ProductSS&C is primarily a software company that markets and sells its products/services in seven markets: insurance entities and pension funds, institutional asset management, hedge funds and family offices, institutions finance (retail credit union banks), commercial lending, property management and municipal finance. In addition to the software, SS&C also provides accounting outsourcing to external companies. IndustryThe software industry as a whole is maturing and growth is slowing. Software/services one of the largest vertical markets with 62.3 expected revenues for next year. The financial services industry typically invests more in software as these companies' IT departments are often unable to fully handle the asset classes and specialized niches for which this software is designed. Financial services are expected to spend $83 billion on IT in 2004, including $62 billion on software alone. Technology spending in the financial services market is driven by growth in underlying assets, transaction volumes and security complexity. Since financial assets are expected to grow 8% annually (to $26 trillion by 2007), financial software is expected to grow at the same rate. According to Yahoo, the vulnerable area is that of the best operators specializing in certain niches. No backup plan if growth stalls in that niche sector. SS&C operates in many niches, not just one. Industry Driving Forces There are some driving forces in the software industry that directly influence SS&C. There is pressure to provide a web component to desktop software (to allow access from the Internet). Currently only a handful of SS&C products are web-based (BancMall). Another pressure comes from the increasing globalization of this sector. In 2003, international revenues represented 22-23% of total revenues, a work in progress towards the company's goal of 50%. SS&C already has a commercial presence across Europe, a large office in Malaysia, and its US-based clients have operations in Europe. Two of their closest competitors (Princeton Financial and Advent Software) have not been very successful in Europe. SS&C could also take advantage of the rapidly growing hedge fund market in Europe to expand this market. Product innovation and technological change are also constant pressures in software. Both technology and financial markets are constantly evolving, and the introduction of new products is critical. There is a growing preference for differentiated products as some niches (e.g. debt and derivatives) need products tailored to their type of market. SS&C combats this problem by using acquisitions to obtain products that satisfy these niches. Risk Factors As in any industry, uncertainty and business risk are the driving forces.