approach helps us attract
and retain customers and increases customers’ use of our products and
services.
- Maintaining Our Financial Strength. We strive to generate a high level of
recurring revenue and cash flow, maintain a conservative capital structure
and employ disciplined financial policies. We believe this fiscal strategy
has been a major factor contributing to our long-term financial strength and
viability. This enables us to fund the growth of our business by continually
developing and acquiring new products and provides us a competitive
advantage in growing, serving and retaining our substantial customer base.
To increase our financial flexibility, we issued $500 million in unsecured
senior notes in January 2004.
- Promoting an Entrepreneurial Culture. We believe that one of our strongest
competitive strengths is our entrepreneurial culture. We intend to continue
to foster this culture. About half of our executive officers and many other
employees joined us as a result of acquisitions. Our operating unit
management structure is central to expanding our business both through
internal development and through identifying potential acquisitions. Our
compensation structure actively encourages our employees to be
entrepreneurial and to emphasize customer satisfaction. Our executive
officers have been with us for an average of twelve and a half years.
BUSINESS SEGMENT OVERVIEW
Investment Support Systems
In Investment Support Systems, we primarily serve financial services
institutions through a broad range of complementary software solutions that
process their investment and trading transactions. These solutions are
grouped into the following business areas: brokerage and trading systems;
wealth management systems; treasury and risk management systems; investment
management systems; and benefit, insurance and investor accounting systems.
The principal purpose of most of these systems is to automate the many
detailed processes associated with trading securities, managing portfolios
and accounting for investment assets.
Our investment support systems are used by customers on both the buy-side
and sell-side of the global financial services industry, as well as
corporates, energy companies and governments. Buy-side customers include
banks, investment managers, mutual funds, investment advisors, insurance
companies, trustees, benefit plan administrators and others involved in
buying, holding and managing investments. Sell-side customers include
brokers, exchange members, depositaries, custodians, transfer agents and
others involved in selling, brokering and trading investments. Approximately
five million trades per day are processed by our investment support systems
at some point in the trade cycle.
We deliver many of our investment support systems as an application service
provider (ASP). We provide investment support systems on an ASP basis
primarily from our data centers located throughout North America and Europe.
We also deliver some of our investment support systems by licensing the
software to customers for use on their own computers.
Brokerage and Trading Systems
Our brokerage and trading systems provide comprehensive processing of
equities, fixed-income securities, and exchange-traded futures, options and
other instruments. Used primarily by broker/dealers and other sell-side
customers, these systems address all important facets of securities
transaction processing, including order routing, trading support, execution
and clearing, position keeping, regulatory and tax compliance and reporting,
and investment accounting and recordkeeping. Some of these systems provide
full front- to back-office support, while others are focused primarily on
one or the other.
We own four registered brokers that facilitate enhanced straight-through
processing by providing the following services using our brokerage and
trading systems: (1) an electronic communications network (ECN) that is used
by brokerage firms and institutional investors to trade Nasdaq and
exchange-listed securities anonymously; (2) a clearing broker that provides
order routing, execution and clearing for professional traders; (3) a
full-service equities trading desk for institutional investors; and (4) a
New York Stock Exchange member that uses a proprietary wireless system to
execute trades for institutional investors.
We link our investment support systems and hosting data centers through the
SunGard Transaction Network. Using this network, one of our registered
brokers offers an online, straight-
through-processing service that automates the investment process for trading
equities, bonds, money markets, commercial paper, certificates of deposit
and mutual funds. This service automatically routes orders and confirmations
between investors, brokers, issuers and mutual fund companies that are
linked to the network. We market these services to users of both our
investment support systems and our business partners’ systems. Through
initiatives like the SunGard Transaction Network, we aim to link all of
these systems both within and across institutions to achieve
straight-through processing.
Wealth Management Systems
Our wealth management systems include a range of software solutions used
primarily by bank trust departments to manage and service the portfolios of
high net worth individuals. We offer an integrated wealth management
application suite that provides straight-through processing for global asset
management firms and includes functionality for portfolio management and
performance measurement, trade order management, regulatory and tax
compliance, preparation of customer statements, and handling of other
customer services. In addition, we provide turnkey, outsourced wealth
management services to banks, registered investment advisors and other
financial services organizations.
Several of our wealth management systems are used to automate the
investment, operations and administrative areas unique to the bank trust
business, including cash and portfolio management, payment of trust
expenses, retiree benefits and beneficiary distributions, and preparation of
tax returns for taxable trusts. Other wealth management systems are used to
automate the functions associated with the worldwide custody and safekeeping
of invested assets, such as trade settlement, investment income collection,
tax reclamation, foreign exchange and reconciliation of depositary and
sub-custodian positions.
We also provide a range of solutions used by brokers, banks and insurance
companies to support front-office wealth management activities. For example,
we provide software solutions that are used by retail brokers in their
advisory role to track customer contacts and manage customer portfolios. We
also provide systems that enable our customers to provide online brokerage
services to their own customers. Our other products are used by investment
advisors to identify new prospects, create customer profiles, analyze
customer needs, assess customer suitability, monitor compliance and
cross-sell products. We also provide information management systems that are
used by brokers and investment professionals to make informed investment
decisions based on timely, dependable market data from exchanges and leading
industry providers worldwide. In addition, we offer historical market and
reference data and technology to perform trading analytics, quantitative
modeling, and portfolio processing.
We also provide systems that automate the functions associated with
worldwide securities lending activities and facilitate straight-through
processing by providing a single, centralized order-routing network that
links lenders and borrowers of securities.
Treasury and Risk Management Systems
We provide a range of software solutions that automate risk management and
trading operations for capital markets globally. Generally, these products
are used by traders and market makers of fixed income securities, foreign
exchange contracts, equities and their related derivatives such as interest
rate and credit derivatives, convertible bonds, foreign exchange options and
equity options. These front- to back-office systems help customers price and
analyze trades, manage trading and related risks across
the institution, process and account for trading activities, and determine
hedging strategies to manage risk. These systems also help customers monitor
compliance with their own trading policies, limits and internal controls and
with regulations.
We also provide a comprehensive solution for global banks to manage the
credit risk associated with their worldwide trading activities. This
solution allows users to consolidate credit exposures, optimize collateral
management, and monitor compliance with capital requirements and regulations
such as Basel II. We also provide to banks, across their retail and
wholesale operations, asset and liability management software with
comprehensive risk management and performance measurement functionality.
Our treasury systems are used by the treasury departments of corporate and
government entities worldwide to manage their cash, debt and investment
portfolios. We also provide professional services that focus on application
implementation and integration of these treasury systems. In addition, we
offer a Web-based service that provides a single point of access via the
Internet to enable corporate treasurers to manage geographically dispersed
treasury operations more efficiently.
We provide software systems that help utilities, power generating companies
and energy traders, marketers and distribution companies to manage physical
and financial trading activities. These systems provide trading support,
market and credit risk management, trade processing, power scheduling and
accounting functions. We also provide professional services including
software development services to the energy industry.
We also provide exception management and reporting systems to financial
services institutions. These systems automatically detect and repair errors
that occur when transactions move between systems, which helps prevent
exceptions in straight-through processing.
We also offer software solutions that provide intelligent message
transformation, content-based routing, and data validation and enrichment,
primarily for payments and post-trade messages. This makes it easier for
financial services firms to integrate their financial messaging business
processes.
Investment Management Systems
Our investment management systems include a range of software solutions used
primarily by buy-side customers to maintain the books of record for all
types of institutional investment portfolios, such as those managed by
institutional asset managers, mutual funds, hedge funds, fund of funds,
banks, prime brokers and third party administrators. We offer an integrated
investment management application suite that provides straight-through
processing for investment transactions, with comprehensive front- to
back-office functionality including trade order management, execution
support, portfolio management, compliance checking, accounting and
reporting.
Our investment management systems are used to track investment activities
including purchases and sales of securities, value portfolios using
securities prices from various market sources, provide performance
measurement and attribution analyses, perform complex accounting
calculations and general ledger postings, and generate a variety of
accounting, audit, tax and regulatory reports. In addition, some of these
systems are used by investment advisors and other portfolio managers to
analyze large investment portfolios using various models to assist with
investment strategy and management decisions. We also provide software
solutions that address the specialized accounting needs of domestic and
offshore hedge funds and funds of funds.
Benefit, Insurance and Investor Accounting Systems
Our employee benefit plan systems automate the participant accounting
activities associated with defined-contribution retirement plans, such as
401(k) plans. These systems maintain the books of record for each
participant’s share of the cash and securities in the plan, monitor
compliance with government regulations and plan restrictions, process cash
contributions and benefit payments, and produce tax reports for plan
sponsors and participants. As a complement to these systems, we offer
document generation systems for creating retirement plan documents and
forms, and software for generating annual government filings and returns by
employee benefit plans.
We also provide to the global insurance industry integrated marketing and
policy administration solutions for both insurance agencies and home
offices, supporting individual and group insurance, annuity, investment
contract and pension policy administration. Insurance solutions include
client management, financial analysis, retirement and estate planning, and
policy illustrations.
Our investor accounting systems automate the transfer agent process for
stock, bond and mutual fund issues. These systems maintain shareholder and
bondholder positions, process new accounts, record purchases and sales,
process cash deposits and disbursements, process dividend and interest
distributions, generate proxy materials, tabulate votes, and produce tax
reports and periodic shareholder and bondholder statements.
We provide imaging, document management and enterprise-wide workflow
solutions for the financial services and insurance industries.
Availability Services
In Availability Services, we help information-dependent enterprises of all
types to ensure the continuity of their business by providing a variety of
solutions that help them maintain access to their critical data and systems.
We engineer information availability solutions by building upon our
extensive technology infrastructure and leveraging our industry-leading
experience and know-how. Our experts work with customers to tailor
information availability solutions that are unique to their requirements.
Customers may choose different or multiple levels of service from our
portfolio of solutions encompassing traditional business continuity
services, managed IT services and consultative professional services. The
selection of information availability solutions is based on a variety of
factors including the customer’s system configuration, required flexibility
and desired degree of control over the solution. Because we are vendor
neutral, we focus on each customer’s individual circumstances and provide
solutions for all major computing platforms with significant objectivity and
flexibility.
The global, networked economy is highly information dependent, and data is a
core asset for almost every business. Any inability to access critical data
and systems—whether due to a natural disaster, fire, power failure, security
breach, terrorist attack or other emergency—can have immediate and severe
financial repercussions and tarnish reputations. That is why, for the most
important business processes, customers are shifting their focus from
solutions that help them recover from outages to solutions that minimize the
potential for interruptions in the first place. To address this drive for
maximum operational resilience, we design and implement “high-availability”
solutions that help maintain the highest levels of access to data and
systems. For less time-sensitive applications, we maintain a comprehensive
array of traditional business continuity solutions that allow customers to
recover from unplanned service interruptions. Since our inception, we have
had a 100% success rate supporting customer recoveries.
High-availability solutions encompass a combination of dedicated network,
servers and storage, as needed, to be used exclusively by one customer. The
highest level solution involves a dual production environment, where two
geographically separated systems process simultaneously the same data to
provide complete redundancy. Additional high-availability solutions include
load balancing—the shifting of processing among multiple servers on a
network to mitigate the risk of a single server failing, and mirroring—the
automated, periodic duplication of data on a secondary storage device for
use if the primary copy is inaccessible.
Traditional business continuity options allow customers to restore
processing operations within a short period after an interruption, usually
from several hours to two days. We deliver these services in a
cost-effective manner using shared resources that take significant advantage
of our economies of scale. Our traditional business continuity services
account for the majority of our availability services revenue.
We also provide end-user recovery offerings that allow customers to relocate
other important business processes faced with disruption. These solutions
range from generic office space equipped with workstations, telephones and
other office equipment, to dedicated trading rooms that are also supplied
with the market data feeds and specialized network services needed to
support trading operations.
Our availability services infrastructure is comprehensive. To meet
customers’ demands, we operate more than 3,000,000 square feet of hardened,
secure facilities at more than 60 locations in over 10 countries, connected
by a communications network comprised of approximately 25,000 miles of
leased communications lines used exclusively by us and our customers. This
infrastructure encompasses computers, networks, data centers and end-user
space that we actively manage using monitoring and reporting tools. Our
facilities provide secure sites to locate hardware and protect applications
and data, and our dedicated network allows quick switchovers from customer
facilities to ours. Using this infrastructure, we provide managed IT
services averaging 99.99% availability.
Our information availability facilities include a variety of sizes and types
of processing and end-user facilities, most of which are in major
metropolitan areas in North America and Europe. Our MegaCenters, which house
processing facilities for multiple computing platforms as well as end-user
facilities, provide customers with an extensive choice of resources at a
single location. We believe that our Philadelphia MegaCenter is the world’s
largest commercial facility dedicated to information availability services,
and that our London Technology Centre is the largest such facility in
Europe. We also have a fleet of mobile recovery units—trailers containing
processing and end-user capacity that can be rapidly deployed to a customer
location and made operational within an hour of arrival.
We proactively manage our availability services resources. To accommodate
the growth in our customer base, we open new facilities, expand existing
facilities and upgrade our infrastructure to offer the most advanced
platforms and technologies generally used by our customers. In addition, we
sometimes consolidate facilities to increase platform options at a
MegaCenter or to achieve greater overall efficiencies.
We also provide information availability consulting services and planning
software. Our consultants are experts who leverage proven methodologies to
deliver a full suite of services including continuity program management,
information security and availability engineering services. Our contingency
planning software integrates business analysis and testing tools with
automated plan development and reporting features. We also design testing
and maintenance programs to verify that customers’ contingency plans reflect
their most current operational conditions.
Higher Education and Public Sector Systems
In Higher Education and Public Sector Systems, we primarily provide
specialized enterprise resource planning and administrative solutions to
institutions of higher education, school districts and other nonprofit
organizations, as well as local, state and federal governments. These
solutions include accounting, personnel, fundraising, grant and project
management, student administration and reporting for educational and
nonprofit organizations and accounting, personnel, utility billing, land
management, public safety and justice administration for governments. We
also provide professional services to several UK public sector agencies.
Since 1995, we have been acquiring companies and developing solutions for
this segment. Three recent acquisitions substantially increased our presence
in this segment.
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