Business has picked up for the EDM vendor community at large over the last six or so months (just look at GoldenSource’s recently reported figures for example) and Simpson indicates that from November onwards Cadis has also witnessed a significant uptick in business. In fact, the vendor is on course to sign up seven new clients this quarter alone, four of which are implementations prompted by Solvency II compliance projects. As previously noted by, risk management requirements are proving to be big business for vendors.
Cadis has been actively promoting its capabilities to assist buy side firms in their compliance with the new insurance industry regulation since October via its Solvency II risk platform. Accordingly, the platform aims to provide insurers with data governance capabilities and the higher level of transparency, visibility and data quality being demanded by the regulatory community.
“We have been successful largely due to our technology approach that means we are able to implement the platform in around 12 to 14 weeks,” explains Simpson. “As Solvency II is imminent (it is due to come into force by the end of the year), firms can’t opt for solutions that take three years to implement; they don’t have the luxury of time or a huge budget.”
These implementations, however, are not purely tactical, in spite of the time and cost pressures. Simpson indicates that they are generally being kicked off as part of a wider plan to revamp firms’ operational capabilities. “Solvency II has merely accelerated the decision making process around kicking off these projects,” he says. “The approach is definitely at the enterprise, rather than divisional level, but it is being carried out in a step by step manner.”
Speakers at TSAM in London also highlighted this trend this month, with investment managers noting that “quick wins” for data management were the order of the day (check out UBS’ “building block” approach for example). Simpson notes that these initial projects from Cadis’ own client base are focused on fundamental reference data items such as securities master data and “clear goals” are evident from the outset. Breaking projects up into manageable pieces and setting clear metrics is one of the coping strategies of many firms in the current environment who are facing serious cost and regulatory pressures.
Simpson notes that this will mean that Cadis will be fairly busy for the rest of the year, although it is likely not to bag the same high number of clients each successive quarter. He is, in fact, hoping to have a total of around 20 new clients on board by the end of 2011 to ensure that the vendor is able to execute on all of these deals.
In terms of the types of clients in the pipeline thus far, he indicates that around half are from the vendor’s traditional buy side client base, whereas the other half is from the sell side, regulators, exchanges and custodian community. He attributes this interest in data management from all players in the capital markets to the new board level visibility of the function as a result of regulatory scrutiny and the introduction of new business practices in risk management.
“We are dealing with chief data officers (CDOs) and chief operations officers at the outset,” says Simpson. “But the risk and compliance functions are also becoming much more involved in the conversations as they are customers of the data management function that want to be involved.” An example of this risk management involvement in the process is the announcement of the completion of an implementation of the Cadis platform at Denmark financial services group Nykredit for its internal risk group last month.
In terms of geographic footprint, the vendor has spent the first quarter in a “period of consolidation”, says Simpson, but will soon be opening an office in Canada. Cadis is also seriously looking at the Middle East and South America for further down the line, in what he describes as a “measured fashion”.
As for competition in these markets and the vendor’s current markets, Simpson indicates that only two recent deals have involved the Cadis solution replacing a competitor’s software. The vast majority are from firms seeking to replace their in-house developed systems and Simpson notes that there is a lot of room to grow within the EDM community. “There will inevitably be new entrants to the EDM vendor market and we can already see some of the market data vendors and accounting system vendors edging into the space,” he says. “For now, there is certainly room to grow.”