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The following was originally printed in Fund Technology, November 3, 2017:
Technology is an increasingly essential underpinning to the long-term health and success of any investment management firm. In fact, a recent KPMG report identified technology as one of the factors that creates a more flexible operational environment. So, it’s no wonder that more firms are enhancing their existing technology systems, or converting to new technology platforms altogether, as they seek to stay ahead in an increasingly competitive market. The benefits of technology investment are clear – easier firm-wide oversight, quicker data delivery, more seamless integration with additional outside service providers, increased speed to market, seamless scalability with growth, allows greater focus on core competencies, the list goes on.
The conversion process, however, isn’t always as clear cut. The decision to enhance or onboard new technology is significant and adds short-term complexity which can ultimately create both financial risk – impact to the bottom-line – and reputational risk – impact on the organization. However, complexity and risk don’t necessarily go hand-in-hand. In fact, using the right approach, investment management firms can overcome any risks, or avoid them altogether.
Having experienced years of successful conversions both in-house and as an external operations partner, here are what I believe to be the critical, foundational issues for ensuring a smooth on-boarding process and laying the ground work for future success when it comes to technology innovation.
By using agreed upon language, process, and measures of success, fear of the unknown is eliminated. Setting the scene considers all of the details, and each party spends as much time as necessary to ensure everyone understands what is expected and required.
Setting the standards happens through in-depth, in-person meetings with key stakeholders and subject matter experts. The desired result must be fully understood and agreed upon.
In all cases, complete information regarding dependencies and desires must be on the table from the get-go.
Operational risk is inevitable during change, and change occurs daily in the investment management space. We know because we’ve helped clients overcome it. But we’ve also seen the long-term benefits – like a firm that leveraged technology innovation to facilitate entry into a new channel and grew assets by more than $1 billion, and accounts from 0 to 4500, without adding any internal infrastructure or personnel. Or another firm that was able to unify operations across multiple investment management groups, multiple asset classes and, ultimately, across multiple regional offices
Technology is firmly rooted in business practices and processes, and can unlock growth potential in addition to streamlining operations. The so called, “Age of Information,” has transformed into an “Age of Opportunity” where investment management executives who take the time to successfully navigate the short-term complexity inherent in technology conversions are poised to reap long-term benefits.