December 1, 2010
The day-to-day running of the Operational Infrastructure of an investment management firm is essential to the firm’s existence. The minimum standard for a functional Operational Infrastructure can be defined as providing the ability to perform routine processes such as monitor risk positions, process trades, manage collateral, produce client statements, etc., in an efficient and consistent manner. However, to be considered highly effective, an Operational Infrastructure must be scalable, highly controlled, dependable and adaptive (responsive to new and changing requirements). This is easier said than done when you think about the need to harmoniously synchronize the multitude of systems, processes, people and data that must work in concert to accomplish this goal. Given the ever changing needs and requirements, it’s safe to say that Operational Infrastructures are not created in just one broad stroke.
The really good ones are developed over time through highly disciplined and methodical approaches incorporating continuous evaluation and improvement components.
More than any other factor, corporate culture plays a major role in establishing and maintaining a strong and highly capable Operational Infrastructure. It is those beliefs, values and behaviors that permeate every aspect and area of an organization. Although direct actions and decisions have the most powerful impact, inaction and non-decisions influence the corporate culture as well. It is top management’s role to set the tone; and from there it flows down and impacts everyone in the organization.
The most successful organizations possess certain key cultural characteristics. Below is the IntegriDATA Top 5, which when blended together enable organizations to truly thrive and grow:
1. Setting and Enforcing High Standards & Controls – every member of the organization understands that the organization wants to be known for delivering high quality services at all times. This goes hand in hand with establishing a highly robust control environment, aggressively getting to the root cause of issues and never turning a blind eye to limitations and weaknesses.
2. Promoting Cooperation & Collaboration – members of the front, middle and back office share joint responsibility and accountability for the Operational Infrastructure, especially with respect to technology related projects where staff are encouraged to actively communicate and work together towards a common goal.
3. Investing in Technology – recognize that specialized third party software applications are critical, but there is also a place for proprietary applications and interfaces in every technology infrastructure. Technology spending decisions should consider many factors and not be solely based on achieving a near-term positive ROI.
4. If It’s Important, It Must Be Measured – reporting and monitoring of key operational metrics is critical. Staff tending to tasks should understand what they will be evaluated on and management can understand risks, exposures and trends.
5. Managing With a Long Term View – developing a strategy that is backed up by regular planning and monitoring is very important. No solution that is implemented should be considered a “one ‘n done.”