Several years ago, SimCorp set a clear goal to transition from a traditional software company to a service provider. This shift led to the creation of SimCorp ONE earlier this year, an integrated one-stop-shop front to back platform for investment managers.
But all this didn’t happen overnight. It started out with standard solutions and business processes, which then evolved to include APIs and platform integration standards. Over time, SimCorp expanded its services to include business offerings such as Accounting, Investment Operations, and Data Management.
The emphasis is squarely on data. High-quality, well-structured market data is crucial for any investment management firm, whether it’s for compliance, performance management, risk management, accounting, or settlement. Without effective systems to manage data, firms risk becoming entangled in inefficient, point-to-point interfaces that lack quality controls, audit trails, and capabilities for data comparison and correction.
The data landscape is becoming increasingly complex, especially with the growing demand for Environmental, Social, and Governance (ESG) information from multiple sources. This complexity requires strong data validation and integration mechanisms and firms are looking for ways to transform data in a way that sets them apart from their competitors. Having a best-in-class data strategy set firms apart.
The process of importing data into SimCorp is becoming more intricate due to several factors: moving from using multiple vendors to a single one, which has improved the quality of data from each provider; the necessity of ongoing data validation; and changes in import files as vendors are acquired.
There’s also a shift toward data democratization, reducing reliance on IT for building infrastructure. Clients want to manage their own data or use tools to gain faster access to new information. This includes an API-first approach, a modern web user interface, AI-powered data exploration with tools like Copilot, and greater digital engagement.
In this blog, we will explore some of these challenges, look how SimCorp has streamlined the processes involved in data acquisition and processing, and at the steps they are taking to reduce the time needed to implement changes while making their offerings more visible. We will also look into what SimCorp plans to offer in the future.
Introducing the SIM model
Importing data into SimCorp has often been a complex undertaking, requiring extensive knowledge of the underlying SimCorp data model. Given the flexibility of SimCorp, the approach in the past was to take whatever data that systems can provide. To turn this around, and to facilitate easier integration, SimCorp has introduced what they call the “SimCorp Integration Model” or in short “SIM”.
SIM guides the user to help understand the workings of SimCorp, identifying relevant entities in SimCorp, and offering detailed information about each entity’s usage, relevant data attributes, meanings, data types, lengths, and associated domain or values. SIM comes with reference documentation, a complete API universe, technical specifications, example code, and swagger documentation.
The main objective of SIM is to support SimCorp's open platform, allowing users to integrate their data into SimCorp by themselves. This approach aims to enable users to take advantage of changes from SimCorp as well as adapt a more standardized approach rather than customized configuration or development if you will.
We see this is a positive move from SimCorp. There has long been a need to simplify importing data into SimCorp and this is a step in the right direction. While this is not a silver bullet, it certainly helps understand SimCorp better in cases where the data provider can provide data in SIM format. Non-SIM formats still require working with Data Format Setups, Data Imports and the Communication Server, which are fully supported by SimCorp.
SimCorp’s Data Marketplace
The SimCorp Data Marketplace is a feature hosted on the SIM site and lists 3rd party solutions offered by SimCorp’s partners, organized by data category. It indicates which data products have been integrated at other customers and which come with standard integration via SIM. The idea of the Marketplace is a platform for SimCorp clients to discover available data and initiate discussions with data vendors directly. This feature provides better visibility of solutions and easier access to 3rd parties.
This is a smart way to expand SimCorp’s partner solutions to a wider audience and for clients to better evaluate if a solution fits their needs or is even worth exploring in more detail. While these provide easier integration with the SimCorp platform, most of these solutions are not plug and play and still require effort to implement and test on your data.
SimCorp’s Data Management Services
Historically SimCorp clients have had to build their own solutions to data vendors, often with a partial solution provided during the implementation, but sometime from scratch. This resulted in elongated implementation projects, risks of errors and more work when new asset types got introduced. Further, these types of integrations are often costly and provide some risk for clients to maintain over time.
The industry has largely moved towards centralized data management systems like Enterprise Data Management (EDM), which validate and standardize data into "golden copies," ensuring consistent, normalized and reliable data. Similarly, regulatory rules often require comparing multiple market price sources. The complexity of security master data, especially with complex financial products, highlights the need for strong data management solutions.
Using the SIM tools, SimCorp has built out their own EDM solution to support delivery of essential market data such as security master data, prices, FX rates, indices, and corporate actions into SimCorp One. This solution has been packaged as a service and covers acquiring, validating, and transforming data into the SIM format. SimCorp offers two Data Management Solutions:
a traditional SaaS-delivered EDM solution, and
a full-service data management offering, where SimCorp manages the entire process for the client.
The SaaS-delivered solution includes execution of the processes, monitoring of inbound and outbound data from a technical perspective, and changes to the data structure and model from data vendors. This provides a cloud-based solution where the daily operation and exception handling is aided by SimCorp, but owned and run by the client, while maintaining the integration is done by SimCorp. Note that adding new asset types are defined within an SLA. Simcorp currently has 25 clients using the SaaS-delivered solution.
The full-service solution on the other hand provides clients with a service offering that includes the management of exception workflows and the expertise to handle changes to client-specific data structures. This service allows the clients to have SimCorp do the operational needs to get their data processed and ready to be used by downstream processes and investor outputs. To provide visibility, SimCorp provides a dashboard that shows data exceptions, their sources, and resolution times allowing clients to monitor progress and request additional data scrubbing. Simcorp currently has 19 clients using the full-service solution.
The strength of this service lies in its native EDM solution, specifically designed for SimCorp One. It continuously incorporates vendor changes and updates to ensure reliable data delivery. As more clients use the service, its coverage becomes more robust, leading to improved data quality and consistency. This approach not only enhances service quality but also helps SimCorp stay competitive.
Moreover, as mentioned in the beginning, this strategy supports their long-term objective of transitioning from a traditional software company to one that is focused on the functional needs, the data processing, technology and the service-oriented business. This transformation enables them to better meet the evolving needs of their clients and maintain a competitive edge in the industry. By doing this their goal is to reduce the implementation time for new clients, as previously mentioned, while increasing efficiency and client satisfaction.
The challenge is that the solution can become complex and difficult to modify, potentially affecting other clients. While costs can be managed by leveraging scale, many SimCorp clients have customized setups, making it challenging to adapt a service like this. Additionally, there are often numerous free codes that need to be considered for downstream reporting. Although the service can accommodate these needs, it still requires a custom build that the client must maintain and test.
SimCorp Enhancements: Data Insight
The SimCorp development team continues to build out the technology stack. They are working on creating more effective methods to make data easily accessible to users by running a test project to determine how they can simplify data access for users without requiring them to write code. They are improving the data architecture with strategies like data mesh and data fabric and are using tools like Snowflake to manage it. Simcorp knows that data access is essential for all users with a valid means to get to data is key.
One objective for SimCorp is to use generative AI to simplify data access for all users. For instance, users could employ a chat function to explore data from various sources like Snowflake or SimCorp One. With the help of Copilot, they can query data and receive results in different formats, such as pie charts, diagrams, or lists. Users can then further explore the data by expanding, narrowing, or drilling down into the results.
Additionally, AI is being utilized to assist users and integrators by generating code for specific API queries, which aids in building integrations with SimCorp.
One of the significant challenges they face is the high cost of AI and cloud data storage. Therefore, they are focused on creating cost-effective solutions that can scale as needed.
This is a great use-case of applying AI on SimCorp client’s own data, amalgamated with externally sourced data and SimCorp’s partnership with Microsoft Copilot is exciting to see coming in the near future. We believe this is the future way of interacting with data and technology in the future. And the future is already here.
Data as a Service
From our perspective, this is an excellent alternative to managing data on your own or relying on external providers, especially if you're frequently encountering challenges with data management. This service has evolved significantly over the years and has become much more mature. If you’re not facing such issues, it might be worth waiting.
If you’re considering SimCorp’s Data Management solution, reach out to us! We can offer deeper insights, help you assess how well it fits your organization, provide references, and create a cost-benefit analysis tailored to your needs.
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