SEI Investments Company (NASDAQ: SEIC) manages assets for both institutions and wealthy individuals, but unlike other asset managers, the company also sells a suite of software-based services to banks and asset managers to manage their own client account and investment funds. This software has tendrils deep into the back-offices of financial services institutions, where it helps process transactions, and manage regulatory compliance and accounting.

The company's software business has high barriers to entry and high switching costs. New entrants to the market are forced to invest large amounts of capital up-front in order to build out the technology platforms necessary to support the administrative services offered to clients. There is also a considerable amount of integration between the client's systems and the administrator's. It can take up to 15 months for large institutions to disentangle their systems from one administrator and reintegrate them with another. ^[1] Moreover, switching is not only costly, but carries risks such as disruption of service.

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