IBS Journal September 2015
So FIS has succeeded in purchasing Sungard where it failed a couple of years ago with Misys.
It was always on the cards after Sungard filed for an IPO following a troubled decade in private equity ownership (reflected in Sungard’s net debt of $4.16 bil- lion). Word on the street was that another acquisitive heavyweight, SS&C, was also a suitor for a while.
The purchase, the largest in FIS’s history, comes with significant challenges. Sungard was the less than impressive sum of many parts and the attempts over the years to rationalise and instill a one-company culture and mode of operation had achieved little. Much of the theory was fine, including a move towards consolidated R&D and standard shared components, but the pace of change was far slower than planned, with few tangible results.
The fate of Sungard’s core banking system (yes, Sungard has a core banking system) was an example of what too often went wrong: it paid over the odds
for a relatively bright, buoyant supplier, Singapore-based System Access, and its Oracle-based Symbols. The product was in need of investment but it had a decent user base and function- ality. It went into a tail-spin, new licence sales dried up almost overnight, and the culture and people evaporated.
At least on the core banking side there was no competing system within Sungard’s armoury but this has been a major issue elsewhere, as the company’s acquisition strategy stacked up many, many applications, of different ages, technologies, and varying degrees of synergy and overlap. Looking at the ‘Solutions’ section of the recently revamped Sungard website only scratches the surface of the myriad applications that lie below. An annoying tendency to regularly rebrand, typically a form of papering over the cracks (cf. Misys), only added to the confusion.
FIS has a degree of this itself, particularly when you look at its array of US core banking systems (only Fiserv has more). It has a fair few payments and cards solutions as well, added to of late with the acquisition of Clear2Pay. FIS’s own attempts to move towards common components have moved no faster than Sungard’s efforts (IBS Journal, February 2015).
So one mish-mash of applications is being added to another mish-mash of applications; one crawling component and rationalisation strategy will need to dovetail with another; one company’s culture, people and infrastructure will need to be integrated with the other’s. If competitors are not losing sleep over this scenario, it is easy to understand why. Two jugger- nauts just became a supertanker, which could prove even slower moving and even harder to turn around.
Tanya Andreasyan, Editor
© IBS Intelligence 2015
www.ibsintelligence.com
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editor’s note
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