A market study, sponsored by SimCorp and conducted by independent consultant Paul Miller (now of specialist consulting firm Knadel), has identified that senior executives at UK asset management firms believe that their ability to undertake new business initiatives is hampered by the need for aggregation, the operational process of pulling together data to support key investment, control and reporting functions. Behind this conclusion, the study found that the firms that do not see aggregation as a major issue have deployed simpler application systems architectures, composed of fewer applications. It also found that the majority of firms have a high dependency on spreadsheets and bespoke databases and even those that have deployed a data warehouse still need to store the results of aggregation processes in multiple locations.
Cath Rawcliffe, vice president of sales and marketing at SimCorp Limited believes the findings should alert asset managers to problems brewing. "These processes are creating a data straightjacket which stifles business flexibility," says Rawcliffe. "It is evident that the more complex the operational platform, the more difficult it is to extract useful information from it. Yet even though the vast majority of firms participating in the study said that they could reduce the number of systems they have in use today, many continue to add further complexity in the form of more processes and data stores. This study indicates that the more this approach is followed, the more difficult it becomes to adapt as business requirements change."
The study reveals that aggregation is seen as an important issue by asset managers, from both an operations and IT perspective. A large number have "high" or "medium" levels of aggregation process duplication across business functions. Most say their aggregation processes are "somewhat automated" or better and nearly all firms need to perform aggregation processes at least daily. As well as the management of data, the timing of aggregation processes and reliance on third parties to either perform aggregation functions or deliver data to be processed were seen as causing difficulties.
"While appearing to solve immediate problems, the continued introduction of new aggregation processes further entangles already complicated operations," says Rawcliffe. "The study indicates that this constitutes a significant operational risk."
