SEI Scales Up

SEI implemented Lightspeed Data Solutions technology to support its ambitious growth strategy.

Companies often develop an aggressive growth strategy only to find that their technology does not support the plan. That was certainly the case with Oaks, PA-based SEI. When SEI decided to boost its asset servicing and investment operations outsourcing business, it partnered with Lightspeed Data Solutions. Headquartered in Los Angeles, CA, Lightspeed Data Solutions provided SEI with a customized productivity-improving solution through a highly collaborative model in a short time frame.  

Growing Pains

SEI is a leading global provider of investment processing, fund processing and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors and ultra-high-net-worth families create and manage wealth. As of September 30, 2013, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $529 billion in mutual fund and pooled or separately managed assets, including $219 billion in assets under management and $310 billion in client assets under administration.  

Among its broad range of service offerings, SEI provides asset administration and investment processing outsourcing solutions for mutual funds, hedge funds, private equity funds, exchange-traded funds, collective trusts and separately-managed account programs. These solutions help investment managers keep pace with industry requirements, achieve efficiencies, reduce business risk and focus on their core business strategies. Clients include investment managers, banks and investment companies located in the U.S. as well as alternative investment managers worldwide.  

SEI had a strategic plan to grow its investment management client base significantly, but the company’s proprietary post-trade matching and reconciliation system was not scalable enough to support the anticipated increase in volume.  

“The system was heavily customized to support SEI’s way of processing,” explains Holly Miller, SEI’s Managing Director of Middle Office Services. “Moreover, SEI did not have the human resources to devote to developing new software internally.”  

A Tall Order

SEI began looking for a new solution. The company wanted to partner with a vendor that could provide robust, standardized, scalable applications, integrate them with the company’s other solutions and offer a post-implementation maintenance service. The solution had to fulfill three key criteria.  

The first was T+1 readiness. The financial markets are globalized, and settlement times have become compressed. To keep pace, the application had to be able to communicate, match and settle trades at lightning speed. Specifically, it had to be T+1 ready in case the U.S. markets leapfrogged Europe’s settlement times.  

Second, the application had to support both fully automated and legacy processing. SEI is a service company, so it must accommodate clients’ current capabilities and infrastructure. The new solution had to be based on newer technology with straight through processing capabilities. But during a transition period, the technology had to continue to support clients that could not migrate to SWIFT technology. For example, some clients still communicate trades via fax and custom trade notifications.

Third, the vendor had to ensure a short implementation time. The timeline for this project was under six months.

The Vendor Selection Process

SEI produced a short list of vendor applications. After conducting several vendor meetings, SEI chose Lightspeed Data Solutions based on the following:  

• Company track record and stability. Lightspeed Data Solutions already had an established relationship with Holly Miller. It had successfully implemented the solution in a short period of time at another firm that SEI was familiar with. Importantly, SEI wanted to partner with a company that would be around for the long haul. Lightspeed Data Solutions passed a rigorous vendor risk process including solvency, credit and reference checking as well as an insurance and risk management plan evaluation.  
• Responsiveness, agility and flexibility. Lightspeed Data Solutions prides itself on its willingness to customize and make changes. It agreed to work with SEI to customize the product and make updates based on feedback from SEI. Further, the Trade Data Management System (TDMS) was developed so clients can customize the way they communicate with their custodians by using various notification packages, data formats and outputs. This approach is not only easier and faster for clients, but it also gives Lightspeed Data Solutions time to focus on system improvements that ultimately benefit all users.  
• Ability to grow with SEI and upgrade the system. Lightspeed Data Solutions demonstrated that it could add functionality in future releases. It is expanding the international messaging/SWIFT/ISO 20022 capabilities. Since the initial implementation, Lightspeed Data Solutions and SEI have successfully integrated TDMS with SEI’s customer dashboard using a newly developed TDMS API. Lightspeed Data Solutions is looking forward to developing interfaces with other products in an effort to continue optimizing and improving SEI’s operational outsourcing solutions.  
• Feature/functionality and ease of use. Lightspeed Data Solutions offers an intuitive interface with fewer clicks, and it features a superior access archive/historical archive of data.  
• Compatibility and scalability. The solution can interface with other products including SEI’s portfolio accounting package. If SEI switches its package, an interface can be developed quickly. Importantly, it is scalable so SEI is able to service far more accounts.

The Implementation

The implementation process went smoothly and operational risk was minimized thanks to Lightspeed Data Solutions’ proven project management structure. The company is committed to providing as much support as is necessary during the process. To this end, it provided SEI with weekly project management updates to keep the project on schedule and ensure SEI’s expectations were met.  

“Normally it could take up to a year to implement a project like this,” says Miller, “but we accomplished it in less than six months from the time we signed the contract to go live.”

The Benefits

Since implementing Lightspeed Data Solutions’ product, SEI has added thousands of client accounts. Moreover, it delivered a very high ROI quickly through significantly increased efficiency. For example, SEI increased its trade volume by 126% without having to add headcount, and U.S. dollar value has increased by 119%. In terms of ROI, SEI would have needed to double back office headcount to achieve the growth they have accomplished.  

As far as Miller is concerned, partnering with Lightspeed Data Solutions has yielded clear benefits for SEI.  

“Working with Lightspeed Data Solutions is not a typical client/vendor relationship; it is more of a long-term partnership,” she says. “The TDMS product provides SEI with an integrated and scalable environment that has helped us increase automation and improve efficiency. We value the fact that Lightspeed Data Solutions comes up with ideas that are mutually beneficial to its own and its clients’ businesses.”

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