January 9, 2021 | Best Practices
A Turnkey Technology Solution is a Make-Or-Break Success Factor
As funds grow, many patch together technology solutions, adding new capabilities as they become available, and then trying to integrate them into existing legacy systems.
It’s possible firms end up with multiple systems: one for trading, one for accounting, and yet a third for risk. But how well do these systems talk to each other? How seamlessly does data flow from one to another? Not very well, in many cases.
“Stitching together different technologies can result in excessive reconciliation work and introduce multiple points of failure, due to the connections and active maintenance required to keep everything running in unison and at scale. A single and seamless system where all mission-critical applications are natively designed to interact together frictionlessly from the start is, by design, much more reliable and scalable, saving operations teams much unnecessary headache,” explains Enfusion’s Senior Managing Director, Head of Investment Engine Software Products Michel Finzi.
For many fund managers that means moving to the cloud for all-in-one solutions that integrate systems, data management, trading, compliance and accounting in one comprehensive platform.
Choosing a Cloud or Hybrid Solution
According to our recent survey, about one-third of hedge fund managers are fully cloud-based, another third use mixed cloud and on-premises platforms, and a final third keeps IT entirely on-premises. But if you add together the cloud and hybrid (partially cloud-based) managers, the cloud is dominant, with 70% of hedge funds hosting at least some of their systems in the cloud.
Interestingly, mid-sized firms (with assets between $250 million and $1 billion) are more likely than very large ones to be fully cloud-based. We believe this is because managers that have launched in recent years are more likely to have started out in the cloud. Unburdened by issues, such as legacy infrastructure, these managers have skipped one stage in their digitalization journey and can fully benefit from the speed and scalability that the cloud enables.
Hedge funds are increasingly using vendor-owned private clouds to host their operational infrastructure—functions like order management, execution management, portfolio management and risk management. Overall, funds are about 10 percentage points more likely to have their systems in the cloud than their data. North American firms are the most prolific cloud uses, while European managers have been more cautious—though, currently, about half of all European managers host order management and execution management systems in private vendor-owned clouds.
One benefit of using a cloud-based solution is that you gain a partner who is experienced in integrating multiple systems. When selecting a platform, it’s important to look for a service provider who can assist you in implementing new products or services or in integrating systems and datasets.
More Accurate Data Powers Better Investment Decisions
All of the hedge fund managers we surveyed (100%) said that full or partial cloud solutions had increased their efficiency—enabling them to do more, faster and with fewer resources. That’s critical in quick-moving markets where opportunities arise (and disappear) quickly.
A turnkey front-to-back (F2B) solution prevents you from losing precious moments when you have time-sensitive moves to make.
Integrated, cloud-based solutions can also improve access to data. Our survey found that nearly two-thirds of hedge fund managers (64%) found it challenging to combine and integrate data from multiple internal and external sources. Cloud-based solutions can be designed to meet this challenge, bringing all data into a common framework, eliminating duplication and inconsistencies and making sure your entire team has the same golden dataset at their fingertips.
By providing accurate start-of-day positions, and client and marketplace connectivity, a turnkey solution ensures that you can strike while the iron is hot, and more.
Expand at Your Own Pace
Your fund is a dynamic entity; change is the only constant.
If you see growth in your future, then you need a platform that can grow with you.
Otherwise, you’ll be forced to upgrade your software as your strategy evolves. And as you know, there will never be a time in the future to do so that won’t interrupt your business, because it’s often a lengthy and stressful process.
So how do you pick the right platform when you’re not sure what the future holds?
A top-notch solution will make it easy to enter new markets by providing:
- One, integrated dataset
- Comprehensive asset class coverage
- Customizable reporting
- And so much more
For example, our corporate action tool is proven to automate and streamline processes for funds with complex trading profiles.
Enterprise-wide View Boosts Efficiency
It’s all well and good if a platform individually solves all of your operational challenges. But the true test of a first-class solution is how it connects investment and operational decision-making.
Enfusion cohesively combines portfolio management, trade execution, risk management and general ledger in one fully-integrated, cloud-based system, providing real-time insights to everyone on your team. Instead of wasting time getting on the same page, your employees can focus on higher-value tasks.
A single, unified dataset accessible across all parts of your organization and complete front-to-back functionality also leads to substantial savings and gives you the foundation for a stress-free expansion.
Bringing It All Together
Creating an operational infrastructure that can satisfy your current and future needs is of the utmost importance to asset managers. When the alternative is the slow implementation of your best ideas, constant migrations to new vendors, and daily confusion between your teams, it’s clear that choosing the right turnkey solution is a make-or-break success factor.
With Enfusion’s 94% client satisfaction rate, you can confidently make this choice.
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