Change management is the secret ingredient in successful data operations for funds

In many cases the best technology isn't really about the technology at all, it's about the people skills and implementation, writes Stephen McClain, head of product at Harmonate.

Technology represents the future of fund services. That’s easy to say, and it’s easily said over and over at conferences and seminars. And in fact, vendors tend to compete on the quality of their technology. That’s important. Stable and scalable code is vital, rather than cobbled together point solutions that don’t work well together.

But change management, and the human process of moving an organisation to a better approach is often glossed over. That’s left to the consultants. And in the end, if they are not watched, the consultants will blame the software. And the software developers will blame the consultants. The customer is left in the middle with potentially something worse than nothing. This all works better if you avoid big bang deployments.

It’s better to be pragmatic about finding the starting point, rather going too far too fast at the beginning.

Being pragmatic

What too many don’t properly understand is that an automation platform on its own is not a complete solution to their problems. A company, for example, starts off by acquiring a Robotic Processing Automation (RPA) tool and assumes that it will immediately reap benefits across the entire organisation and processes.

However, many times they set their expectations too high too soon.  When they try to replace all procedures up front, they find little, if any, realised return on investment. Their processes are implemented quickly and poorly, causing even more overhead than if not implemented at all.

Those that embrace a pragmatic approach find the right balance. They identify and prioritise which processes need to be automated first. Usually the best approach is not automating the most complex process. Rather it’s preferable to start with the quick win that demonstrates the possibilities. Better yet if it can also be achieved in the first three to six months.

Selecting what will be automated is a crucial step in the process.

Once there is a successful implementation, executive buy-in becomes easier for successive processes to follow, and even more realisations in the future. More importantly this demonstrates to the team tasked with these processes how automation can complement, rather than replace or add more work to their daily activities.

The key to automation is the people

Employees see elements of their jobs become value drivers through automation and learn how they can in turn drive the organisation in more productive ways. Someone whose main responsibilities entailed entering numbers into spreadsheets can now push that work into carrying more clients and adding insights and speed that outmaneuvers the competition. Thanks to automation, the employee is more involved, more invested and, by complementing the machine, has made the entire company more efficient and profitable.

Fund services firms also need to remember that automation does not replace people. Automation allows people to scale. It must be understood that automation works best when humans continue to stay involved. Automation should never be considered a stand-alone process.

That starts with implementation, but it never stops.

Most in Silicon Valley are familiar with Hamilton Helmer’s theory on Seven Powers that allow businesses to stay ahead of the competition. Warren Buffett also talks about “moats” and barriers, good business have that allow them to stay out ahead.

Ash Fontana at Zetta Venture Partners has suggested along with the familiar Helmer and Buffett moats of intellectual property, scale and branding. There is a competitive advantage on how well machines and humans learn from each other. Fontana looks for loops where humans and machine scale together. As legendary chief information officer Paul Strassmann has argued, the ability of computers to store and use knowledge capital is their real, underappreciated value. You need the human to start and keep that fly wheel moving.

Humans after all

The irony of a fund services business that employs automation wisely is that on the outside, it seems more human, and appears to return to the core of what fund administration should be. Some may call technology-enabled fund administration ‘New Fund Administration’. In reality it may be more that automation can allow fund services firms to focus on the core values of what fund administration can deliver.

And if you consider the middle- and back-office’s service to be to enable smarter front-office investing, and the nimbleness to find opportunities others don’t see and can’t get to, smarter data operations enables that.