The ‘need for speed’ has been a focus of the investment management industry for some time now. Algorithmic trading, STP and similar initiatives have substantially increased the velocity at which firms now travel. The problem is that these technological advances are only as effective as the underlying systems infrastructure and the management of data therein. In other words, all too often the net result of this increase in pace is automated chaos.
One of the primary reasons for this chaos is the asset management industry’s predilection for ‘best of breed’ technology. Best of breed is the best product of its type; asset managers often purchase software from different vendors in order to obtain the optimal solution for each application area. This approach is the net result of tackling one IT project at a time, solving the problem in front of them rather than the bigger picture. As a result, investment management firms have added layer upon layer of systems to tackle geographic, strategy or asset class issues. It is also easier and quicker to deploy a system to solve a specific problem in isolation or meet a particular need e.g. equities, rather than address a number of issues in an enterprise-wide solution.
It takes a brave Operations Director to say, ‘OK, we have been adding specialist software systems for years. What we need to do now is begin to strip out layers of IT infrastructure before we try to speed up our operational processes any more.’ Rather like the performance car designer insisting on the stripping out of unnecessary parts or weight in the chassis before attempting to add any more cylinder power to the engine.