Does It Need to Be So Complicated?

I recently dined out at a restaurant with very extensive menu choices. In fact, as there were so many options, I found it hard (and a bit stressful) to make a selection. While some restaurants certainly want to cater to a wide audience and offer both flexibility and ability to 'customize' your meal, others will offer a more standardized menu based on tried and tested food offerings.

This got me thinking, and drawing parallels to my profession. Software vendors, in their endeavor to offer flexible and customizable solutions to a wide range of investment managers, have increased their menu (functionality) offerings. However, added choices and ability to customize can lead to a more difficult implementation. We've all heard of stories that 'XYX' Investment Company has been implementing the 'ABC' system, and the effort / timeframes are going well beyond the original plan. Now, I recognize several factors can lead to elongated implementation timeframes, but in my experience, the effort to define and implement 'non-standard' systems functionality can be hard and time consuming.

This brings me to the question – "does it need to be so complicated?" Have vendor systems become too complex, or has the business become too complex, and vendors are just responding to client needs? Are clients resistant to adopt 'standard' functionality, as they view their business processes as 'unique'? In my opinion, I believe it's likely a combination of all the above. Yes, the investment management business is complex and becoming even more so with complicated product types, regulation, client demands, etc. And, as much of the functionality in investment management systems is inter-related (e.g., choices made upstream impact downstream functionality), the complexity of implementation becomes exponentially harder. Clients also like to have choices and flexibility, especially when migrating to new systems.

So, "does it need to be so complicated?" Well, the answer really depends on your requirements. The most critical aspect is getting a detailed and complete understanding of your current and future needs. Once this is documented, sessions can be organized with software vendors (and other 3rd party experts) to vet if the requirements can be implemented in a 'standardized' way. When I use the word 'standardization', I'm referring to industry defined best practices, and/or knowledge of similar clients (investment managers) having implemented system functionality to satisfy similar requirements.

Implementing new systems does not happen very often, so unwinding current systems and related processes is a difficult undertaking. Taking a step back to understand if current processes are aligned with best practices is a critical step to assessing your future state needs. All too often, we see companies try to 'recreate the same process' in the new environment, or 'create a non-standard process' when in fact one is really not required. Just because 'I can' does not mean 'I should'. On a recent business trip, I checked into my hotel and saw they had brand new alarm clocks that resembled I-pads. This device could wake you in so many ways - but you needed to take the time to review all the options. Me, I just wanted to wake up at a specific time, but didn't care what type of music or ring tone woke me up.

Now, I'm not averse to implementing 'non-standard' functionality, however, investment management clients should 'pick their battles' and ensure the function is truly unique, critical, and value-add. The 'cost' of implementing and maintaining a non-standard function / process can be high, so it's prudent to validate your business case.

In conclusion, the investment management business is complex, and clients will continue to expect software vendors to offer functionally rich, flexible and customizable systems. However, adopting standard functionality whenever possible will add simplification to what is typically a complicated undertaking. When you need to go 'outside of the standard menu', choose wisely so the cost of doing so justifies the value. While I like choices when dining out, typically you can't go wrong with the chef's special. It's proven, and one less worrying decision.

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Ken Barnet

Ken provides strategic direction and leadership on Citisoft programs in North America and globally. He has over 30 years of experience providing both advisory and delivery services to asset managers and service providers of all sizes. Ken is a leader of complex, enterprise-wide programs, with specialties including strategic IT and operational assessments, operating model transformations, operations outsourcing transitions, and vendor software selections and implementations. His expertise spans asset classes ranging from equities and fixed income to derivatives and alternatives, and functional areas covering front, middle, and back office.