Back Office: Time to Pay the Piper
Back Office: Time to Pay the Piper
With increasing complexity and the need for more highly automated operations, the back office will require increased innovation and continued investment.
“Despite these new demands, one back-office requirement ironically remains the same: the call to do more with less. The complexity of transactions (think: derivatives) continues to increase, and more and more of these complex transactions pass through the back office daily. Fortunately, Wall Street's back-office organizations have done an outstanding job meeting business demands, all while utilizing the same -- or fewer -- resources. Unfortunately, that recipe may be nearing the breaking point.”
Wall Street & Technology, January 25, 2010
Executive Business Summary
Have you heard the recent industry buzz about operational efficiencies in the back-office? In the last week, Wall Street & Technology Magazine published three stories on this issue. Why? Well, despite all the new demands of the past decade, the back office has remained the same.
Consider this: Many of the investment accounting systems used today were developed in the 1970’s and 1980’s but the industry has changed dramatically over the past thirty to forty years. Not only have new financial instrument types become more challenging to manage, but also regulatory requirements, such as FAS 157 have been added. Not so good for a capital markets department that has to stay on top of all this while being hobbled by a legacy infrastructure.
However, there is good news. With the advent of open architectures and by learning from the mistakes of others, Pendo Systems’ team introduced a contemporary investment accounting system, BasisPoint, which captures data at its most granular level and retains that level of detail throughout the life cycle of a transaction – and even beyond. Our solution is proven and installed at five customers including Northern Trust Corporation who utilizes BasisPoint to provide operational outsourcing to their insurance customers. In addition, are a strategic investor and Partner.
Pendo Systems, Inc. (“Pendo”) was founded in 2007 by Pamela Pecs Cytronwho has 20+ years of experience in the leadership and growth of Pendo’s competitors. The company’s product, BasisPoint, is the first Microsoft-based, cross vertical global investment accounting system to serve this market in over 15 years. Pendo has achieved much success with limited capital and is positioned to become the leading provider of mission critical, sophisticated financial services software products - along with implementation and continuing support. BasisPoint allows our clients to automate and integrate back-office accounting, reconciliation, reporting, processing and clearing. Our solution enables our clients to focus on core operations, better monitor and manage investment risk, improve operating efficiency and reduce operating costs.
Our business model is characterized by substantial, contractually recurring revenues, high operating margins, and significant cash flow. We generate revenues primarily through our high value software and services, which are sold on a long-term subscription basis and integrated into our clients' business processes. Our fees are based on asset under management. As a consequence, a significant portion of our revenue consists of subscription payments and maintenance fees, which are contractually recurring. Our pricing model is based our clients' assets under management. This recurring revenue model helps us to minimize the fluctuations in revenues and cash flows typically associated with up-front, perpetual software license revenues, and enhances our ability to manage costs.
Pendo’s current client base consists of six production customers, two of whom are third-party providers who process multiple insurance customers on the BasisPoint product.
Our goal in addressing this market is to replace the legacy technologies serviced by a few competitors, with a new and comprehensive technology to address ever-increasing industry requirements including: 1) globalization 2) new and evolving asset classes 3) on-demand access to detail data, and, 4) support of multiple lines of financial businesses with a single solution.
The demand for our solution is high. Why?
• Changes in:
o technology
o government regulations
o the economy
o investment software industry
The legacy investment accounting software developers are generally in a maintenance mode, and are not making significant functional or technical investments to their products. Because of these issues, combined with declining service levels and recent layoffs, the opportunity to replace these systems is high.
Based on this and the overall market opportunity and to achieve this growth, Pendo is seeking to raise additional capital of US $2,000,000 to $3,000,000. The proceeds of this will be used for product development, sales, marketing, and general operating expenses. Our goal is to obtain 20% market share over five years yielding over $25,000,000 per annum. EBITDA margins should be in the 20 – 30% range as most software related sunk costs have already been incurred. The current primary investors and client of Pendo will participate in the capital raise from additional equity license revenue.
http://www.pendosystems.com/
With increasing complexity and the need for more highly automated operations, the back office will require increased innovation and continued investment.
“Despite these new demands, one back-office requirement ironically remains the same: the call to do more with less. The complexity of transactions (think: derivatives) continues to increase, and more and more of these complex transactions pass through the back office daily. Fortunately, Wall Street's back-office organizations have done an outstanding job meeting business demands, all while utilizing the same -- or fewer -- resources. Unfortunately, that recipe may be nearing the breaking point.”
Wall Street & Technology, January 25, 2010
Executive Business Summary
Have you heard the recent industry buzz about operational efficiencies in the back-office? In the last week, Wall Street & Technology Magazine published three stories on this issue. Why? Well, despite all the new demands of the past decade, the back office has remained the same.
Consider this: Many of the investment accounting systems used today were developed in the 1970’s and 1980’s but the industry has changed dramatically over the past thirty to forty years. Not only have new financial instrument types become more challenging to manage, but also regulatory requirements, such as FAS 157 have been added. Not so good for a capital markets department that has to stay on top of all this while being hobbled by a legacy infrastructure.
However, there is good news. With the advent of open architectures and by learning from the mistakes of others, Pendo Systems’ team introduced a contemporary investment accounting system, BasisPoint, which captures data at its most granular level and retains that level of detail throughout the life cycle of a transaction – and even beyond. Our solution is proven and installed at five customers including Northern Trust Corporation who utilizes BasisPoint to provide operational outsourcing to their insurance customers. In addition, are a strategic investor and Partner.
Pendo Systems, Inc. (“Pendo”) was founded in 2007 by Pamela Pecs Cytronwho has 20+ years of experience in the leadership and growth of Pendo’s competitors. The company’s product, BasisPoint, is the first Microsoft-based, cross vertical global investment accounting system to serve this market in over 15 years. Pendo has achieved much success with limited capital and is positioned to become the leading provider of mission critical, sophisticated financial services software products - along with implementation and continuing support. BasisPoint allows our clients to automate and integrate back-office accounting, reconciliation, reporting, processing and clearing. Our solution enables our clients to focus on core operations, better monitor and manage investment risk, improve operating efficiency and reduce operating costs.
Our business model is characterized by substantial, contractually recurring revenues, high operating margins, and significant cash flow. We generate revenues primarily through our high value software and services, which are sold on a long-term subscription basis and integrated into our clients' business processes. Our fees are based on asset under management. As a consequence, a significant portion of our revenue consists of subscription payments and maintenance fees, which are contractually recurring. Our pricing model is based our clients' assets under management. This recurring revenue model helps us to minimize the fluctuations in revenues and cash flows typically associated with up-front, perpetual software license revenues, and enhances our ability to manage costs.
Pendo’s current client base consists of six production customers, two of whom are third-party providers who process multiple insurance customers on the BasisPoint product.
Our goal in addressing this market is to replace the legacy technologies serviced by a few competitors, with a new and comprehensive technology to address ever-increasing industry requirements including: 1) globalization 2) new and evolving asset classes 3) on-demand access to detail data, and, 4) support of multiple lines of financial businesses with a single solution.
The demand for our solution is high. Why?
• Changes in:
o technology
o government regulations
o the economy
o investment software industry
The legacy investment accounting software developers are generally in a maintenance mode, and are not making significant functional or technical investments to their products. Because of these issues, combined with declining service levels and recent layoffs, the opportunity to replace these systems is high.
Based on this and the overall market opportunity and to achieve this growth, Pendo is seeking to raise additional capital of US $2,000,000 to $3,000,000. The proceeds of this will be used for product development, sales, marketing, and general operating expenses. Our goal is to obtain 20% market share over five years yielding over $25,000,000 per annum. EBITDA margins should be in the 20 – 30% range as most software related sunk costs have already been incurred. The current primary investors and client of Pendo will participate in the capital raise from additional equity license revenue.
http://www.pendosystems.com/
Views: 5
Tags: accounting, alternative, application, back-office, banking, capital, equity, financial, funds, hedge, More…
Comment
Articles from The Glass Hammer
© 2012 Created by Jim D.
You need to be a member of The Glass Hammer Network to add comments!
Join The Glass Hammer Network