Six Signs It May Be Time for a New Investment Accounting Solution

In a recent blog, Citisoft identified replacing legacy technology as one of 3 Tech and Ops Trends to Watch:

To say that legacy technology and aging infrastructure are dead may be a bit premature, so let’s just say that it’s finally being shown the door. There are still countless asset management firms running mission-critical functions on enterprise software packages and applications that are, at best, struggling to keep up with today’s operational challenges and, at worst, borderline obsolete.

Nowhere is this abundance of aging infrastructure, and not-fit-for-purpose applications more prevalent (or troublesome), than within the investment accounting realm.  Many asset management firms are operating on investment accounting platforms that were implemented before the associates who are using them were even born.  Others are operating within patchwork environments with multiple investment accounting systems, and stitched together with Microsoft Office tools and manual processing.  

If you are like most asset managers, you’ve been trudging along, making do with your current investment accounting system; accepting your current reality as the norm; getting used to the status quo, and doing your work within the confines of (and working around) the capabilities of your current system.

How long have you been using your current investment accounting system? Is it meeting your current requirements? Is there a more comprehensive solution available? These are all questions you should be asking yourself, but how do you really know if you should join the growing list of asset managers who are replacing their legacy investment accounting systems. 

Although there is not always one glaring thing that jumps out and screams “We need a new investment accounting platform,” there are many indicators that make it clear that you should at least be considering a change. 

Here are six of those signs:

Vendor not supporting or growing platform

If the vendor is not updating their investment accounting system on a regular basis, or not providing adequate support, this is an urgent signal to probe the vendor on their plans for the application.  You don’t want to be operating your critical investment accounting functions on an application that is heading out to pasture. Another red flag, is a flat, or shrinking, client base. Be sure to understand these trends.  Are there more, or less, clients on your investment accounting platform than 3, 5 years ago?  Have they won any new business this year?     

You’re still on premise

You can’t go online or turn on the TV without hearing about “the cloud.”  It seems everything is moving there.  Although the asset management industry can often be slow to adopt new technology, they have gotten on board with the move to the cloud, and investment accounting applications are no exception.  The industry-leading investment accounting applications offer hosted (cloud) solutions, with many offering additional services beyond simple hosting.  In addition to the investment accounting systems vendors, the capabilities of the middle office service providers have matured to the point that there are several viable options for full investment accounting outsourcing.  Unless your firm has a burning desire to install and maintain technology on premise, an evaluation of hosted/outsourced solutions makes incredible sense. 

You have multiple investment accounting systems

Regardless of how your firm ended up with multiple investment accounting systems (merger and acquisition, to support different accounting basis, different asset classes, different product types), if you have multiple systems performing investment accounting functions, it is a signal to assess a possible rationalization to a more comprehensive solution. 

You are reliant on the Microsoft Office suite

If your investment accounting process lives and dies with Microsoft Excel or Access workarounds, it is a signal that your investment accounting application (or at least its current implementation) may not be fully meeting your firm’s requirements.  At the very least, it’s time to reassess current (and foreseeable) requirements against investment accounting capabilities.  The reassessment may be simply against the current capabilities of your existing application (e.g., for a process redesign, upgrade, or potential re-implementation), or perhaps a review of other systems in the marketplace is in order. 

Manual processes / accounting

If your staff has a high number of data entry tasks, either in the investment accounting system, or in Excel (or between the two), this is a signal of limitations in the current solution, and may be a sign to look at additional investment accounting options.   If staff is manually performing accounting functions/calculations outside of the system, this ramps up the urgency to assess the current application for suitability. 

You are the bottleneck

The demands on your operations staff, and investment accounting systems are continually evolving and growing.  Whether these increased requirements are driven from external forces (e.g., regulatory changes, client reporting demands) or internal (e.g., new asset classes, new markets, new products), the investment accounting function must be able to meet the demands within generally aggressive timelines.  When these new initiatives come up in your firm, is investment accounting one of the cautionary voices at the table (or simply forced to piece together a tactical workaround to avoid being perceived as the bottleneck)?  This may be another signal that it’s time to reassess the full scope of investment accounting requirements at your firm and take a good hard look at your current investment accounting application.  

There generally isn’t one eureka moment that defines when it’s time to consider a new investment accounting solution.  Often, it’s a series of things that stem from the inertia of making do with the legacy platform, and continuously implementing workarounds to support one-off requirements.

If any of the signs mentioned above are flashing in your investment accounting environment, it may be time to consider a new investment accounting solution.  Citisoft is available to assist, either with a Strategic Assessment of your current investment accounting environment, and/or a Systems Strategy and Selection for a new solution.