Simplify the Chaos
September 20, 2010
Author: Patrick Murray
Title: President and CEO
- Fewer systems are better.
- Fewer systems cost less.
- Fewer systems are easier to upgrade.
- Fewer systems have less to integrate.
- Fewer systems are easier to understand.
Investment operations can have varying levels of complexity depending on factors such as products, parties, demands of regulators, market data sourcing, report timeliness, and demands of clients. With so many variables, solving the problem with too many systems, which creates more integration points, over-complicates the problem.
In order to effectively achieve Straight Through Processing (STP) in an operation, the focus must be on keeping things simple. Every time a new proprietary or vendor system is introduced into an environment, it will need to be integrated, maintained, configured and customized, and eventually upgraded. Each time a new system makes its way into your operation to solve a problem, your total cost of ownership and maintenance just went up significantly. The new system will need to be fed with data, monitored, controlled, and properly rolled out to users. Maybe you have the staff to handle the implementation and subsequent application, integration, and network maintenance and maybe you don't, but one thing is true across the board and that is your organization's resource capacity has been reduced often significantly. To some the value-added with another new system will be high, but are enough people, without a stake in the system, receiving enough value to justify the cost?
The key to simplifying an investment operation is to use as few systems as possible. Start by defining the required functionality across your organization. Build, buy, or outsource a system that handles the largest and most important functional points and has an open architecture. Then build around this core by using web-based built applications and web services. If there is a need for additional systems where company-wide value relative to total cost of ownership is a clear win for the company, then the system is a worthwhile endeavor. As the number of systems increases, value diminishes, while complexity, cost, and confusion run wild.
Investment operations can be a chaotic place, but by limiting the number of systems and simplifying workflow you can successfully control the chaos!