Whether you are implementing Workday for the first time or are an existing Workday user, proper support is needed to ensure your Workday experience is a success. To realize the system’s full potential and adequately support your business users, Workday must be supported by resources capable of taking on many tasks. These tasks can vary from answering how-to questions, troubleshooting issues, administering recurring events, updating calendar/schedule periods, liaising with Workday, and analyzing/deploying Workday release features.

When building your support team or enhancing it, it is essential to look for the following key characteristics. These characteristics are attributes of individuals who know Workday in and out and how the industry operates. These attributes will result in a support team that can efficiently handle any Workday request.

1. Resources with Industry Experience – Support personnel with experience in the industry are more efficient than newer resources without the requisite background. In addition, these resources can understand and diagnose issues quickly and accurately as they have been through similar situations before.
2. Less Specialization – Resources knowledgeable in multiple Workday modules provide more comprehensive solutions to issues. In addition, cross-module expertise enables these resources to know what components are related, how they impact each other, and what is part of any total solution.
3. Documentation Skills – Resources that know how to create well-written documentation provide value beyond configuring Workday. The documentation they produce will be invaluable to retaining institutional and contextual knowledge, mitigate against staff turnover, and provide a knowledge base for others to leverage.

Resources with Industry Experience

It is important not to fixate only on what resources know in Workday. Knowing the ins and outs of the industry is just as valuable. This knowledge is gained only through experience and provides a perspective on how things are supposed to work regardless of the kind of system.

For example, it is quite common for terminating employees at Asset Managers to be subject to a Garden Leave policy where the terminated worker is essentially paid not to work for a set amount of time after their termination. Workday does not come pre-configured with the means to put someone on Garden Leave; it will be up to your firm to configure this. Resources with experience administering and using Garden Leaves will know how to configure it properly. In Workday, the easy part is setting up the Garden Leave itself so that the terminations could go on leave and not terminate until the end of their Leave. However, there are additional considerations to review regarding whether Garden Leave terminations should be included in active headcount, where they should sit in your organization, or whether they should be visible to employees outside of HR. Support resources knowledgeable about Garden Leaves would know how to configure Workday optimally, focusing on the pitfalls to look out for and specific reporting requirements.

This is just one specific example; however, with so many moving pieces for a feature commonly used by Asset Managers, it is critical to vet resources on their knowledge of Workday and how they have applied Workday to meet HR policies at other firms in the same industry.

Less Specialization

Having less specialization in a specific Workday component may seem counterintuitive, but in our experience, it is quite the opposite. Sure, a specialist in a particular Workday module can expertly configure its module. However, this specialization comes at a cost where they cannot configure other modules or realize the more significant impact a request may have on other areas of Workday.

As a result, a specialist may not be able to implement a comprehensive solution. Or, their lack of knowledge of other Workday components would introduce complexities when handoff and coordination are required between multiple resources.

For example, in Workday Financials, you can set up a Punchout where Workday integrates with a vendor allowing you to purchase items (like office supplies or computer hardware) directly from the vendor, and the order information would flow directly into Financials. Setting this up would involve creating a Purchase Order, matching the invoice, capitalizing the asset (if applicable), and setting up a depreciation schedule. Again, a resource that was knowledgeable in multiple Workday components would be able to advise you on what to watch out for and the best path to implement the solution.

Documentation Skills

The most overlooked attribute when evaluating Workday resources is the mindset and ability to document everything and do it well. Documentation is critical as resolving Workday issues is often an involved process involving researching the subject, implementing the solution, and testing multiple scenarios. Furthermore, many types of problems and projects repeat themselves (i.e., an employee thinks their Time Off Balance is incorrect, Performance Cycles happen twice a year, annual Open Enrollment, and new time off plans). Documentation can prevent having to research and resolve the same issues more than once.

Proper and well-written documentation will preserve the work done, allowing you to retain institutional knowledge, lessen the impact of any resource turnover, and enable work to be done more efficiently. The team will spend less time re-examining common issues, attempting to understand past decisions, and more time resolving the actual problem.

Retaining knowledge of your existing setup is particularly relevant across the alternative investment client base, where firms often devise complex allocation rules to determine the true profitability of each business line.   These rules result in a ‘fully-loaded’ P&L by business line and can be used in some cases to determine the compensation of portfolio managers, traders, or other essential employees associated with the business. In some cases, firms will want access to this P&L but not have it truly posted in the general ledger and instead use it for reporting purposes. This necessitates customized reporting that may exclude or include these allocations depending upon the view of the person running the report. When troubleshooting or modifying these reports, it may take a resource that is unfamiliar with the setup much longer and may lead them to recommend modifications that are not appropriate. It may also require lengthy explanations from the business that is not the best use of time and could otherwise be avoided.  

Conclusion

Successfully supporting Workday is not easy, as there are many types of users to deal with and a wide array of issues to resolve. Therefore, selecting the proper staff to support Workday is in your best interest. Your support personnel must be capable of working with multiple Workday components, documenting solutions and decisions well, and having knowledge of the business to create solutions that fit within the industry. By recognizing and evaluating resources against these critical traits, you will be well-positioned to field the right Workday support team for your organization.

FinServ’s long history servicing the world’s top Alternative Asset Managers, combined with our deep Workday expertise, make us a natural option to help you find a world-class Workday support team.

Managing your IT infrastructure touches every team member and can create significant issues if not handled effectively. From extensive downtime to user frustration having an IT team that does not act as a business partner can hurt your whole fund.
FinServ completed an IT MSP Vendor Selection for one of our Private Equity Fund clients experiencing these exact issues. When the head of the fund could not access his systems during the pandemic, and their service provider had let the problem sit for over 24 hours, the fund decided a change had to be made.
The client was already aware of FinServ’s Vendor Selection methodology, as a few months earlier, we helped them select a new Third-Party Fund Administrator.

FinServ’s Vendor Selection methodology ensures that our clients select the right service provider for their unique requirements. Our comprehensive approach includes three stages of selection.

Phase 1 – Initiate

FinServ works with our client to inventory/collect all essential documentation and support for the new vendor culminating in a detailed set of user requirements. FinServ leverages our functions of an IT MSP to reconcile all possible functions to ensure all possible services are covered. Getting from a long list of vendors to a shortlist based on a detailed Request for Information (“RFI”).

Phase 2 – Assess

At the core of our selection approach, we use a 35-Page RFP including over 320 detailed questions. This level of detail ensures that the vendor provides the services and support in a way that meets each client’s requirements. Every client has their own way of doing business, and this approach ensures that the vendor that best fits that model is selected. The key to this stage is FinServ’s team with unparalleled attention to detail combs through the provider’s documentation and answers. It creates a qualitative and quantitative scoring that investors and auditors call world-class.

Phase 3 – Recommend

In the final stage of our selection process, we use scripted demos, which force each vendor to show, not just tell us, how they address the client’s most complex challenges. It is in this step that the right vendor rises to the top. Most salespeople hate this step because they know that often they want to stretch the truth about their systems. The right vendor can show how it is done to seal the win. In our final step, we conduct comprehensive reference checks that often uncover issues that may not disqualify a vendor but help the client with crucial advice as they move forward with the winner. The final step is a recommendation deck that summarizes all the detailed work, including the cost analysis across the finalist vendors supporting the client’s final selection. Many clients have used this document to show potential investors the quality of diligence in selecting a key service provider.

Beyond the Methodology

The process is key to making the right choice, but more important is ensuring that you focus on the essential areas these service providers offer. Technology is constantly evolving, be sure there is a focus on what is needed today and in the near term to meet your firm goals and requirements.

FinServ makes it our business to always stay on top of the latest requirements from regulatory agencies like the SEC and the latest technologies that the best providers are using.

Your IT Managed Service Provider (“MSP”) typically handles 2 to 3 of the most critical aspects of your business:

1) Cyber-Security & Risk Management

2) Monitoring & Management of IT Infrastructure

And for funds that have chosen not to keep IT resources in-house.

3) Service Desk / Desktop Support for Users / Company

1) Cyber-Security & Risk Management

With the war in Ukraine and the increased likelihood of focused cyber-attacks, there has never been a more critical time for a financial institution to ensure that they have the best possible risk management and cyber security coverage possible.
The offerings from the best IT MSPs have changed drastically over the past few years as the technology for cyber security and risk management has been forced to evolve as quickly as the sophistication of attacks.

The Not So Obvious Requirements Matter Most
One of the nuanced aspects of these services is less about your direct protection and more about how communications about potential IT security issues are raised. Our clients desire to limit the noise created by non-critical communications, so only the most critical issues are escalated for review. Some vendors have more advanced issue monitoring and alert systems that use rules and triggers to raise only the most important messages to clients, limiting “boy who cried wolf” scenarios.
The best vendors also proactively provide webinars and training for your employees to stay on top of the latest attack approaches. A knowledgeable team is your best defense against constantly evolving and changing cyber threats.

2) Monitoring & Management of IT Infrastructure

Has your network ever gone down, leaving you unable to work? Have any of your remote employees ever lost access to your network? Has a crucial executive of your firm ever been frustrated by not getting the IT support they need?
If the answer to those questions was yes, you probably don’t have the right service provider with the proper setup and response management systems. The best IT MSPs have formulated approaches that ensure redundancy and backup of essential systems, so you never have downtime during regular business hours. Similarly, they have all created world-class service systems that support intelligent routing of critical issues with complete status transparency. Essential issues are solved in minutes, not hours or days. When they take longer, your support staff can see real-time updates on 1) who is working on the issue, 2) when it will be resolved, and 3) all the latest activity and communications to the key executive.

3) Service Desk / Desktop Support for Users / Company

If a key executive’s camera is suddenly not working and they have a full day of Zoom or Teams calls ahead, not having someone come to their desk immediately to fix the issue can be a significant problem.
Alternative asset management firms often choose not to hire a CTO or desktop support staff. With predominantly SaaS-based applications, the need for in-house physical support has been dramatically reduced. Many smaller funds prefer to rely on an outsourced IT support person along with a part-time Virtual CTOs (“vCTOs”) to focus on complex technology strategy. Separately, while remote desktop support can work for many issues, in-person physical support is still something many funds require. While many IT MSP Vendors have moved away from offering this service, it is still an essential requirement for many funds.

If you are one of these funds, FinServ has you covered. We know which IT MSPs truly champion this type of support and which vendors only give it lip service. Additionally, If you are unhappy with any existing onsite IT support you are receiving today, we can help you move to a vendor that will cover all of your needs.

Conclusion

The IT MSP Vendor space is filled with many sub-par providers that cannot cover the mission-critical services that alternative asset managers require. In a world where one mistake could cost your firm its reputation or paralyze your operations, it seems crazy to leave this essential operational risk under-serviced and exposed.
There is no one-size-fits-all vendor. Many of the best IT MSPs have focused their services in certain areas, so choosing the right partner that fits your firm’s unique requirements is essential. FinServ’s knowledge of the marketplace and our rigorous selection methodology ensure you get the provider and services your fund requires.

To learn more about FinServ Consulting’s services: info@finservconsulting.com or (646) 603-3799.

Undergoing technological change or implementing a new system is not something to be taken lightly in ordinary market environments, much less during a time of extreme or abnormal market volatility. If your fund or organization is planning to implement a new OMS or replace a legacy OMS, there are several things you should consider.

From a business and investment standpoint, there are the usual key considerations, including: the need for integrated OMS/EMS functionality, whether ease of use important, ability to customize workflows and if there is a desire for extensive client/marketplace connectivity. From an operational perspective, one must also consider other non-functional items like data migration (and how easy it is to implement), the software support model, modularity and future expandability.

​The aforementioned list only touches the surface; the overarching themes involve automation, workflows, analytics and decision-support tools. In fact, in a recent Refinitiv/Greenwich Associates paper, traders ranked an EMS as the most impactful technology in the short-term.

OMS vs EMS

In general, hedge funds treat the Portfolio Manager (PM) and Trader workflows as a single unit, whereas traditional asset managers may have additional bifurcation between roles and responsibilities. At a hedge fund where the PM sends orders via email/chat/voice to a trader to execute, they may want a single, integrated OEMS. On the other hand, an asset manager often has multiple PMs who route orders to a centralized trading desk. In this case, the institution may want a solution with specific standalone OMS and EMS functionality, in order to access best-of-breed functionality.

The trend in the marketplace for a while has been OMS vendors integrating additional trading functionality by buying or building EMS solutions. This results in the ability to capture and allocate client orders while also capturing execution details to help the firms comply with regulatory requirements. Additionally, this allows them to market themselves as an all-in-one solution and would insulate the client from having to integrate yet another vendor into their technology stack.

Source: Charles River Development

Ease of Use

Being able to get your operations, back office and front office users onboarded and using the software as quickly as possible can be a heady concern for most clients. In theory, this sounds simple, but many legacy OMS were designed with a single asset class in mind. If your client is now multi-asset, multi-strategy and trading a variety of instruments in volume, it’s even more imperative that a system be easy to use and operate as one cohesive platform.

A modern interface with intuitive workflows can be a competitive advantage especially if the fund’s current OMS platform is antiquated and requires, in a worst case scenario, dual entry or swivel-chairing in order to execute and fill an order. (Swivel chairing involves a PM creating orders/allocations in an OMS and then sending them over to trader for execution in an EMS).

Ease of Customization

A vendor’s product team always has to find the right balance of customization and the notion of a standard offering for the client. However, in this day and age where customizability is king, most vendors are client-driven and willing to bend over backwards for their clients. Enfusion Systems, whose product features weekly upgrades, has marketed their product as being easily customized. In a recent implementation with an asset manager, Enfusion agreed on development of specific functionalities within their platform that would position them well for the changing OEMS marketplace. The client agreed on an OMS implementation, while also using Enfusion’s Services team for reconciliations (the client still kept some functionality in-house, like collateral management).

Client/Marketplace Connectivity

Most multi-strategy funds that trade a wide breadth of products across different asset classes and venues will always be excited at the prospect of having a vendor whose product comes pre-packaged with existing API connectivity to brokers, venues and marketplaces. Many clients have a baseline expectation of connectivity with a full suite of partners across the spectrum of asset classes. If this is not currently in the vendor’s repertoire, the expectation is that connecting to new trading venues and brokers would be trivial.

Data Migration

One of the most underestimated Issues that can be the source of delays for most implementations is data migration. What seems like a simple exercise to port accounting/trading data from the client’s old system to the new system can lay bare a client’s unreconciled data and inconsistencies between trading data and official books and records. Having clean, reconciled source data from the client that can be matched to the client’s custodian or fund administrator sounds simple. In practice, many things can go wrong and be a source of delays. Finding a vendor who has experience successfully migrating trade data, for funds that are similar to their current structure, in a timely manner is the holy grail.

Our Implementation Project with Enfusion and an Asset Manager

FinServ is currently engaged with an institutional asset manager on the implementation of Enfusion’s comprehensive front-to-back trading software product. The asset manager is looking to implement a new front-to-back office system for one of their businesses. Because their current portfolio management system is a legacy product, the product features were outdated and users found the workflows to be inefficient. By implementing a new portfolio and order management system, they would be able to control service levels and more importantly, they would be able to custom develop functionality that match their growing business needs.

After an extensive vendor selection process, the asset manager chose Enfusion Systems. Enfusion was able to make their choice easy due to their cloud-based solution, which provides integrated order and execution management as well as middle office and IBOR services. Although not the focus of this article, the asset manager was also looking to outsource part of their back office to Enfusion’s Services team. Using one vendor for both OMS and back office was one of the key drivers behind their decision. In addition, having a single data model also provided a golden copy for data for all users across all functions. Since the asset manager’s business model involved trading a diverse set of product types and made use of heavy derivatives, Enfusion’s ability to handle multiple asset classes also made sense.

Considerations

Because implementing a new OMS was such a large effort, the timelines for launching and migrating an initial account and eventually the entire business spanned much longer than a year. A decision was made to have a phased approach, where specific sets of strategies and funds would be moved to the new platform in stages.

In order to alleviate some concern that the execution tools, order management workflows and trade compliance functionality would not be replicated completely (due to extensive in-house custom enhancements over the years), Enfusion worked closely with the client to address these items.

From the client’s standpoint, adding a new system would also add additional complexity – additional integration points, extra feeds into and out of their books and records system, the necessity to have Trading operate out of multiple platforms simultaneously, a bifurcation of the client’s Operations team to handle both sets of systems and lastly, having PMs manage portfolios and strategies across multiple systems during the phased implementation.

“Enfusion and FinServ worked side-by-side during this project – we ran implementations, gathered clients’ requirements and dived deep into the use cases. Both parties were truly collaborative and this enabled accountability with the client. FinServ has tremendous project management experience and it was great partnering with them.”

– Brad Flax, VP of Business Development at Enfusion

Summary

If you are interested in learning more about our current and past Enfusion implementations, please reach out to FinServ. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.

An HCM solution is an integrated system that automates HR functions combined with finance, planning, and analytics and allows for employee self-service capabilities, thereby reducing labor costs, optimizing business processes, and increasing efficiency. Companies that transition from manual processes and disparate legacy systems to modern, cohesive digital workforce management technologies can realize up to 15-25% cost savings related to HR and IT spend.

Most current HCM solutions are offered as a cloud-based, SaaS delivery model and include modules for payroll, HR, time and labor management, and recruitment. This type of solution does not require an expensive hardware investment and constantly updates software to the latest version while maintaining secure backups. These systems are monitored at all times and provide the utmost reliability. An added plus for asset managers is that the solutions can be customized to suit the size of any company and grow as the organization grows.

At FinServ Consulting, we have experience working with firms of various sizes in the alternative asset management industry to select, implement, and/or upgrade their HCM systems. While there are numerous benefits of having one comprehensive, integrated HCM, there are other options available on the market such as lite solutions that meet basic needs without all the added features that may not be necessary for some firms, as well as point solutions that cater to the industry’s unique needs, like complicated compensation structures. FinServ can help assess your company’s specific requirements to identify what to be aware of in terms of missing features, implementation issues, and cost-benefit analysis of different HCM options.

Benefits of a Consolidated HCM

Attract and Grow Talent

Recruiting top talent and keeping them engaged is no longer just HR’s responsibility—talent objectives can have a significant financial impact on growing a financial services business. Implementing a new HCM system can help enhance performance management processes to eliminate bureaucracy and encourage meaningful conversations between managers and employees focused on performance improvement. In addition, better compensation data and visibility of top talent allow managers to make more well-informed decisions regarding performance and rewards.

Some clients in the alternative asset management space that FinServ has previously worked with used manual spreadsheets to manage staff performance, as well as recruiting and other functions in some cases. However, by opting for a consolidated HCM system, these organizations were able to use more sophisticated workflows to provide employees with more meaningful feedback. Also, they could track and monitor operational outcomes and staff development across the company to ensure a payback from their HCM investment.

Make Better Informed Decisions

Asset management firms in the current environment face increasing regulatory scrutiny, such as GDPR, AIFMD, and Form PF, and constantly evolving standards. In order to meet the new generation of demands, these companies need to make well-informed investment decisions with visibility into all business lines. However, this is a difficult task when the data required to deliver these insights is housed in disparate legacy systems with varying formats and level of detail. This is where having consolidated HCM comes in—a single system for finance, HR, planning, and analytics can offer the necessary foundation to gain better insights, save time on data aggregation, and proactively solve business problems. A digital solution of this type can help improve business margins, provide competitive differentiation, attract and retain customers, and identify lucrative areas for growth.

Harness the Power of Modern Data

Today’s financial companies have an unprecedented amount of valuable data across their organization. However, many are still not able to access this data due to isolated, unorganized, and inaccurate legacy systems. The data warehouses that are typically accessed by business intelligence tools to create reports or perform financial analyses hold data that was accurate at the time it was loaded and refreshed from legacy systems, resulting in a high likelihood that it is out-of-date and unreliable. As a result, financial services firms often turn to add-on custom software solutions to try and achieve real-time data extraction, but these products often produce further challenges because they require continuous maintenance to keep up with the changing needs of the business.

Implementing a contemporary, consolidated HCM system allows firms nimble access to the real-time data that is necessary for constantly changing business needs. These solutions include technologies, such as cloud computing, open APIs, artificial intelligence, and machine learning, that make insights transparent and accessible across lines of business.

Build Organizational Agility

Being agile is key to an asset manager’s long-term success and there are several factors at play in building organizational agility:

• Adaptable: A flexible technology foundation is essential to be able to change organizational structures and processes in response to regularly shifting business needs.
• Skilled: Financial services firms, among others, face a widening skill gap and must find ways to upskill their workforce.
• Empowered: In order to perform at the highest potential to meet evolving consumer expectations and drive success, employees need full access to data to make business decisions.
• In Control: The need for measurement and control goes hand in hand with agility and speed. Asset managers must measure more relevant KPIs to learn from what works and what doesn’t when it comes to new digital revenue streams.

There are common obstacles that firms must overcome to meet the guidelines above, including inflexible legacy technologies, bureaucratic organizational culture, and a lack of relevant employee skills. By using a comprehensive HCM solution to add intelligence to business tasks, financial firms can move past these challenges and employ integrated, real-time planning in order to build organizational agility and realize their digital growth aspirations.

Choose the Right Solution

As mentioned previously, there are many HCM offerings available on the market and it is important to select the right one to meet your firm’s unique needs. There are several factors to consider, such as the needs and priorities of the business, size of the firm, and desired metrics and reporting abilities. FinServ Consulting has experience working with asset management firms to identify and implement a suitable HCM solution. We can help you make the right decision and take full advantage of the capabilities and rewards that the new solution will provide.

Summary

If you are interested in establishing or improving your firm’s HCM platform, FinServ Consulting is the right partner to help you reach your firm’s strategic objectives.  Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact us at info@finservconsulting.com or give us a call at (646) 603-3799.

Global market data spend recently exceeded $30 billion per year¹. In an increasingly data-driven investment world, market data spend is only expected to rise, as firms seek out new alpha-generating data sets to enhance returns. Additionally, quantitative investment strategies have never been more in vogue with investors; the literal arms race to find better, more powerful data sets is sometimes merely just a struggle to “Keep Up with the Joneses”.

Market data is a critical component of modern fund management; however, wrangling market data expenses has never been more important due to rising costs and increasing complexity. In this article, FinServ will cover:

• Why is Market Data Expense Management Important?
• What Makes Market Data Expense Management Hard?
• What Technology Solutions are Available?
• Complementary Solutions and Services
• How FinServ Can Help

Why is Market Data Expense Management Important?

Market data is a Top 5 expense at most investment managers, but it is often the #1 headache. Although other expenses like employee compensation, real estate, and general technology spend reach similar (or greater) heights, market data expense management often lacks the same direct and consistent level of stewardship. Everyone wants to decrease market data expenses, even though they tend to be the least understood (e.g. complex contracts, metered services) and it is easy to pass the buck on ownership between technology, finance, operations, and the front-office. Strong, centralized control of the market data management process can help firms save millions by eliminating unused and underutilized services; however, even when market data has an organization’s focus, there are several inherent challenges with managing market data expenses without help.

What Makes Market Data Expense Management Hard?

Market data is incredibly costly and difficult to manage due to its complexity. Market data expense managers are tasked with providing structure to market data programs facing an ever-growing list of responsibilities and related challenges. These include managing a variety of execution-focused priorities, while also driving organizational change via strategic initiatives like optimizing data usage/flow and cutting out unnecessary costs. These activities include:

Expense Allocations & Invoice Reconciliation Controls:

• Market data allocations are usually more complex than vanilla corporate expenses. A single invoice could get allocation to some combination of individuals, groups, departments, and/or strategy (e.g. fund AUM-based allocations).
• This requires a clear understanding of the market data services and solutions currently in use, including an understanding of services purchased. How you pay matters as well; any soft dollar payments should be tightly managed along with appropriate firm compliance officers.
• Due to the volume and complexity of market data vendor invoices, the invoice reconciliation process demands a strong technological solution to facilitate daily market data expense management.

Usage Management:

• Keeping track of actual market data usage is required to get a handle of how to cut unnecessary costs. This includes knowing which applications use specific data, how it’s licensed, and when renewals will occur.
• Market data usage and expense reports are required for the business to make informed decisions related to overall needs. This includes a mechanism to track usage and verify that it is in line with the original business objective.
• Mitigate audit exposure as a firm and remediate any compliance breaches. Understand how the firm’s contracted capabilities compare with actual data usage. Determine if licenses exist for all services utilized across the organization?

Strategic Platform Management:

• Review and implement industry best practices for market data expense management.
• Align the overall strategy with the strategic initiatives of the business and technology teams.
• How may the organization optimize market data consumption across the board to reduce costs?
• How many data vendors are currently used?
• Are any services duplicative/redundant?
• Are there any unused/underutilized services?
• Are there better platforms available for meeting corporate strategy?

What Technology Solutions are Available?

MDSL: Market Data Manager (MDM) and TRG: Financial Information Tracking System (FITS) are two of the leading market data expense management system providers in the financial services and asset management space. The overall landscape has been heavily influenced by private equity merger and acquisition activity. MDSL recently merged with Calero, a telecom expense vendor, and TRG acquired a third player in the market data expense marketplace called Screen: INFOmatch in 2019. Both MDSL and TRG aim to provide structure and clarity to manage firmwide market data, research, software and enterprise subscription spend on subscriptions to market data providers like Bloomberg, Reuters, and FactSet.

• Contract Management and Centralized Inventory: Allows organizations to track, organize, and calculate costs related to market data vendors, contracts, products, and users. Contracts and licensing inventory details may be captured to create a centralized inventory of market data assets for use in invoicing and allocation.
• Compliance Workflow: Compliance approval workflows may be leveraged to review soft and hard dollar eligible costs.
• Invoicing Workflow, Reconciliation, and Allocation: Invoice processing becomes streamlined when matching against structured inventory records. Robust organizational structures may be accommodated to allocate to departments, groups, and/or individual users.

Complementary Solutions and Services

• Managed Services: Both MDSL and TRG offer managed service offerings inclusive of contract maintenance, compliance reviews, and invoice reconciliations. If you are underwater with your current market data expense management process, consider leveraging managed services as part of an initial implementation.
• Usage Monitoring and Control Products: MDSL: Access Compliance Engine (ACE) and TRG ResearchMonitor provide access controls and usage monitoring for subscription services, allowing you to reduce spend on underutilized services and directly ensure compliance with data access contracts/agreements.

How FinServ Can Help

Managing market data expense is often a headache for investment managers, but there are several leading marketplace solutions that help relieve the burden placed on market data managers. FinServ Consulting’s industry expertise and unparalleled track record of service for asset management clients makes us the right partner to help you select the right solution for your organization.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799.

¹ Based on a Burton-Taylor Research Report.

Regulation around UMR came about as a response to the financial crisis of 2008-2009. One of the reforms that was recommended was the implementation of margin requirements for non-centrally cleared derivatives. The in-scope OTC derivatives include FX options, NDFs, physical FX forwards, swaptions and hedging trades.

The initial implementation of Variation Margin (VM) requirements was implemented in 2017, while Initial Margin (IM) requirements continue to be phased in until 2021. The new IM rules that are to be put into effect in 2020 and 2021 affect primarily smaller financial organizations, including buy-side participants. Note that UMR has been phased in since September 2016 in the US and March 2017 for remaining market participants.

The initial Phases affected the interdealer market and required execution/negotiation of new CSAs, custodial arrangements, eligible collateral schedules and account control agreements with counterparties/custodians.

The upcoming Phases will affect smaller insurance/banking groups and asset managers, who naturally have less experience with the new rule requirements and likely, fewer resources to help with implementation.

Unlike variation margin, which is based on the market value of trades, initial margin is a risk-based calculation. VM also happens to be a mature concept for most firms; IM, though, is new for most institutional investors because it includes custodians in addition to the trading parties.

Key Dates

Adherence to UMR has been on a phased approach thus far; in 2018, market regulators postponed the last two Phases (4 and 5) by one year. The Phase 4 compliance date was originally September 2018 and was moved to September 2020. The Phase 5 compliance date moved from September 2020 to September 2021.

The phased thresholds for UMR means that, with each Phase, more and more In-Scope Counterparties will be affected and has been the source of some consternation among market participants.

In addition to the notional thresholds, IM is required to be posted between counterparties where there is a consolidated threshold of $50mn USD or $50mn EUR. Thus, if the IM threshold is less than $50mn, no IM needs to be exchanged.

Biggest Challenges

There are four main challenges for market participants when it comes to compliance with UMR:

Solutions

The IM rules consist of the following tasks that need to be completed by a market participant:

• Calculation of regulatory IM
• Collateral segregation and rehypothecation requirements
• Eligibility checks of collateral
• Settling of collateral (on T+1 basis)
• Threshold application (ie 50mn)

Because of this daunting list (many of which are operationally intensive), many participants have sought to outsource their adherence to the new guidelines.

But market solutions have been scarce; there are few all-in-one solutions; rather, a few vendors have capabilities in different facets of UMR

• There were originally two market solutions: Margin Xchange and ISDA create
• As of December 2018, neither had been released to market
• As of September 2019, Margin Xchange ended their product after regulators cut the industry workload by ~90%
• As of January 2019, ISDA create was launched and is free to the buyside
• As of September 2019, 50 firms were on ISDA create; more than 160 other firms are testing the platform ahead of Phases 4 and 5.

Here’s a list of what a ‘typical’ hedge fund needs to do:

• Assess which products are in-scope and calculate notional amounts
• See if the notional threshold is applicable or not
• See if the IM threshold is applicable or not
• Re-negotiate all Credit Support Annexes
• Calculate & Pledge IM and ensure it is held with Custodian Bank
• Ensure no rehypothecation of collateral
• Manage margin requirements: calculation, monitoring, segregation and reconciliation

Calculating IM

Calculation of IM is one of the more cumbersome requirements of the new rules. There are certain vendors who are licensed ISDA initial margin calculation service providers and can help with calculations.

Partial list of vendors who are licensed SIMM service providers

• AcadiaSoft Risk Services Suite
• Bloomberg
• Calypso
• Cassini Systems
• CME
• Clarus Financial
• Lombard Risk
• Murex
• OpenGamma
• Quantile Technologies
• TriOptima

Initial Margin (IM) has to be calculated via one of two methods : the grid method or the SIMM method.

Unfortunately, there is no clear preferred method in that both methods are operationally burdensome. Each method has its pros and cons, which will require each market participant to perform a cost benefit analysis.

Here we will list out some key points for each method.

Grid Methodology – A standardized schedule included by regulators

• Insufficient granularity of tenor buckets and product types
• The grid methodology has a lack of clear guidance from regulators and as a result, inconsistent interpretation. As a result, it hasn’t been widely adopted.
• The methodology seems simple, but results are difficult to compare between counterparties

SIMM Methodology

• Thus far, all entities that have implemented regulatory IM have used SIMM
• Takes into account offsetting risks
• Use of a standardized model allows simpler comparison of margin amounts and results in fewer disputes among participants
• Requires each counterparty to generate sensitivities for every trade – time consuming and requires huge amounts of market data
• The only regulator-approved IM model

Summary

If you are facing any of these issues in complying with the UMR rules, please reach out to FinServ. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.

Hiking up any formidable summit requires experience, expert guidance, and determination to succeed. Navigating a Black Mountain implementation is no different. It can be a challenging and complex experience for asset managers that are not prepared to embark on the journey.

What is Black Mountain?

Black Mountain is a best-in-class, industry-standard provider of highly configurable front- and middle-office software solutions for investment managers. Part of newly formed Allvue Systems, owned by Vista Equity Partners, Black Mountain is an innovative suite of solutions for portfolio management, trading, credit research, and direct lending. Investment firms utilize Black Mountain to streamline critical business processes that are at the heart of all front- and middle- office activities.

• Research Management: Integrates deal pipeline, analyst commentary, and ongoing coverage with trading activity and portfolio exposures. Includes the ability to push Excel-based financial templates into Black Mountain for aggregate research analytics.
• Trade Order Management: Streamlines order entry with broad asset class coverage including loans, bonds, municipal securities, equity, CDS, ABS, MBS, futures/options, swaps, repos, FX, and real estate. Easily accommodates data input controls, alerts, and custom portfolio allocation methodologies.
• Portfolio Management: Dynamic dashboards, charts, and analytics are tied to trading activity for all supported asset classes. Additionally, 3rd party data sets can be incorporated into the system to provide robust reporting capabilities to meet changing company, market, and regulatory needs.
• Compliance Management: Supports pre- and post-trade portfolio compliance via a powerful and robust compliance calculation engine.
• Data Warehouse: Facilitates historical data capture and reporting requirements. Enterprise data management tools can be leveraged in the system to define data priority, conflict resolution, and alert users using rule-based data gap checks.

Source: Black Mountain Systems

What to Know Before Getting Started with a New Black Mountain Implementation

• Get Help Early: Don’t assume that you only need help after a Black Mountain contract is signed and the implementation officially begins. There is valuable preparation work that can and should begin well ahead of any Black Mountain implementation. The clearer current and desired future state are defined (and documented) before involving the Allvue implementation team will only improve the quality of overall system design, reduce the risk of misinterpretation, and will save time/budget in the long-run.
• Don’t Rush the Scoping Process: In a similar theme, resist the urge to “just get the implementation started”. Black Mountain implementations start with a handful of scoping sessions/workshops to formally outline the core project scope, assumptions, and risks in the form of a Scope Document. While additional requirements gathering will take place in an agile fashion throughout the project, the initial Scope Document will govern your initial project budget. It is easy to misinterpret what you are getting if you are not familiar with Black Mountain and it is important to manage expectations on all sides.
• Out-of-the-Box Solutions Still Need Initial Configuration: Every Black Mountain client is different. Even though Black Mountain has a treasure trove of standard, out-of-the-box features and functions, much of it still requires configuration before being usable in a production environment.
• You Need to Understand Your Data: Garbage in really is garbage out. Not only does data need to be clean before being consumed by Black Mountain, but you need to be proactive about how to resolve data conflicts. This includes understanding data origination, priority, and downstream reporting dependencies. If the same field can come from multiple sources, which source should be used and in what scenarios? Do you need an additional Security Master solution on top of your Black Mountain implementation?
• The More You Know, the More You Will Want: As your team gets more familiar with the power of the Black Mountain platform, get ready for new ideas and user requests. Setting aside a reasonable budget to handle new requests will help you address these requests and improve user satisfaction/adoption.
• Aim to Leverage 3rd Party BI Tools for Reporting: Consider leveraging 3RD party BI tools like Microsoft Power BI or Tableau via Black Mountain APIs in order to self-service a larger portion of your dashboard/reporting needs via direct systematic access to your data stored in Black Mountain.

How FinServ Can Help

• Ability to Bridge the Gap: The FinServ team is made up of talented consultants that possess both a deep level of industry knowledge and technical expertise. Coupled with the team’s Black Mountain platform knowledge, FinServ is able to help clients bridge the knowledge gap with the Allvue implementation team to streamline the implementation process by calling out potential design limitations and clearly articulating complex requirements using cross-functional workflows, UI/UX wireframes, and by creating detailed end-user documentation.
• Project/Program Management: FinServ provides best-in-class project management staff that are experts in managing scope change requests, issue logs, preparing executive level presentations, and detailed weekly status reports. These activities together ensure that all levels of the client organization are kept up-to-date on the most critical aspects of the project progress and that issues are escalated proactively.
• Business Analysis, Data Analysis, and Documentation: FinServ skilled business analysts can support clients by providing hands-on project delivery activities like documenting requirements, performing data mapping, testing, and creating formal system documentation that otherwise would take you away from your day job.
• Full-time, Onsite Consultants with White Glove Service: FinServ can provide full-time, onsite consultants to support a Black Mountain implementation. This level of support ensures that any issues that arise are immediately reviewed and often resolved immediately. For any issues that cannot be resolved immediately, detailed resolution requirements are documented and provided to the vendor for immediate remediation, testing, and verification back out to the user.

The Bottom Line

Black Mountain is a robust, powerful platform for investment managers, but getting started with a Black Mountain implementation can be a daunting task if you don’t prepare ahead and don’t have the right adviser supporting you on your journey. FinServ Consulting’s Black Mountain expertise and unparalleled track record of service for asset management clients makes us the right partner for any Black Mountain project.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799.

If you are considering implementing Workday for your Human Capital Management (HCM) and / or Financial system needs, then you are likely aware that Workday is a Software as a Service (SaaS) application – centrally hosted and consumed over the Internet as a Service. The SaaS model will save your organization time and money on the maintenance tasks typically associated with an on-premise software installation. What it won’t do is absolve your IT staff from all Workday responsibilities, rather your team’s responsibilities will shift.  Depending on your organizational structure, this role can stay solely within IT or it can be split between IT and the Business.

Let’s review the traditional on-premise software model and how your staff supported it.

With Workday, your IT Staff largely pivots away from the infrastructure maintenance to an application maintenance and integrations focus. Your staff would support Workday’s “Delivered Value” as defined in the Workday Technology Illustration below.

Let’s examine each “Delivered Value” item to determine how they translate into responsibilities for you and your staff.

Web Familiar Experience

Workday’s main user interface is through the Web Browser and will be how your users primarily interact with Workday (there is also an App).

Enabling your users to access Workday will be dependent on your staff and this can include the following application Maintenance and Support tasks.

• Adding and configuring New Users in Workday including Single Sign-On (SSO) set up
• Disabling Terminated Users
• Setting login and password expiration settings
• Monitoring New Releases and reviewing their corresponding System Release Notes
• Using Business Analysis to plan and manage projects for Enhancements and Additional Component Activation
• Keeping abreast of major functionality changes that will benefit your firm such as Workday Prism Analytics
• Configuring and Testing System Changes
• Troubleshooting User Issues and Managing the Issues to Resolution
• Administering your Workday environments (tenants) – Production and Staging to manage system refreshes and upgrades

Enterprise Reporting

Workday will become the Golden Source for your firm’s Human Resources and Financial data. Naturally, your users will want to take advantage of this and will want a comprehensive set of reports. Building these reports will require your staff to understand how Workday stores the data and how to extract the data using specific report types.

Furthermore, you will also need to think beyond Workday to consider how HR and Financials data in Workday can augment and complement the data in other areas of your firm. At many of our clients, the strategic vision in consolidating all of the firm’s data involves another tool, usually a Data Warehouse.

• Building Matrix Reports
• Building Advanced Reports
• Building Composite Reports
• Understanding the available set of pre-configured reports
• Planning how Workday data can be used throughout your firm

Integration On-Demand

Central to Workday’s functionality is the ability to communicate your data with both internal and external parties. Internally, you may want to have Workday interact with your internal CRM system such as Salesforce (typically for deal pipeline or other customer management). Externally, you will want to have Workday interact with your various Vendors for Procurement Punch-Outs, Banking Transactions, Benefits and Payroll. This data flow is done via Integrations / API Calls that were initially set up during the initial Workday deployment by the Workday Integrators.

Maintaining the Integrations, API Calls and related File Transfer Infrastructure will fall on your staff and the responsibilities include the following:

• Mapping out both internal applications and external vendors that will interact with Workday
• Monitoring Integration Runs and Troubleshooting Errors
• Collaborating with Vendor Contacts to determine the root cause and resolve
• Building custom Integrations in Workday Studio (if standard integrations do not meet requirements)
• Configuring and maintaining a File Transfer Server (if necessary) with secure file protocols such as SFTP, SSL, SSH, etc.
• Supporting file encryption with keys such as PGP keys
• Configuring the Firewall to white list Vendor IPs to allow the Vendor to connect to your File Transfer Server

Configurable Business Processes

Business Processes allow you to define and create your firm’s workflow in Workday. For example, to hire a new employee, each firm will have their own steps to initiate the hire process, enter data, run background checks, obtain approvals, etc. This process is taken from your firm and then re-created in Workday.

Your staff will need to develop their Business Process skills to support the business in the following manner.

• Investigating and Resolving Business Process Issues
• Creating and / or modifying Business Processes
• Tracking approvals given for Business Process changes through the Request Framework or other internal tool
• Reviewing and Analyzing the Business Process for risks due to Key Man Dependency, Separation of Duties, Improper Access Granted, etc.

Summary

Implementing Workday will require your IT staff to be fully committed and involved in the implementation from the beginning. This is critical for a successful implementation and a seamless operational support transition. Your IT staff will not be as focused on Physical Infrastructure but rather on Workday and the systems / components related to Workday. IT’s role is critical for segregation of responsibilities and allows your firm to successfully address audit points and regulatory concerns.  This post is designed to guide and instruct you on the changes to come to you and your staff. FinServ has advised multiple clients on supporting their Workday implementation, augmenting their support staff and improving upon existing processes. FinServ is an experienced Workday integrator with the deep industry expertise needed to configure Workday optimally for your firm. For help in implementing or enhancing Workday, contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.

Hedge Fund Chief Technology Officers (CTO) face a litany of responsibilities ranging from:

• Maintaining the technical infrastructure necessary to run their firms
• Overseeing regulatory compliance in the technology stack
• Guarding the firm’s non-public data and systems
• Managing critical investment and trading systems
• Shepherding the firm’s adoption of future technology paradigms

To deal with each challenge effectively and comprehensively, CTOs need to narrow their focus to the key issues that involve protecting the firm and their investors and ideally giving the firm a competitive advantage.

Infrastructure / Support tasks can in some cases be removed as a distraction and partially or wholly outsourced to a Managed Service Provider (MSP), a company that remotely manages a customer’s IT infrastructure, applications and / or systems. Often, leveraging the right MSP will allow a fund to redirect their investments in physical infrastructure and onsite support of that infrastructure to other more mission critical projects. With the right MSP partner, a fund can scale quicker and create a robust infrastructure, supporting enhanced performance and productivity, while leveraging the deep and specialized expertise of the MSP. This is especially true with the popularity of Azure and AWS, where the right MSP has deep expertise in leveraging these environments and locking them down securely, an expertise that many funds do not want to hire for internally.

The decision to use an MSP may seem straightforward. But, in order to use an MSP successfully, several factors must be thought through before even engaging with the MSP. (Note that, while we assume you are working with MSPs for the first time, even if you currently have an MSP and are looking to replace them, our subsequent advice is still relevant!) When FinServ performs a vendor selection for our clients in the MSP arena, we focus on the following key questions and on documenting the existing state of key items to facilitate the transition:

MSP Goals

In order to successfully choose and onboard an MSP, it is critical to understand and document the main goals you are ultimately trying to accomplish and how. Consider the following:

IT Current State

The MSP’s responsibility is to take on the tasks that your current IT staff is doing. How do you communicate that clearly and succinctly to the MSP so that both parties have a common understanding of what tasks are in scope?

The answer lies in having a full understanding of what your existing IT footprint is and what your current IT staff does. Rationalizing their current roles and what the target operating model will be is crucial to a successful transition.

To effectively outsource tasks that were handled internally to an external party, it is critical to understand all tasks that your staff does, system dependencies and external dependencies. Once you have a holistic picture, you can then go through the exercise of segregating tasks that will be outsourced and those that will remain in-house. With a clear definition of the tasks that you expect the Managed Service Provider to take on, the expected roles and responsibilities will start to become evident.

To achieve this goal, FinServ developed a “Functions of a Hedge Fund” map which allows us to review all the functions you have and then efficiently highlight which functions will be targeted for partial or full outsourcing. This becomes a key document to share with the vendors during the selection process.

Questions to ask yourself include:

• Do you have a complete and well documented picture of your firm’s IT hardware and applications?
• Do you have a comprehensive and well documented view of what the IT staff does? Ask yourself, your managers and your staff. This operational assessment exercise might surface some unexpected discrepancies in your understanding of their tasks to what they actually are
• Which tasks will be outsourced?
• Does the MSP have the resourcing / skill-set to do those tasks effectively?
• How will the MSP be enabled to do those tasks effectively?

The FinServ team are experts in comprehensive current state documentation. We can quickly document these current state items to ensure the selection process is based upon your firm’s unique footprint and requirements.

Choose and Assess the MSP

As the technology thought leader, you should determine and agree on how you will choose the MSP. Choosing an MSP is no small task and to give yourself the best chance at success, this needs to be carefully considered. Having an experienced consultant like FinServ with specific knowledge of the MSP marketplace and industry trends can increase your firm’s chances for success.

Onboarding and Managing the MSP Relationship

Equally as important as selecting the right MSP for your firm, ensure you can properly onboard and manage the MSP. In most cases, we have seen that clients do not have the dedicated resources to see this part of the MSP process through. Should that be the case, it is critical to get an experienced consultant like FinServ who can provide dedicated expert resources to lead you through the process.

Once the MSP is onboarded, they will need to be managed – you will need to have measures of success in place to measure the MSP’s performance. As part of the selection process, meeting with each MSP candidate to review their understanding of how you will evaluate their performance is critical. Consider items such as:

Summary

If any of these themes resonate with you and your organization, please reach out to FinServ. FinServ has advised and managed multiple Funds through selecting and onboarding a Managed Service Provider.

By leveraging our methodologies and industry best practice tools we can expedite your selection and ensure a successful onboarding process saving both time and money and ensuring this complex and critical process meets the goals you set for it at the start.

If you already have an MSP, but they are not providing the services that you require, the same thought processes and best practices are still relevant when replacing your existing MSP.

Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.