Institutional investors are increasingly looking to alternatives, such as private markets for both diversification and alpha generation. Expanding into new asset classes offers significant opportunities, but requires a measure of business transformation in terms of evaluating current IT infrastructure. During InvestOps Tampa hosted by Tradetech, the conference sought to understand how firms are able to build a next-generation operational model, meet regulatory demand, as well as learn how to create a data management infrastructure.
SS&C Advent participated on the panel, Overcoming legacy technology challenges: How can you seamlessly introduce new technologies into your existing architecture to streamline your operations and achieve cost efficiencies? Contributors explored the benefits of:
- Outsourcing: Employing a hybrid outsourcing model to achieve operational efficiencies and cost savings
- Replacing legacy software: Implementing a modern solution to automate data management
- Data accuracy: Introducing tools that integrate seamlessly with existing architecture Increase data accuracy
Data, data, data
Data management is an ever-growing and important aspect of a firms business. As noted throughout the conference, the back-office has difficulty managing data, which can range from handling multiple sources and data normalization to the ever-growing detail around asset classes that is required to store and track. However, it is not only the challenge of managing data, but also how to present it in a meaningful way. Data management has become a significant obstacle for operational workflows, including:
- The front office: This is often viewed by some firms as the number one client for the operations team, as this team prioritizes getting data to them in efficient and effective manner
- Data feeds: The average number of data feeds for a buy-side firm is increasing exponentially
- Data access: Financial data continues to increase, which makes APIs and data access an ever important factor for operations
Insourcing vs outsourcing:
Recently, firms are more receptive to outsourcing, as the strategic advantages of cloud deployment have become apparent. Over the past decade, outsourcing has evolved considerably; it is no longer “one size fits all” and it does not have to be an “all or nothing” proposition. As highlighted during a few sessions, firms that are evaluating the different offerings available, many prefer an “a la carte” and flexible service model. The benefits of this approach include increased automation and data quality. With the right provider, outsourcing gives firms greater flexibility to customize their selection of operational services according to their needs, as well as to change the service mix as the firm grows or needs change.
Vendor vs Partner
Many panels discussed the concept of leveraging a vendor vs a partner. As firms consider the different outsourcing models available, they are also evaluating and looking for a true partner that can be an extension of their organization, with a focus on:
- Investment: Outsourcing services and technology are an investment, not a cost. Firms should not let the cost drive the decision, but the value add of incorporating an outsourcing provider
- Culture: Firms should evaluate providers as a cultural fit, not only based on its functionality. The firm should select a provider that is aligned with them on direction and vision
- Trust: Firms are a customer of the provider, therefore service levels remain the main driver of success and trust is earned
Asset class diversification
The conference provided attendees with actionable insight into the operational challenges facing institutional investors, as well as what to consider when evaluating technology and service providers. As firms continue to diversify strategies including the recent expansion of investments in private markets, firms face significant hurdles across many areas, including data, asset class expertise, and technology. Through the various panels and roundtable discussions, this conference helped to shed light for attendees on how to consider and manage these challenges.
For those evaluating the various solutions and managed service offerings available for institutional investors, learn more about our solutions capabilities today, by contacting us, or requesting a demo.