I recently participated on a panel discussion at Osney Media’s Top Strat and Data Conference in Boston. I thought the topic on outsourcing was very interesting and something we come across a lot when talking to prospects so I thought I would share some of my views on the panel topics:
- Should you outsource business components, use Software as a Service, or execute in-house?
In my view, asset managers should not execute in-house what is not core to their business. In a recent blog I wrote, I talked about how things like data management were not core to their business and they should therefore consider outsourcing it. Data management is a typical example of something that you could say lies outside the main day-to-day business of an asset manager. In my view, it is not their USP, nor should it be. On the other hand, data is a core raw material in the build/manage process of a fund – so one can understand why an asset manager wants to keep certain business-critical data management functions close to hand. On the other hand you have the sales/marketing and distribution side of the business, for whom data is not so much a raw material, rather an element of the communication, and it is here that the ‘core-ness’ of certain data management functions become less clear.
Many organizations will use a combination of outsourcing, SaaS and in-house technology provision depending on how commoditized the systems in question are. SaaS – a term often misused and misunderstood – relates to use of software in the cloud with an on-demand licensing model – asset managers are embracing SaaS to access highly commoditized offerings such as CRM, HR systems and ERP.
The biggest fear when we talk to customers first is lack of control as they consider their fund data to be very sensitive information but when we compare to something like Salesforce.com where their customer information is in the cloud, they soon realize that as long as the data is secure, it makes sense.
- Data security and migration when using outsourcing
The number one concern of an asset manager when they engage with an outsourced service provider or a SaaS/PaaS service provider is security of data. They are concerned not only about the security of the data while the service provider is in control/possession of it – but also with respect to how they will migrate the data back to their organization, or to an alternate provider at the end of the service agreement.
SaaS/PaaS providers must prove to the client that they have an ultra secure environment and the related information management governance, standards, processes, procedures to back this up. Key related areas of concern outside specifically of security are Backup and BCP/DR services should anything go wrong.