When Asset Management companies pursue middle-office outsourcing, they have a terrific opportunity to scale their business and to contain costs but the transition is not without its challenges!
When undertaking a transformational operational change the hardest part is data reconciliation between the old and new environments. When a report from the new environment shows a different result, the new system can be blamed when in fact it is much more likely to be a data management & reconciliation issue.
The promise of cost reduction is delayed: Businesses tend to under-estimate the effort it takes to prepare for and parallel a conversion path so it can go live on time and on budget. Quite often, the drive to cut costs before the conversion is complete occurs which actually increases overall costs due to lengthy delays before live date. The Middle Office function is so critical to informed Front-Office decision-making that a switchover cannot occur until the Asset Management company can stand over the quality, accuracy and timeliness of reporting from the new environment
Finger-pointing can occur between the two teams when differences occur in reporting at the very time the teams need to work most closely and collegially together to make this complex and difficult operational change a success.
Lengthy and delayed conversions don’t just cause high unbudgeted costs in money terms but also create a very large operational risk to the firm during the transition as project teams hired for the duration of the conversion can often decide not to extend their contracts and move to their next project.
Difficult conversion experiences can impact the relationship between outsourcer and the Asset Manager from the outset of their new appointment making difficult change even harder to bed down.
A transparent data management & integration tool helps to solve one of the key areas that can cause concern and distrust in the new operating environment– the data!
The key to successful outsourcing is proven data reconciliation between the old and new environments. With an smart investment data highway providing this ‘bridge’ capability, Asset Management firms can reach a state of comfort and trust in the new environment which can support a timely go-live conversion decision.
A data highway is a transparent and comprehensive data management & integration tool that can easily and quickly identify, expose, correct, enrich, reconcile and verify the data between the system and the outsourcer’s system. The data highway helps ensure that issues are properly identified, exposed and resolved ‘in-the-middle’ whether it’s a data issue or a real system(s) issue.
A data highway must be system-agnostic and standards-driven whether it be source of data or destination of system reporting, whether it be Fixed Income or Real Estate investments, whether it be the outsourcing of the Performance function or aspects of Compliance or Risk Management, whether the outsource provider be large or small.
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