Why you should try before you buy

The challenging regulatory environment and increasingly demanding mandates from institutions are driving asset management firms toward new and efficient ways of managing problems. One impact of this development has been the shift from manual processing to automation. The return on investment from the automation of investment management processes can be significant. Companies can increase not …

by | June 23, 2015 | FactSet

The challenging regulatory environment and increasingly demanding mandates from institutions are driving asset management firms toward new and efficient ways of managing problems. One impact of this development has been the shift from manual processing to automation.

The return on investment from the automation of investment management processes can be significant. Companies can increase not only the accuracy and scalability of their operations, but also other internal efficiencies such as reducing time-to-market and increasing productivity.

This realisation has encouraged many asset management firms to move away from spreadsheet-based applications and in-house legacy systems. These firms are turning instead to customised applications offered by specialists, with the knowledge required to ensure that the applications are truly fit for purpose.

Before implementing any new software application, however, clear objectives are required. The solution must meet the ongoing needs of the company. Irrespective of the complexity involved, an investment manager must also be certain that the solution is right for the company from an operational perspective. This involves choosing the solution that best fits their particular business model, environment and technology stack. As a consequence, clients are insisting that a proof of concept (PoC) must be included in either the vendor selection process or the sales process.

A PoC is a short, controlled test of a new solution, simulating the real world environment. A PoC allows the company to see the good, the bad and the ugly on both sides of the client-vendor relationship. In addition to

aligning the expectations of the investment manager and the software provider, a PoC highlights any potential risks and the development required by both parties to ensure that the solution ‘fits’. This saves the company valuable time and also the cost of implementing a product that is unusable.

It could also be argued that PoCs provide a practical alternative to lengthy Requests for Proposals (RFPs). The traditional RFP can take anything from six to 12 months to design, execute and analyse. By the time the process is complete, the needs of the investment manager have very often changed, to the extent that the results of the RFP are no longer valid. Furthermore, RFPs are very often driven by procurement, rather than the business. This can lead to frustrations in the business as innovative functionality is compromised in the name of cost streamlining (or even vendor risk), exacerbating the issue.

In a recent article, Steve Young, CEO of investment management consultancy Citisoft, explained that ‘the consolidation of industry vendors and providers, a more networked community, risk aversion and a desire to show immediate progress’ are driving the increasing use of PoCs in vendor selection. I see this trend only increasing over the next five years.

In my view, PoCs should form an integral part of any selection process; enabling firms to test-drive a system to ensure that it is in good working order and has the characteristics required to meet the needs of the individual investment manager.
 

By Simon Cornwell, Co-founder, Vermilion Software

Categories:

Resources

Back-Office Transformation – Safeguarding the Future of UK Wealth Management

White Paper | Asset management Back-Office Transformation – Safeguarding the Future of UK Wealth Management

Cashfac

Back-Office Transformation – Safeguarding the Future of UK Wealth Management

The UK wealth management sector is consolidating and only those with scale will survive. Delivering successful back-office transformation is key… Continue Reading

View resource
Start Building Privacy-Preserving Applications with Conclave

Best Practice | Asset management Start Building Privacy-Preserving Applications with Conclave

R3

Start Building Privacy-Preserving Applications with Conclave

Conclave is a confidential computing SDK that makes it possible to build privacy-preserving solutions that securely share, pool and process… Continue Reading

View resource
The Vendor-Client Partnership: Sharing the Responsibility for Software Implement

Best Practice | Asset management The Vendor-Client Partnership: Sharing the Responsibility for Software Implement

FundCount

The Vendor-Client Partnership: Sharing the Responsibility for Software Implement

If you’re like most firms looking to implement a new back-office accounting platform, you shortlist vendors, get demos, select the… Continue Reading

View resource
Benefits - Smart solutions for a complex world

Other | Asset management Benefits - Smart solutions for a complex world

PATRONAS Financial Systems

Benefits - Smart solutions for a complex world

Our products combine the advantages of standard software with the convenience of individual solutions tailored to your requirements. Let’s find… Continue Reading

View resource