New York/ April 28, 2004/: CarbonBased Consulting, Inc (CARBON), releasing its second annual Buyside IT Spending and Trends Survey today, found alternative investment managers are increasingly seeking out their own technology solutions initiatives but have yet to report full satisfaction with the results.
A mere 35.2% of survey respondents felt they had experienced success with their primary business systems such as; Trade Order Management, Portfolio Management or General Ledger, Investor Relationship Management, or Partnership Accounting. Only 26% indicated they had success in achieving full integration with their prime broker and/or administrators.
"For industry needs to be met, the general satisfaction rate would need to be 60% or higher," said Brian Shapiro, President and CEO of CarbonBased Consulting. "The fact that rates sit at just 35% indicates to us that vendors, while being relied on more than ever, are still failing to answer the call," he said. New York-based Carbon is an established research and advisory firm focused exclusively on the asset management industry.
Carbon surveyed a representative industry sample of buy-side organizations in this year’s survey, comprising; Investment Managers (26%), Hedge Funds (48%), Fund of Funds (16%), Family Offices (6%), and Independent Wealth Managers (3%). Median assets under management were $450 million, with funds ranging in size from $15 million to $13 billion. Staff size ranged between 7 and 120 employees.
Specifically, respondents said they experienced the highest satisfaction with Trade Order Management reporting a 54.8% success rate, Portfolio Management or General Ledger 38.7%, Partnership Accounting 32.3%, and Investor Relationship Management 29% satisfaction. Only 15% of respondents said they relied on a prime broker or administrator for these technology solutions, while 40% used one or more vendors, and 19% developed their own proprietary systems.
"While traditional reliance on prime brokers and administrators for technology solutions initiatives is on the decline, managers have not found full success implementing their own technology solutions, be it from vendors or home-grown proprietary systems," said Kenneth M. Neuhaus, Executive Vice President at Carbon.
"The continued frustrations experienced by the buyside with its technology solutions presents an opportunity for both vendors and service providers," said Mr. Neuhaus. "The door is open for either party to develop products that more closely match the needs of the investment community."