Frank Glock is head of Emea Sales at Enfusion. Glock has over 20 years’ experience in the buy-side services and software segment, and has held senior leadership positions in the past at both Charles River Development and SS&C.
Joseph DiTalia is the global product manager for managed services at Enfusion. DiTalia has over 20 years’ experience in financial services across product, programme and operations management within asset services and wealth management.
- Q How has the thinking around operational efficiency evolved in the past decade?
I think there’s been a material evolution in the definition – and practical translation – of operational efficiency in the buy-side. Early on, when you look at the best-of-breed, best-in-class approach being delivered by many vendors serving both the alternatives and long-only sectors, they comprised point solutions delivering a richness of functionality that was fit for purpose.
For often a single purpose such as OMS, PMS, EMS, compliance, risk, etc. Each one of those systems, however, has gone on to evolve with its own unique set of high-maintenance prerequisites and unwelcome dependencies and interfaces,
especially around data, ongoing administration and upgrades. Typically, this has come about as a consequence of the vendor acquiring complimentary systems and trying to knit everything together.
And if you look at how decisions were being made and sometimes continue to be made, what we see is a bifurcation of IT/operation versus the wider business interests as a whole. It also seems that the definition of operational efficiency has significantly evolved from being somewhat polarised and departmentally-specific to now, with more of a macro, top down and cross enterprise focus. Nowadays, the operational efficiencies we, at Enfusion, have helped to realise serve to simplify, standardise and achieve scale through a single platform solution.
- Q Have these changes all been driven by technology?
In the main, yes, but also by the many challenges facing the industry and a shift to platform-based solutions. Platform technology has evolved at a great pace and continues to do so. Technology remains an intrinsic enabler for delivering a true cross-enterprise platform. And going back in time, there were once a number of highly prolific systems that were certainly fit for purpose. But the original design brief was very much one where it was all for on-premise. These systems were designed to be on premise and maintained on premise.
A number of vendors have continued in a similar vein and with the same products, but have rebranded those to be SaaS solutions, fully managed and hosted by the respective vendor. This has in many cases proven troublesome because a lot of these systems that were built some time ago weren’t designed to be hosted in a private or public cloud. When you look at how we started, our original design brief was to become a natural extension to our client’s value chain by delivering operational simplicity through a single, front-to-back, SaaS platform.
Nearly 20 years on, our industry has totally changed but we remain a reliable constant. Our entire technology framework lends itself to a more optimised cloud-based solution. This is how we’ve proceeded from day one with software at the epicentre which is specifically designed for the cloud.
Other vendors who have taken a traditional product and placed it into the cloud experience a range of issue – especially around maintenance, upgrades, and simplicity in usability and in scale.
- Q How does the system chosen affect the business overall?
Funds often make tactical decisions around the systems which are chosen, and this has led to a number of different challenges. Ultimately, the solution chosen
needs to inform and enhance investment decisions and the end-toend process as a whole. When firms choose to buy best of breed, this can sometimes compromise the objective of creating alpha.
Our solution is designed to assist clients to ensure there is consistency around how a firm runs its business internally from the front to middle to back office, in terms of how it interacts with clients and counterparties, and how data is optimised across the board.
This is in recognising that data and process is not just within the confines of a particular area of the business, but it’s actually a material part of how an organisation lives, breathes and sets itself up for success.
Our original design brief was to become a natural extension to our client’s value chain by delivering operational simplicity through a single, front-to-back, SaaS platform. Nearly 20 years on, our industry has totally changed but we remain a reliable constant
- Q Any thoughts on how the pandemic is affecting efficiency? What concerns have you been receiving from clients?
Alongside the obvious changes in terms of communication and logistics that all of us have had to adapt to, most funds have successfully deployed business continuity plans to ensure they protect the health and safety of their employees. And so, generally, from that perspective, it’s proving to be quite successful when you look at streetside counterparties, banks, brokers, liquidity venues, etc.
Again, they’ve also generally responded well and serve the industry with little to no disruption. However, the pandemic has served to shine a light on many, with some firms struggling to maintain optimal levels of internal processes, and that’s from a front-, middle- and back-office perspective.
Right now, we have many funds coming to us during this period who are struggling with the accessibility of their mission critical systems. And often, this is due to a lack of investment in deploying the correct infrastructure with robust contingency measures and security. The challenges also stem from those who have been reliant on an incumbent set of providers who have failed to maintain the required levels of business as usual activities.
The pandemic really has placed a lot of emphasis on having a nimble, agile and entirely accessible platform. Enfusion counts itself among groups where you can access our system from anywhere in the world. This has led to zero disruption for our clients across the globe.
- Q Final thoughts on the future/ any other lessons to be learnt from the pandemic?
I think this can be summed up in a single statement: doing more with less. We see significantly increased focus on firms needing to simplify and standardise their processes, but simultaneously achieve scale, and I think this is partially driven by what we have seen and will continue to see in terms of increased M&A activity.
But most importantly, the industry is facing significant pressure on margin, and it’s important for firms to control costs while achieving sustainable growth. In this context it is critical to not only focus on being operationally efficient but also operationally effective in order to create value for the end investor.
This will most definitely continue, along with a tremendous amount of vendor fatigue, especially around the classic established vendor platforms. Expensive overruns and upgrades are a continuing challenge. Looking forward means looking for a simple, agile, more economic solution to run on, which also scales well firm-wide. Looking into the future, alpha generation is not just for the preservation of the portfolio manager or the trader, but in fact it’s a way of life.
The process funds the value chain. Irrespective of what part of the business you operate on, it’s going to be incumbent upon an individual or departments to, wherever possible, seek more economically attractive ways of actually running a business, investing in single platform solutions that become the central nervous system of the firm and incorporate not just software, but also services, data and analytics all in one platform.
The delineation between the middle, front and back office is also liable to start blurring, because of the importance of data and how data is disseminated both into the front office and through the middle and back office.
If you look at what’s been happening over the last few years regarding the general position and management of data that’s being consumed, it’s clear we’re going to see a greater dependency on high integrity information, not just for the investment process, but also in terms of how a firm starts to profile and create new and innovative products for its clients.
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April 29, 2020