Businessmodel of DST Systems

Customer Segments

DST provides a range of advisory, technology, and outsourcing services to commercial and institutional clients across multiple sectors. The Company’s customers can be organised principally into the following categories:

• Financial Services, comprising various businesses within the financial services sector, including asset management firms, mutual funds, brokerage firms, banking institutions, insurance companies, wealth management providers;
• Healthcare, comprising a range of institutions operating within the healthcare sector, including hospitals, pharmacies, specialist clinics, dental and vision organisations, managed organisations, specialist health insurance providers, and government-sponsored healthcare plans; and
• Commercial and Corporate, comprising various corporate and commercial businesses across multiple sectors, including the broadcast and media, consumer finance, retail, non-profit, and telecommunications industries. DST principally serves clients in its home market of the US. The Company also serves an international customer base across the UK, Canada, and Australia, as well as in various other markets across Asia Pacific and Europe.

Value Propositions

DST provides value to its clients in the following ways:

• Its industry standing and reputation, with the Company established as a leading provider of advisory and technology services to a diverse client base, serving a number of high-profile clients across multiple industries;
• Its broad portfolio of services and solutions, with the Company offering an extensive range of services and solutions – including investment advisory, asset distribution, and healthcare administration services – to customers across the financial services, healthcare, and corporate sectors;
• Its proprietary technologies, with the Company utilising a range of proprietary technologies in the development and delivery of its solutions, making its offerings unique within the industry;
• Its international reach, with the Company serving a large domestic client base in the US, as well as an extensive international client base across the UK, Canada, and Australia; and
• Its industry expertise and experience, with the Company employing specialist personnel across its three operating segments enabling it to provide expert services, as well as employing a team of experienced industry executives. ### Channels

DST operates a website at www.dstsystems.com, through which it provides information on its services, solutions, target industries, and operating locations. The Company does not operate an online sales channel, nor does it appear to provide an online client portal through which customers can access account details and tools.

DST principally makes sales through its own in-house direct sales force, which is organised both by business segment and geographic region. The Company’s sales personnel operate out of the Company’s network of sales and administrative offices, including locations in Australia, the US, Canada, the UK, China, India, Hong Kong, Ireland, South Africa, Ireland, and Thailand.

DST does not appear to utilise the services of third party resellers, distributors, and sales agents to a significant extent. The Company, however, does appear to utilises such providers in certain markets where it is not well-represented directly.

Customer Relationships

Despite its online presence, DST does not provide services and solutions to clients on a self-service basis. Instead, the Company makes its sales through a direct sales force, the members of which consult closely with clients in order to establish the individual requirements and circumstances of each client.

The Company seeks to tailor its services where possible, agreeing custom service contracts on a case-by-case basis. DST seeks to establish longstanding relationships, with its contracts often extending to multiple years.

DST offers ongoing support to its clients, with many larger customers having their own dedicated account management teams. Clients are able to contact personnel at the relevant regional office over the phone or via email in order to access personalised assistance, or can make more general enquires through an online contact form.

The Company additionally operates web support portals for its various target industries, through which clients can access a range of online resources.

Additionally, DST operates news and insights section, through which it provides relevant ad timely industry information to its clients. It also publishes a list of its upcoming events, providing clients the opportunity to interact with DST representatives in person.

Key Activities

DST is a provider of technology-based information processing and servicing solutions. The Company offers its services primarily in the form of unified data management, business processing and customer communications solutions.

The Company aligns its operations into three reportable business segments: Financial Services, through which it provides investor and asset distribution services to companies within the financial services industry; Healthcare Services, through which it provides medical and pharmacy benefit solutions, including aid information processing, quality of care, cost management and payment integrity services, to customers in the healthcare sector; and Customer Communications, through which it offers integrated print, mail and electronic solutions to a range of corporate and commercial clients. DST is based in the US, its principal market. It also serves clients across markets in North America, Asia Pacific, and Europe, notably Canada, Australia, and the UK.

Key Partners

DST works in close collaboration with a network of partner companies and organisations across its three reportable business segments. These partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of equipment, technologies, and services that support the development and delivery of the Company’s core advisory and technology services;
• Technology and Consulting Partners, comprising a range of technology companies, software developers, and consulting firms that assist in the Company’s development of effective and reliable solutions;
• Joint Venture Partners, comprising a range of companies with which the Company jointly provides services and solutions through mutually owned entities;
• Channel and Distribution Partners, comprising the Company’s small network of distributors and sales agents that assist the Company in reaching markets where it is not well-represented directly; and
• Strategic and Alliance Partners, comprising a range of market leading companies with which the Company collaborates on a range of joint projects, including in marketing and branding. DST has a number of partnerships in place. This includes a joint venture partnership with State Street, a strategic partnership with Alfresco, and a healthcare development partnership with Frist Data Capital.

Key Resources

DST’s key resources are its proprietary technologies and intellectual properties, its solutions and products, its IT and communications infrastructure, its physical office network, its partnerships, and its personnel.

According to its annual report, DST holds a number of US patents, US copyrights and trademarks that various aspects of its information processing and computer software services and products.

Searches of records published by the US Patent and Trademark Office identified several patent applications in which DST was named as assignee, including applications entitled ‘Simultaneous real-time access to financial information’, ‘Graphical user interface (GUI) language translator’ and ‘Simultaneous real-time presentation of financial information’.

DST also owns and or leases a number of physical properties around the world. This principally comprises its network of sales and administration offices across North America, Asia Pacific, and Europe.

Cost Structure

DST incurs costs in relation to the development of its technologies and solutions, the maintenance of its IT and communications infrastructure, the procurement of professional services, the management of its partnerships, the implementation of marketing and advertising campaigns, and the retention of its personnel. In 2015 DST recorded total operating expenses in the amount of $2.40 billion.

Revenue Streams

DST generates revenue through the development and provision of various advisory, technology, and outsourcing solutions. The Company principally derives its revenue under individual sales and service contracts that are agreed on a case-by-case basis.

In 2015 DST generated total revenue in the amount of $2.83 billion, up on the $2.75 billion recorded by the Company in 2014. Of this revenue, the Financial Services segment contributed 51.4%, followed by the Customer Communications segment with 29.8%, and the Healthcare Services segment with 18.7%. 0.1% of the Company’s revenue was generated through other activities.