Despite the huge advances in fund administration technology in recent years, many providers – particularly the boutiques – have yet to reap the benefits. We are, however, reaching a point where an effective system is more than just a differentiator; in fact, having an inefficient system could put some managers out of business as a result of spiralling operating costs.
Investing in systems to keep up with regulatory and other change in the market is essential for the long-term survival of firms. Of the many reasons why fund managers put off upgrading their technology, one of the most misunderstood major perceived barriers to embarking on this journey are supposed myths around data migration.
1. Data migration is expensive
Historically, many fund managers looking to change technology providers have experienced hidden costs and charges leaving bad memories of poorly managed and expensive migrations. The costs and timescales that incumbent providers work to can be prohibitive and are often used to dissuade companies from changing supplier. When followed by clumsy attempts by new providers to bring that data on to the destination system, this has inevitably led to a fear on the part of fund managers that migration costs will be high and difficult to control.
Happily, the position has improved and present day reality is that some of the more enlightened and experienced software providers have now introduced a level of management and control to create a standard migration process with predictable costs and timescales. The very best of these modern software houses will even fix the price and timescales at the outset of the project. Equally, they can offer a dedicated service which works with the incumbent provider to reduce costs incurred from switching. For instance, a flexible process can often accept data in the format of a standard download, which removes the need for costly data reformatting as the switch is carried out.
2. Data migration is time-consuming
Over the past five years, we have seen that the time taken to complete a data migration from start to finish, on average, has dropped from 12-18 months to 6-9 months, representing a 50% reduction. Most software firms should now be able to provide a data dump inside a 24 hour window: a side-benefit of the various improvements in the industry’s checks and balances introduced over the years.
Smart thinking system suppliers have taken advantage of technology to standardise migration procedures which means that once the initial data mapping exercise is complete, the remainder of the process will then run reliably and to predictable time scales. A range of control reports will be produced to ensure that data quality can be checked, and corrections applied as required, prior to going live.
3. Data migration is burdensome
Previously, technology limitations typically led to providers adapting and building a specific programme for each migration. This somewhat piecemeal approach resulted in a correspondingly tiresome migration process for both the provider and the fund administrator. Nowadays, the more insightful providers offer a standardised approach to each job including an initial pre-migration step to do the data mapping – managing the process from start to finish. This approach allows suppliers to deliver a streamlined process with consequent benefits for efficiency.
In terms of the data switch-over itself, automated control processes have been cleverly designed to ensure that ‘in-flight’ trades and other transactions invoked on a Friday on the old system can be confirmed by Monday on the new one. This means that there is no disruption to either trading or service for the investor while the migration is taking place virtually ‘behind the scenes’.
4. Data migration is insecure
The risks inherent in data being in limbo are now comprehensively mitigated by encrypted and password protected file delivery.
Overall, the improvement and standardisation of the migration processes now being offered by the more informed and savvy providers greatly reduce the risk, costs and stress surrounding these critical projects. Making the switch has literally never been easier. So while the decision to change provider and upgrade your technology infrastructure is a big one for any firm, don’t let data migration be the barrier!
Tony Collins heads Business Development EMEA at Bravura Solutions