Faster Time To Market

Evidence and data. All interviewees highlighted that it became much easier and faster to expand their organizations’ setup following the move to SimCorp’s SaaS. For investment management organizations, seizing new opportunities (or moving out of less interesting areas) faster directly impacts their bottom line. This flexibility benefited the interviewees’ organizations in different ways:

• The head of investment accounting at the investment management (pension fund) organization said: “When we wanted to add new functionality, SimCorp was able to do this single-handedly, which meant we didn’t need to undertake additional integrations. For example, we were able to easily replace our legacy order management system, which would have been a huge lift if done on-premises.”
• The director of securities services at the investment management organization said: “With SaaS, we’ve found that new issuances and business development are happening at a much faster pace.”
• The head of operations at the investment management organization said: “If we want to add geographic reach, new asset classes, new investment strategies, or connect to a new broker or interface, we can do it smoothly and easily. We have recently added a private credit strategy … and we were able to bring that live, during the project quite easily. It would have easily taken us an additional six months if we had we implemented this ourselves, on-premises.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization adds an additional asset class in Year 1, increasing AUM by 5% (equivalent to $12.5 billion). This additional asset class is added 25 days earlier than it would be to an on-premises setup.
• It builds ESG functionality in Year 2, growing AUM by 10% (equivalent to $25 billion) and is completed 50 days earlier than on an on-premises setup.
• It enters a new regional market in Year 3, also growing AUM by 10%. It does this 50 days sooner than doing so on-premises.
• The composite charges a 2% management fee and has a profit margin of 10%.

Risks. Factors that could impact the size of the benefit for organizations include:

• An organization’s ability to plan and organize on-premises expansions.
• An organization’s need to change its setup quickly.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $10.5 million.

Increased Business-User Productivity

Evidence and data. Interviewees highlighted that a lot of time was freed up for the business users of the system following the transition to SimCorp’s SaaS. This included time savings from no longer having to wait for updated data and from batch processing running faster and more smoothly. Prior to the migration to SaaS, users at the interviewees’ organizations also had to spend time dealing with security patches, currency adjustments, and upgrades. Furthermore, interviewees noted that because SimCorp’s SaaS delivered continuous innovation through automated updates, new functionality to support changing operational requirements became available to business users sooner, resulting in saved time, easier deployment, and increased productivity.

• The VP of asset management technology at an investment management firm said: “We wanted our investment managers to spend more time on the investment decision (our real IP) and not the processing of a trade. Technology is becoming far more commoditized. SimCorp’s SaaS allows me to focus on functionality rather than infrastructure.

• The director of securities services at an investment management organization explained: “On the operational side of things, it means people can finish their tasks much sooner and with more accuracy. … The great thing is that if you need to recalculate something, you don’t have to wait to do it after hours. That kind of flexibility and time saving is invaluable.”
• The head of operations at an investment management firm explained: “24/7 support of SimCorp’s SaaS is an important benefit. If our colleagues in Hong Kong have an issue, they can raise it and get the necessary support right away. That always-on support is critical for us.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• It has 150 business users in Year 1, growing to 160 in Year 2 and 170 in Year 3.

• In Year 1, each of the 150 business users save 2 hours per week.
• In Year 2, each of the 160 business users save 4 hours per week as they become more accustomed to using the tool and upgrades become more frequent.
• In Year 3, each of the 170 business users also saves 4 hours per week.
• The fully burdened hourly rate for a business user is $72.
• A conservative 75% productivity conversion factor is applied because all of the time saved may not be put back to productive use and rather enables users to avoid having to work out of hours.

Risks. Factors that could impact the size of the benefit for organizations include:

• The number of hours saved.
• The hourly rate of the business users.
• The productivity conversion rate.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.3 million.

Reduced Specialist Maintenance, Upgrade, And Future Expansion Costs

Evidence and data. One of the most important benefits that interviewees highlighted was the reduction of highly specialized maintenance, upgrade and expansion costs. Interviewees noted that when software was used on-premises, customizations were added over time to address new and specific business requirements. However, these customizations needed to be supported in-house, and only the employees who implemented the customizations could upgrade them as new versions of SimCorp’s software became available. As a result, these specialized staff formed key person dependencies. The alternative was to hire specialist third parties (e.g. consultants) to complete this work, which would also be disruptive if additional time was needed.

• The director of securities services at an investment management firm said: “Running the platform, you have to make sure the core application, database, and OS [operating system] are updated and then there is maintenance to consider on top of that. It’s a lot of effort that we now don’t have to worry about.”
• The head of investment accounting at an investment management (pension fund) organization stated: “We now have seamless annual upgrades since moving to continuous testing. We upgrade in less than a weekend and only need to do basic sanity checks on Monday morning. That is a world of difference.”
• The head of operations at an investment management organization said: “It would have been difficult to find a team with the same experience; it’s not easy to find the right skilled and talented people. That is what SimCorp’s SaaS solves for us.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• When using SimCorp on-premises, a team of three specialist FTEs were required for application maintenance, upgrades, and expansion; infrastructure maintenance; and basic maintenance. If SimCorp SaaS was not implemented, the number of specialist application maintenance employees would have grown to four in Years 2 and 3 following expected expansions into new areas.
• The average fully burdened annual salary for a specialist FTEs is $200,000.
• Note that there is still a team of three FTEs maintaining and supporting SimCorp’s SaaS solution (as detailed in the costs section). However, these FTEs are less specialized as there is no longer a need to maintain and upgrade customizations and therefore cost less.

Risks. Factors that could impact the size of the benefit for organizations include:

• The number of FTEs required for maintenance, upgrades, and expansions.
• The salary rate of the specialist FTEs.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.1 million.

Avoided On-Premises Infrastructure Costs

Evidence and data. Migrating to SimCorp’s SaaS from an on-premises setup meant the interviewees’ organizations no longer ran the related infrastructure, so there was significant cost avoided. This included hardware upgrades in the form of servers, operating systems, and any other software, including security and applications management; it also includes all related resources for maintenance and support of the technology stack. In some cases, by freeing up physical space, there were also facilities savings.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The cost of the infrastructure avoided amounts to $750,000 every year, of which $450,000 covers the server and storage hardware, operating systems, data center facilities (e.g., space, power, and cooling), and security and other application management technology.
• The composite requires three FTEs to maintain the on-premises infrastructure; the average fully burdened annual salary for an on-premises infrastructure maintenance FTE is $100,000.
• In Year 2, an additional component of infrastructure, which would have been required to support the additional capabilities added, is avoided, amounting to $37,500.
• In Year 3, if the composite was still on-premises, additional infrastructure costs of $75,000 would have been incurred to support the move into the new region.

Risks. Factors that could impact the size of the benefit for organizations include:

• Infrastructure costs (e.g., the servers may be lower cost).
• IT maintenance resource costs.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.8 million.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Reduced system risks. Several interviewees highlighted that since moving to SimCorp’s fully accountable SaaS, they received a reliable and secure service, including compliance with global and regional IT security regulations, such as the impending EU-legislated Digital Operational Resilience Act (DORA).
  
  For instance, the director of securities services at an investment management organization commented: “With SimCorp’s SaaS, you have disaster recovery and backup in case anything happens. The support delivered, with an effective governance structure and system monitoring, provides us with a holistic solution and greater confidence.”
  
  This interviewee also noted that risks were also reduced because their organization no longer had to depend on certain in-house specialist skills. There was also less reliance on other internal resources, who may not always be immediately available, to ensure the system was secure, reliable and robust, so any incidents or issues did not take as long to resolve.
• Increased access to innovation. Being on SaaS typically meant upgrades were implemented sooner, so new innovations, functionalities, and capabilities were available sooner. Several interviewees explained that they were able to implement additional capabilities; for instance, the head of investment accounting, at an investment management (pension fund) organization stated: “By adding fund administration functionality, balance data is available daily instead of monthly, so members get an updated balance value every morning. This is a better CX [customer experience].”
• Improved implementation speed compared to on-premises. The head of investment accounting, investment management (pension fund), said their organization explored the time saved introducing new applications and interfaces, stating, “What is great about SaaS vs. on-premises is that we now only need to integrate other systems and data providers once, rather than duplicate a build into many systems.”
• Decreased carbon impact. Moving from a data center setup to a cloud service reduced emissions since large cloud implementations were more efficient. The head of operations at an investment management organization said, “From a corporate sustainability perspective, it helps because we know the resources can be used more efficiently and with lower carbon impact compared to on-premises.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement SimCorp’s SaaS and later realize additional uses and business opportunities, including the following:

• Reduced reliance on internal specialized resources, which increases agility as such resources were limited and could be unavailable when it was necessary to upgrade, support, expand, or simply fix customized software, limiting the ability to make other changes quickly. Also by consolidating multiple applications platforms and processes onto one platform, operations were simplified and so could be modified and changed more easily.

• The director securities services at an investment management organization said, “What’s great is that we have the option to share the solution with other parts of the business to gain greater economies of scale.”
• The head of operations at an investment management organization stated: “We look forward to gaining additional functionality. … For instance, a real-time interface would enable us to model some special bonds.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).