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Cost _Hugo_ by chenshu


  Business Model

Muriel Hugo Marcelo
 Ragnerstam Erik
Robert Pierre-Alain
    khedri sassi
1. Overview
         Sterci is a company based in Geneva, employing about 70 people,
  and which provides products and services for the banking world. The core
  business is the STP. “Straight Through Processing (STP) enables the
  entire trade process for capital markets and payment transactions to be
  conducted electronically without the need for re-keying or manual
  intervention, subject to legal and regulatory restrictions.” (c.f.

  Stercihas developed four different applications:
     1. Stelink, the Financial messaging application
     2. Steform, the application integration by mapping messages
     3. Stematch, the application for reconciliation and exception
     4. KEYdata, the market data management application

     Sterci provides also consultancy on request or on a regular basis
  depending on the client.

2. Costs
        First we are going to explain all the costs structure of the company
  as detailed as possible and then we’ll structure the data in a schema to
  provide a global view of the costs. Moreover it will be very useful to take a
  look at how a banking service-company behaves in relation to the costs.

        Sterci is a service-oriented company with continuous projects
  development. The company is investing in its highly prepared human

        The mainly costs are destined to the human resources distributed
  for the different products: Stelink, Steform Stematch, KEYdata.
  Furthermore they are Engineers who work on products development &
  support and consultants who work on implementation of projects, training
  and consultancy services. The high-skilled engineers are specialized in the
  Oracle DBMS and C, JAVA languages.

         The sensitive work at Sterci explains why is applying a good
  quantity of its economic resources in its teams. A characteristic of the
  company is employees’ mobility that falls into a necessary and variable
  cost. This is due to the nature of the company.

          After 25 years of experience Sterci may be considered with a
  maturity in its costs management, this is proved by its international
  certifications and accreditations.
  In such a company like this the most interesting costs are the variables
  because its product developments are permanent and the company is
  always attentive to the banking environment changes. The company is
ready to invest the amount that would be necessary to be up in the
      The dynamism of Sterci is high in terms of software development,
and again this is explained for the company’s sector dynamism (Banking).
The next table shows the background of the company since 1977:

                                    Sterci's background

         1977   -   Stelex Test key software on GA
         1979   -   Development of first Swift CBT
         1981   -   Bull Swift CBT on DPS6
         1984   -   Stachem Telex on VAX/VMS
         1986   -   Stachem Swift CBT
         1989   -   Swift II migration on X25
         1990   -   Stachem for Sic (Swiss Interbank Clearing)
         1991   -   Stachem for Secom (Sega Intersettle)
         1996   -   Launch of Stelink on open systems
         1997   -   e-mail & fax on Stelink
         1998   -   Stelink for Sarie (Saudi Arabia Clearing)
         1999   -   Launch of Stematch for reconciliation
         2000   -   Stachem to Stelink migration
         2001   -   Launch of Steform for ISO 15022
         2002   -   Stelink certified for Swift Net
         2003   -   Swift Net migration
         2004   -   Stelink FileAct solution
         2005   -   KEYdata successful rollout
         2006   -   Launch of Sterci service bureau
         2007   -   Solutions for SEPA

                           Table 1.1: Sterci’s background

       Looking at the table one can realize that in average each year the
company presents a product release or upgrade. Now looking at the
technology they’re using (Oracle, Java, C) and the sector they belong,
these results prove the dynamism at Sterci.
Such dynamism requires good quantities of investment on projects and all
the factors to make them a success.

      Now, Sterci take care of its partners, customers and potential
customers. For this purpose it’s permanently organizing events not only in
Geneva but also around Europe and Middle-East that are its target
markets. These events are of a wide variety from breakfasts to
conferences, forums and seminaries. The related costs to these events
may seem unimportant but for Sterci it is looked at as an investment for
future business opportunities. In fact there are two programmed events
before the end of this year; the first one is the “Finance Forum” that will
take place in Zurich at 06-07 November and another is the “SWIFT
Operations Forum SOFE” in Brussels at 10-12 December.

The table 1.2 shows the major costs of Sterci represented by nominal
names. It’s not a classification between fixed and variable costs, its
purpose is to give a general idea about the cost structure of the company.
                     COST STRUCTURE
                     Projects development
                     Products Maintenance
                     Rents (Infrastructure)
                     Servers Maintenance
                     Workstations & Laptops
                     Telephone services
                     Internet access
                     General services (electricity,
                     water, calefaction)
                     Office material
                      Table 1.2: Overview of Sterci’s costs

  Source: Sterci Company

3. Revenue:
         The main revenue of Sterci is focused on its products. They are in
  constant maintenance and development and the revenue is mostly made
  through “Software Licensing”. Once the license is granted it means for
  Sterci additional revenues because additional services are required, and of
  course Sterci has a service configuration ready to be offered.
         The Licenses consist afterwards of an annual payment for
  maintenance and corresponding IT support. Sterci Licenses are granted
  depending on the workload of the customer.

        As we said before Sterci is present in Europe and the Middle East.
  More precisely the company Licenses for IT Solutions are distributed in
  100 financial companies around 10 countries as it’s shown in the figure

    UK                                                                        Germany
 Steria Ltd                                                                  Steria GMBH


  BeLux                                                                         Italy
                                  France                                        DPCS

                                                                             Saudi Arabia

  Spain                                                                       Singapore
  Sterci                                                                         TBD

                 Switzerland, France, Germany, Italy, Luxembourg, Belgium,
                        Spain, Saudi Arabia, Singapore, Bulgaria, UK

                          Figure 1.1: Sterci’s presence in 10 countries

          When installing the products by a client, there is a phase of project
   to integrate into the client architecture, as well as formation to the new
   users. Some clients may require some special developments which are
   usually billed. Sterci also offers consulting competencies to its clients.

       Finally, when companies want demo of the products to choose between
   different solutions, they have to pay for this service.

4. Value proposition:
   Sterci has a lot of value to offer to its customers:
      - Sterci has been a player on the market for a very long time and thus
          have a lot of experience and a strong background in the field of
          financial messaging; it was one of the very first companies to offer
          solutions for the SWIFT network. The first application developed by
          SWIFT was as early as 1977, and until now several successful
          applications has been developed and delivered.
      -    Sterci’s software has full SWIFT accreditation which makes them a
          safe choice for use within the SWIFT network. Sterci’s solutions also
          comply with other regulations and standards which allow them to
          easily interoperate with any other system.
      - Sterci is certified ISO 9001 which assures that consistent business
          processes are being applied.
      - Sterci has big and famous customers like Euroclear, Clearstream,
          Lloyds TSB, Crédit Agricole, BNP Paribas, the Swiss National Bank,
          Swissquote, Union Bancaire Privée etc. which makes Sterci a trustworthy
              service provider.
  Sterci offers aggregated value to its customers using its STP chain in four
  They are explained in the next schema:

                       VALUE PROPOSITION THROUGH STP
             time to market (e.g. SWIFTNet Funds)
             new standards / new business quickly implemented
             broader – wider offer
        Risk mitigation
             controlled workflow : alerts
             reconciliation : immediate recognition of discrepency

      Cost reduction
           less exceptions
           less manual processing, less errors
           less maintenance (interface, format,…)
           flexibility / agility
           operational risk : less funds required to cover the
             optimal liquidity management : better margins
             optimize the ressources
              Source: 7th IDG Executive Bulgarian Financial IT Forum

5. Channel:
      As Sterci is a highly specialized company with clients such as banks and
  investments funds most of the channels are based on relationships with
  other companies.
      The most important channel for Sterci might be the SIBOS conference
  (SWIFT International Banking Operations Seminar) which is the world’s
  leading financial forum organized by SWIFT. This meeting is organized on
  a yearly basis by SWIFT and is a very important opportunity for companies
  working with financial messaging, such as Sterci, to build new
      Another important channel is the networks of Sterci’s partners. Sterci
  has many big and very important partners, such as IBM, Reuters and
  SWIFT, which covers main Europe as well as Middle East and Asia.
     As Sterci can offer unique services to its customers and is a very well
  known player on the market clients often contacts Sterci directly to take
  part of the service offers, this can also be regarded as a channel.

6. Value Configuration:
        Sterci offers innovation to its customers with its products through a
  systematical integration to the current customer IT Infrastructure.

  To understand how Sterci implements its products we propose a real case
  of one of its customers. Since the name of the customer is classified we
  refer to it as “STP Business Case”.

          First the situation at the customer was poorly in terms of technology
  integration and with a high degree of complexity. The next figure
  illustrates the initial situation:

                           Financial information
                              (e.g. Reuters)

                                              Interface A
    Portfolio Mgt                               Network
      System                                  Interface B          Back-

                               Manual reconciliation

                        Risk, cost, manual, time, rigid

         As shown the situation was critical impacting directly in the
  customer competitive service. In that complex situation when a query
  about financial information was needed it was difficult to respond in a
  short time. It’s now when Sterci propose is IT Solution as follows:
                        CURRENT SERVICE
                    « Query for financial information »


                      STERCI IT SOLUTION

                                   Financial information
                                      (e.g. Reuters)

                                           Data loader
 Back-office                 EAI - Steform

Now the customer IT Support looks and is more organized and robust in
time to respond to query about financial information outside its
But Sterci solution also works inside the IT platform of the customer to be
integrated with the Application Portfolio, as is shown in the next figure.
                                        Financial information
                                           (e.g. Reuters)

                                Data loader
                                  EAI -

   Portfolio Mgt
  At this point we have shown the use of two of the Sterci IT Solutions:
  Steform and KeyData. Now to interact with Swift trading it’s necessary to
  apply Stelink and to replace the manual reconciliation Stematch must be
  At the end the customer profit of the whole value proposition of Sterci on
  its four dimensions: Competitivity, Risk Mitigation, Cost Reduction and
  optimized ROI.

  Source: 7th IDG Executive Bulgarian Financial IT Forum

7. Relationship:
         Sterci establishes and maintains long term relationships with it’s
  customers through licensing and support agreements.
         For example a client that has acquired KeyData and Steform at the
  beginning becomes a potential customer to implement Stemach and
  Stelink or simply it may require some additional services already offered
  by Sterci or depending on the particular customer’s activity may require a
  customized software development.
         To maintain and to create new relationships Sterci has a HelpDesk
  to interact with the customer. Whenever a new standard or financial
  regulation is introduced Sterci through the HelpDesk offers the solution
  and in this way enforce the relationship.

8. Customers:
     Sterci has established a track record of long term relationships with its
  customers including Bank for International Settlements, Euroclear,
  Clearstream, Fortis, Dexia, Lloyds TSB, Crédit Agricole, Saudi Arabian
  Monetary Agency, Swiss National Bank, BNP Paribas, Swissquote, Union
  Bancaire Privée, Banque Privée Edmond de Rothschild.
  Now, we present the customer configuration as Sterci present it:

  -   Banks, investments funds and financial institutions. They
      represent the traditional and first clients of Sterci. They can use all the
      products of Sterci, in different configurations and the expertise of Sterci
  -   Service Bureau providers. Two kinds of Service Bureau are offered.
      The first kind is only an outsourcing the IT to Sterci itself or some
      partners out of Switzerland. Another kind (only for Stematch) is by
      outsourcing the complete reconciliation process to an external
  -   Large corporations. Recently, SWIFT offered the possibility to large
      corporations to access the SWIFT network to access directly their bank
      wherever in the world. Before they needed to gain access through a
      local bank. These companies thus have a need for an application like
      Stelink to access the SWIFT network and often of an application like
      Steform to map the messages generated by their internal system into a
      SWIFT format.

9. Partner:
        Being a complex solution provider through its applications, present
  in many countries but remaining a small company, Sterci has developed a
  vast partner’s network. We can separate these partners in three different

  Service partners:
        - Messaging partners. Sterci has partnership with major financial
           messaging infrastructures, which means it provides links to their
           systems and supports their standards. SWIFT, Telekurs (SIC) or
           Swiss Exchange are some example of these partners.
        - Data provider partners. Sterci products can easily integrate
           market data provider’s flow. Reuters and Telekurs Financial are
           part of them.
        - Service Bureau. Sterci has partnership with some service
           providers which host Sterci applications like Unicible in Lausanne
           or Simplex in London.

  Sterci is directly present for the sales in Switzerland and some other
  countries like Belgium or United Kingdom, but it can rely on some
  distributors in Europe on Steria and other partners, or Ejada in the
  Kingdom of Saudi Arabia.

  Technological partners:
  Sterci has three kind of technological partnerships:
         - Software applications that are integrated with Sterci solutions
            like the OFAC-Agent (anti money laundry) which is a filtering
            solution to comply with embargoes and reinforced regulations on
            terrorism and illegal trafficking and is directly integrated in
        -   Software applications that interact with Sterci solutions like for
        -   The technologies used by Sterci to provide performance,
            scalability and security. For this reason Sterci has partnership
            with companies like BEA, HP, IBM, Oracle or Sun.

10.     Capability:
  To provide a high quality service Sterci can count on the following
        - State of the art engineers. Sterci development teams count some
             30-40 development engineers which master databases, client-
             server architecture, 3-Tier architecture, SOA as well as
             technologies like J2EE.
        - Strong quality standards. When working with banks and other
             financial institutions, quality is more than required. Even if all
             products except Stelink are back-office, they remain key
             applications for the risk management and general functioning of
             the back-office. Sterci is certified ISO9001 and Stelink, Stematch
             and Steform are certified by SWIFT.
        - Adaptability. Sterci solutions are very adaptive and can be
             integrated in any architecture.
        - Strong background and knowledge in banking. Present in the
             business since several years, Sterci is one of the most expert
             team in its business.

       - Products developments. Sterci develop its four applications to
          integrate new functionalities as well as to comply with new
          standards. This is a very time and money consuming activity, but
          is one of the strong points of Sterci.
       - Product support and maintenance. Sterci clients need fully
          operational applications, in very complex environments. This is
          why Sterci provide a help desk which supports Sterci applications
          as well as guiding the customers with the configuration of the
          more general environment.
       - Project management. When installing Sterci application for a
          client is always an integration and configuration work. This is
          always done by Sterci project managers and can take from few
          weeks to several years depending on the size of the client, the
          complexity of the solution as well as the need for former solution
          data reintegration or not.
       - Consultancy. By being active in the messaging business since 30
          years, Sterci has accumulated a very large expertise which is
          available to its clients.
       - Training. Sterci applications and financial applications in general
          imply the end-user to be trained to use them efficiently.
       - Marketing and sales. The marketing and sales teams of Sterci
          intend to offer the best suiting solutions to current/future clients.
          After the potential client short-listed some solutions, Sterci
          provides personalized demo(s) to demonstrate the use of its
-   Management and strategy. The management of Sterci is always
    following the new solutions and new standards of the business.
    Project managers can follow on the field the needs of the
    customers. This allows Sterci to always be in phase with the
    trends of the business.

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