Digital transformation takes more than just software

Technology is a great facilitator of change, but it is not the panacea for all operational challenges. Holland Mountain’s Head of Consulting, Jeremy Hocter, explains why.

One of the more common assumptions we see Private Capital firms make is that with a new system in place, everything will immediately be better. Whilst a well-designed software solution has the potential to drive improvements, there are a number of surrounding factors that must be actioned in parallel to ensure a positive outcome. To avoid a failed implementation, it’s vital that firms are prepared for the changes and have carefully considered not just the surrounding processes but also the people required to make it a success.

Laying the groundwork

At the start of a software selection process, it’s important to be clear on what your firm needs. Without this clarity, you might see a lot of attractive features in the sales demonstration but miss the details on the fundamental parts of the system that your firm’s users will need every day. Make sure you’re choosing the system that fits your specific requirements the closest, which may not be the slickest demo. If you focus your attention on the functionality that is most needed, you’ll build a fuller picture of how closely each system fits your firm’s specific requirements and be better equipped to make an informed selection decision.

Make sure the pricing model is transparent and you know what is included in your package and what isn’t. These days, many products are modular so you can choose the ones that are the most appropriate for your needs and use the sales demonstration to confirm how each module will solve specific problems for your firm.

I’d also strongly recommend seeking the right level of business sponsorship, from the start. These are critical business systems and any implementation needs to be championed by senior business leaders. A significant amount of time and financial investment will be required to ensure the implementation is successful and it’s unlikely to be without some challenges along the way, so it’ll be important to have support from leaders within the firm.

Navigating the design phase

The first phase of an implementation process is an opportunity to gain insight into existing processes, creating shared understanding of the problems that the new system aims to solve. Make sure internal teams meet ahead of the vendor’s design sessions to agree what they want the future state to be, then select just a couple of key people to communicate that to the vendor. If this doesn’t happen, you risk a lot of head scratching and disagreement during the vendor’s design sessions, which wastes time and can increase costs unnecessarily.

If you can, try to utilise as much of the standard functionality as possible, rather than opting for complex customisation. In the long run, it’s often better to adjust your processes, rather than customising a new system to fit. This will help ensure your teams can leverage all the new features and R&D effort that goes into a new system; if your implementation is highly bespoke and customised, this may not be possible.

Assembling a multi-skilled project team

Don’t underestimate the time and effort required. These projects need input from your internal team, as well as consultants, to be successful. Third party consulting firms bring valuable knowledge of best practice, and help you avoid pitfalls, but it is vital that your own employees are involved at every step of the way. Their contributions will be invaluable, from defining their requirements, to conducting testing, reviewing and signing off cleansed data, and completing training. If a third party handles all of this work independently, once they leave at the end of the project your own users won’t know how to use and maintain the system.

For firms wishing to leverage temporary resources to boost their capacity during the implementation, best practice is for these resources to backfill your team’s BAU activities, freeing them up to be able to dedicate time to the project. Data is another area where dedicated additional support can be very helpful. Data cleansing and migration is perhaps the most under-estimated aspect of implementation projects, and a common cause of delays. Ensuring the new system has high quality data from the start will maximise the chance of successful adoption by business users.

Planning for the future

After the effort of an implementation, it’s very common for firms to suffer project fatigue. This is entirely understandable, however it’s essential that a firm does not consider that all the work is completed once the system is live.

As the software vendor’s resources roll off the project, do make sure your firm has the necessary people and processes in place to continue maintaining the system on a daily basis. As a minimum, a system owner should be identified early in the project, who will have a full understanding of the system and the background on why certain decisions have been made.

Allocating a small budget for the ongoing maintenance of the system is a prudent measure, as business requirements are continually evolving and any new system needs to develop at a similar pace to avoid it becoming out of date. Without investment in maintenance, there’s a danger you might need a complete revamp and relaunch of the entire system, which erodes the business’s trust in the solution. Many firms now use third party support to pick up the bulk of this ongoing system maintenance effort. Holland Mountain offers an outsourced Platform Management service for firms that don’t have the capacity to manage the system in-house.

Driving towards digitalisation

The technology available to the Private Capital industry is evolving and innovating at an astonishing pace. If you take portfolio monitoring as an example – two years ago there were perhaps three key solutions, now there are over 30. As new, specialist providers enter the market, their solutions are filling the remaining gaps in available functionality and gradually expanding the potential for digitalisation. It’s clear that digital technologies will continue to play a pivotal role in the advancement of our industry, as long as implementation is fully supported by the right processes, people and data. Firms that act now to explore technological innovation and embrace these opportunities will benefit from a streamlined operating model, enhanced investor experience, and ultimately, will create competitive advantage.