Enterprise Systems Selections Case

The Challenge

A long standing multi-billion dollar hedge fund invests in both marketable securities and structured debt. The firm is global in nature. The marketable instrument types invested in include: high yield corporate debt and bank loans, asset backed securities, credit derivatives, equities, options, money markets and FX spots and forwards.

The client was confronting a number of challenges that are directly associated with an organization that has achieved significant growth and success coupled with an increasingly complex business environment. They recognized that while its current process and technology infrastructure had continued to evolve to meet the organization’s needs, it possessed significant limitations. In the absence of making an investment to architect and implement a system and process infrastructure that will meet the current and future needs of the business, the firm subjected itself to:

Operational Inefficiencies

  • Need to hire more junior employees to handle manual processes
  • Ad hoc report requests take considerable time and resources
  • Employees spend more time fixing errors and ensuring data integrity

Increased Operating Risk

  • Heavy reliance on off-line spreadsheets poses greater risk of errors
  • Inability to calculate critical risk and scenario analytics
  • Reconciliation process does not include cash and complex instruments

Inability to Meet Information Needs

  • Reporting processes are manual, not speedy enough and/or not meeting needs
  • Accuracy suffers due to higher volumes and manual nature
  • Investor service has higher probability to deteriorate
  • Key internal reports to partners and investment professionals suffer

Client Goals

Client sought a consultant to assist with, and implement a business applications strategy that supports and leverages their business growth over the long term.

Our Approach

Business Analysis

  • Developed firm-wide profile and high level business process assessment matrix
  • Defined sub-processes and related high level requirements by type of investment
  • Prepared current process flow diagrams
  • Evaluated current systems and determined capabilities and gaps/limitations
  • Inventoried all system generated reports and Excel spreadsheets
  • Analyzed in detail all incoming and outgoing data interfaces

Detailed Requirements & System Selection

  • Defined detailed enterprise wide functional requirements for the following systems:
    • Contact Management
    • Portfolio Management
    • Investment Accounting
    • Corporate Actions
    • Security Master
    • Cash Management
    • Reconciliation
    • Currency Hedging & Exposure Management
    • Risk Management
    • Trade Order Management
    • Trade Processing
  • Identified more than 20 potential vendor products (both enterprise and best of breed solutions)
  • Prepared and distributed RFI to vendors, collected and scored responses
  •  Prepared detailed scripts and managed two rounds of demos (general system and detailed functionality) to reduce the population to 8 remaining vendors
  • Prepared detailed test cases, compiled test bed of data and provided to vendors for onsite demos
  • Administered final round of demos and prepared total cost of ownership estimates
  • Assisted in selecting vendor finalists and then contract negotiations

The Results

  • The selection process was completed in 4 months
  • Final recommendations were presented to, and approved by the firm’s steering committee
  • Subsequently, 3 prominent software vendors were contracted; detailed project planning and business analysis completed, and the 3 systems went live

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