The recent Hedgeweek Special Report penned by James Williams remarks that “asset managers now operate in a world where complexity is pervasive, products and competitors proliferate, and profits are under pressure. Keeping up operationally is critical, not just a ‘good-to-have.’ In this new operational frontier, infrastructure has become a source of competitive advantage.” The focus of Williams’ report is primarily how the alternative asset fund management industry is being disrupted by more agile, “artificially intelligent” tools, and how firms of any size can differentiate themselves by leveraging these programs into predictive “knowledge platforms.” The insight that Williams applies to “predictive analytics” is equally applicable to any type of asset management software, and highlights the importance of working with an experienced, industry-specific vendor to build an alternative investment firm’s technology foundation and ongoing strategy.
Williams’ four main components of a successful knowledge platform are sophistication, the ability to support key business functions, flexibility, and expertise. Regarding flexibility, he specifically notes that “one size doesn’t fit all. An online dashboard for example, shouldn’t look the same for the client relations team, compared to the compliance team or operations team.” The ability to configure a software platform to meet the unique needs of each team within an organization sets industry-specific providers apart from the brand-name vendors. Brand-name providers need their software to reach as broad a consumer base as possible; many core features are hard-coded, and require customization from third parties to meet a firm’s specific needs. These third-party developed updates can be incompatible with core product updates, inhibiting the ability of firms to maintain their operations through the loss of functionality in an overly engineered product.
Expertise is where Williams notes “the asset management industry is farthest behind the curve. Does the platform have that deep, specialized expertise and analytical capability?” Expertise is where the hidden cost of selecting a brand-name provider is most apparent. Selecting a brand-name solution requires hiring an outside consultant to drive the implementation process. These outside consultants often do not have deep knowledge of your firm or industry, and educating them properly requires a significant time and budget investment. An outside voice in the implementation process can also lead to scope creep and communications breakdowns. Consultants also must be retained through each core product update to ensure the continuity of custom-developed functionality. External parties do not necessarily complicate projects, but firms should consider the risks associated with including multiple perspectives on project that impacts daily operations.
A successful asset management software implementation is rooted in strong leadership on the client side, and exceptional vendor expertise. Ross Ellis, the Vice President and Managing Director of the Knowledge Partnership in SEI’s Investment Manager Services division, comments that fund managers need “to make a serious commitment to a knowledge strategy, including hiring the right people to lead such a charge and determine who the best firms will be with whom to partner.” Assigning a single contact to lead the implementation streamlines the communication process and ensures total accountability on both ends of the project. The selected partner’s knowledge must be effectively leveraged in order to create a technology solution that aligns with the firm’s goals and optimizes investment operations beyond the expectations of the client.
An experienced industry-specific software provider is able to collaborate with a firm’s technology leader to create a Project Charter that clearly defines project goals, and identify clear, detailed action steps to reach those goals. During the course of the project, the provider’s dedicated implementation specialist also provides valuable assistance for accurately transitioning your firm’s data, correspondence and other intellectual capital into the platform, by ensuring all information is de-duplicated and only the relevant data is housed in the software. The specialist will also work closely with the firm’s technology leader to create the ideal presentation for the data, and ensure all relationships within the data are retained.
Consolidating technology operations within a selected provider ensures you have a simple communications pipeline for scaling the platform to the firm’s evolving needs. Williams’ article details how SEI built unique proprietary tools to handle Form PF and FATCA compliance operations, but many industry-specific providers are also able draw upon their deep knowledge of the industry to build specific modules for firms, such as dedicated cash flow forecasting and fund manager due diligence features.
Williams’ article proclaims that “a knowledge platform is not the preserve of the biggest managers; firms of all shapes and sizes have an equal chance of success.” Scalable, industry-specific management software, driven by a firm’s technology-savvy staff and ongoing collaboration with leading providers, can be a catalyst for growing your firm into an industry-leading player in the alternative investment market.