NEW YORK--(EON: Enhanced Online News)--SimCorp, a leading provider of investment management solutions and services for the global financial services industry, has published a new white paper, titled, “Making the Case for Moving from a Legacy System: Seven Steps to a Solid ROI Analysis.” Authored by Tom Hong, Managing Director at InvestTech Systems Consulting, the paper is part of an ongoing series of industry thought leadership compiled and published by SimCorp.
“Leaving legacy IT behind is a large but transformational decision for investment managers”
In this paper, Mr. Hong outlines best practices for leaving legacy investment management systems behind and transitioning to a system that supports business strategies while controlling costs via an ROI analysis framework.
Mr. Hong explains that “many buy-side firms are making the painful discovery that what started out as a solution providing years of adequate technology support for the business is now straining under functional shortfalls, manual workarounds and integration challenges. The technology has become outdated, costly to maintain and unreliable.” This technology is what is described as “legacy IT systems.” As investment managers look to replace these failing legacy systems, firms must know in measurable terms and precise calculations why it may be in the firm’s best interests to migrate to a state-of-the-art system.
In order to build a business case focused on ROI, InvestTech outlines the following seven steps:
1. Understand the problem: Identify and describe the root problems and key objectives against which a buy-side manager can measure the impact of a state-of-the art solution.
2. Set up a scorecard: Identify key business metrics (KPIs) – take measure of the current state.
3. Develop the parameters: Align the KPIs to the drivers behind the initiative. The main drivers might include reducing operational risk, increasing operational efficiency and supporting growth opportunities.
4. Prioritize requirements: Rank overall requirements by speaking with key internal stakeholders to identify strategic impacts and opportunities.
5. Assess the solution: When assessing replacement systems, score them by functional capabilities, technology platform capability, vendor relationship and operating costs.
6. Gauge ROI correctly: Develop a practical summary of current-state and proposed-state costs amortized over a multi-year horizon.
7. Make legacy system replacement decisions based on a 360° business case: With all the information in hand, investment managers can make the right choice in selecting a state-of-the-art system to replace failing legacy investment systems and experience measurable success.
“Leaving legacy IT behind is a large but transformational decision for investment managers,” notes David Kubersky, Managing Director for SimCorp North America. “Building a strong and measurable business case enables operations executives to demonstrate the powerful impact that state-of-the-art IT can have on reducing cost, improving efficiency and enabling vital business growth.”
To download a copy of the InvestTech paper as featured in the latest SimCorp Journal of Applied IT and Investment Management, please click here.
Since 1971, SimCorp has been providing investment and portfolio management software and services to the world’s leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds and wealth managers. SimCorp’s world-class software provides global financial organizations with the tools they need to mitigate risk, reduce cost and enable growth. SimCorp is a global company, regionally covering all of Europe, North America and Asia Pacific. Listed on the NASDAQ OMX Copenhagen, SimCorp is dedicated to supporting the global investment management industry, its clients and its investors.