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.

Overview

Many investment funds outsource their back office and fund administration services to third-party administrators.  Fund administration services typically include calculation of net asset value (NAV), daily, weekly or monthly P&L reporting, fee calculations and other activities that constitute being the official books and records.  The reasons for using third-party administrators are well documented and typically include investors’ preference for an independent firm to oversee a fund’s financials.  In addition, third-party administrators provide the ability to scale and often provide a sliding pricing model that goes up when a firm does well and down when a firm does not.  Lastly, firms can take advantage of admin technology without the need for supporting this infrastructure in-house.

Shadow accounting is the process of maintaining an additional set of financial books for the purposes of comparison with the third-party administrator.

Reasons for shadowing your administrator

Full Shadow Accounting vs. ‘NAV lite’

NAV lite (or NAV light) is the process of taking in key inputs from the admin or other external sources and performing a check on the NAV calculation.  In addition, it is common for the internal fund team to perform fee calculations as both an input and output to the NAV.  Funds choose to do this to gain a level of comfort and provide senior management with confidence that the calculations are correct.  The advantages of this approach are staffing requirements are reduced, and a full-service fund accounting system is not needed.   Having confidence in the calculations is often enough to ensure the accuracy of the administrators.  Some would argue however, there is no substitute for starting from the trade and entering all the debits and credits needed to calculate a NAV and a full set of financials in order to ensure accuracy.  Shadowing only the NAV involves dependencies from the data being supplied by the admin and therefore comes with risks that mistakes could be made and the NAV can still be incorrect.

The Verdict

A recent survey indicated that over 80% of all investment managers perform some level of shadow accounting.  It is rare for an investment firm to have the ability to raise capital without additional scrutiny that has become the norm in the industry.  Investors and allocators have a large population of investment managers to choose from and have applied increased scrutiny as part of their due diligence.  Most allocators have made it clear that shadow accounting is a requirement or at least desired.  In addition, the data investors, auditors, and regulators are asking for is easier and quicker to produce when internal systems can be used.  Therefore, funds have overwhelmingly made the choice to fully shadow or partially shadow their admins.

The Realities of Shadow Accounting

The realities of this decision are the increased investment from a cost and resource perspective, in a fund’s infrastructure.  Funds are increasingly choosing order management systems and performance management applications that either has an accounting engine or can produce reports that can be used to produce a NAV.  Choosing a system or systems to perform this function can be difficult and proper resources should be dedicated towards the selection and implementation.  Similarly, choosing an outsourced shadow accounting provider is a critical decision that should be made after proper vetting.  All funds are unique and therefore making decisions based on what worked for other funds typically leads to failed implementations.  Choosing a system or vendor is a long term decision that is difficult to undo and requires attention to detail and diligence to get it done properly.

FinServ Consulting has been providing advisory, technology and business solutions to investment firms for over 15 years.

For more information on how we can help or guide your strategic direction, please contact us at info@finservconsulting.com or 646-603-3799.

Hedge Funds and Opportunity Zones

Opportunity Zones have recently been cited in the news as new opportunities for investors looking for tax-deferred long-term gains. What is an Opportunity Zone? According to the IRS, an Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service. In order to be eligible for this program, specific state census tracts must have a 20% poverty rate or have a median family income of less than 80% of the surrounding area. Governors then selected 25% of the eligible tracts for the program.

These Zones were added by the Tax Cuts and Jobs Act in 2017 as a way of spurring investment in economically distressed cities. As a result of this new law, many asset managers have been raising new funds to invest in these Zones. The value proposition in these Zones is such that taxes can be deferred on any gains invested in these Funds as late as the end of 2026. In addition, if the investment is held for longer than 5 years, an additional 10% is excluded on the gain. If the investment is held for longer than 7 years, the exclusion becomes 15%. Furthermore, if the investment is held for at least 10 years, the investor is able to be exempt from all capital gains taxes.

Not surprisingly, many funds have been eager to defer capital gains by selling investments that have appreciated and reinvesting the gains in the new funds within six months. According to the rules, the sale of stocks, real estate or businesses can be sold and their proceeds can be reinvested in these Funds. The principal and capital gains can both be invested, but only the capital gains portion is exempt from taxes. There is also no requirement to invest in a like-kind asset in order to defer the gain (which is a requirement in a 1031-exchange).

Funds Investing in Opportunity Zones

One of the more famous (infamous?) funds that has started an Opportunity Fund is Skybridge Capital, whose Co-Founder is Anthony Scaramucci, the former White House communications director for President Trump. Skybridge intends to raise $3 billion for their Opportunity Fund. Another is EJF Capital. They manage almost $7 billion in assets and recently started fundraising for a $500M fund in September 2018.

Skybridge and EJF Capital had announced plans for a joint $3 billion fund, but recently ended the venture after there were concerns about EJF’s experience in managing real estate funds.

While the traditional hedge funds are open to individual investors (many have minimums of $50K to $100K, and in many cases, substantially higher), there are other opportunities for individual investors.

These include crowdsourced investment vehicles like Fundrise, which allow retail investors to invest as little as $500 into a pooled investment vehicle, which then invests in an Opportunity Zone fund.

Benefits of Opportunity Zones

The benefits of these Opportunity Zones are multi-faceted. One is tax deferral for investors. Another is the hope of rebuilding depressed American cities.

From an investor point of view, the tax deferred benefits of such a program are the biggest benefit. The ability to take capital gains from a current investment and invest it in a new one that can defer taxes for up to 10 years can be attractive to long-term investors. In addition to the tax benefits, by increasing the benefits to an investor the longer they invest their money, it ensures that the investor is financially aligned with the Opportunity Zone and ensures they have skin in the game.

The largest social benefit is spurring economic investment. Recall the old saying ‘a rising tide lifts all boats.’ This program has the potential to revive smaller cities and towns that historically, have not had much outside investment. By providing incentives and access to private money, this new law can turn around once-forgotten cities in the Midwest and Rust Belt that have not been able to attract development and investment  like the coastal cities of San Francisco and New York.

Risks and Downsides of Opportunity Zones

Like any speculative investments, the potential risks are not suited for the faint of heart. Aside from the lock-up period needed to realize the potential tax benefits, there is no lengthy track record by which an investor can gauge performance. In addition, one needs to question why some of the depressed areas have not had organic investments on their own and rather, require the specter of deferred tax benefits to attract investors.

There is also the risk that many Funds have raced to start up these Funds since the 2017 law came into effect and they themselves have not carefully performed their due diligence on asset quality. There is also some belief that investment firms and property developers would take advantage of the new laws by moving money around to avoid taxes rather than increase overall investment.

Another is the risk appetite of the investor. Many of the Funds have targeted areas that may be deemed too depressed to actually deliver positive returns. This is one situation where the early adopter may have gotten the best deals or opportunities have been picked over, while these Funds are left to scrounge for the dregs.

The detractors of this new law are concerned about the social aspects – namely, increasing wealth inequality and negative gentrification effects. There are some who think this will lead to the continuing wealth gap in the country. Those in the most depressed census tracts will fail to attract investors, while those that are on the cusp of becoming thriving towns will attract the lion’s share of investments. Broadly advertised as a new law that can attract investments in depressed cities, suburbs and rural areas, the law has also had its’ detractors who think it is just another handout to the rich.

The other potential downside is that these Funds will speed up gentrification. In fact, the recently touted Amazon HQ2 land in Long Island City, NY was located in a designated Opportunity Zone census tract. Before the deal fell through, there had been concerns from local officials and residents that it would further push out long-time residents who would no longer be able to afford to live there.

Opportunity Zone Events

Listed below are a few recent and upcoming conferences/seminars on Opportunity Zones.

https://www.forbes.com/forbes-live/event/2019-opportunity-zones/

https://www.novoco.com/events/novogradac-2019-opportunity-zones-spring-conference

https://www.pace.edu/mypace/get-in-opportunity-zone?mpc=fs

https://www.cfany.org/event/5th-annual-real-estate-outlook-opportunity-zones/

https://www.markspaneth.com/events/2019/opportunity-zone-forum-2019

https://www.wovents.com/forbes-womens-summit/

Summary

If your hedge fund has started an Opportunity Zone fund and is looking to implement performance improvement systems or client relationship management tools around your new fund, please reach out to FinServ. 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.

Artificial Intelligence – The Next Internet

Today, the term Artificial Intelligence (AI) has gone main stream and has become the focus for the next stage of technological evolution. In 1996, Bill Gates said about the Internet:

“The Internet is a revolution in communications that will change the world significantly. The Internet opens a whole new way to communicate with your friends and find and share information of all types. Microsoft is betting that the Internet will continue to grow in popularity until it is as mainstream as the telephone is today.” –Bill Gates (Time, 16 September 1996).

This sounds awfully familiar to how AI is being described today as to how it will reshape our lives. In the Business.com article “3 Reasons Why AI is Beneficial to Business“, AI is described as:

“Artificial intelligence (AI) is regarded as one of the most impactful technologies in the word today. It is transforming the way the world works by spurring innovation in every sphere of the planet. There are many advantages of AI, from the capability of making any function work faster to improving how the world runs.”

Much like how the Internet was described in its genesis, AI is being described in a similar grandiose fashion where I am not being told anything specific in terms of benefits nor am I being told of the practical usage of AI. For example, how is AI going to exactly make me and my clients work more effectively? Specifically, how will this make the HR space function more efficiently? How can HR utilize AI to add value to their work and to their firm?

Think Small

To identify the areas where AI can help HR immediately, it helps to think small. Find smaller ways to improve your work processes that you can implement with minimal change. Changes that affect multiple groups and the whole organization will run into stiff cultural resistance and incur greater risk. For example, AI has been a trending topic recently in how it can improve the Recruiting process from scheduling to follow ups to candidate interaction.  However, we have seen that Recruiting processes can be difficult to change due to ingrained processes, legacy systems, multiple internal and external involved parties, etc. Furthermore, if AI is not implemented correctly for Recruiting, it can potentially lead to employment law violations.

In a notable misstep for AI, Amazon recently disclosed that they abandoned an internal effort to have AI review and process candidate resumes as the AI learned gender bias and showed preference toward male resumes. Reuters reported that:

In effect, Amazon’s system taught itself that male candidates were preferable. It penalized resumes that included the word “women’s,” as in “women’s chess club captain.” (Reuters, Amazon scraps secret AI recruiting tool that showed bias against women)

Effective AI should be thought of as an “add-on” that can enhance your work by taking on mundane tasks, guiding you through tasks, offering advanced data analysis to complement your work, etc. We have selected 3 areas where an AI “add-on” can have a big impact to HR and be implemented quickly.

1. Chatbots
2. System Training
3. Retaining Talent

Chatbots

Chances are that you have already encountered many of these Chatbots on your daily websites from shopping sites to your utility provider’s site. The Chatbot AI prompts you to ask questions which they then answer without an actual representative interacting with you. Well, this is coming to the workplace as well and HR is in a prime position to benefit.

On the popular collaboration and messaging app, Slack, the add-on, Niles, can listen and learn from your questions. For example, you can ask Niles, how much would it cost to switch from the Low to High Medical plans or how many vacation days can I carry over? Niles can answer these questions freeing up your time for more complex tasks. And what if Niles does not know the answer? Well, you would have to give Niles the right answer and Niles would learn from this.

System Training

As more and more HR departments implement HCM systems, there comes a learning curve to learn how to use the system. For the most part, users have been trained through on-site sessions and user guides. But how much knowledge does the user really retain after the training is complete – not enough to complete the task seamlessly. User guides have issues as well in terms of finding and using the correct guide and their overall static nature. You can always ask your HRIS Administrator for help but that depends on if they are available and it may take time away from their other tasks as well. AI in System Training is designed to overlay on top of the system for a seamless experience and interact with you as you do your task. This on-screen experience is on demand and contextual.

WalkMe, a digital adoption platform, offers AI training that sits on top of the Workday UI. It can guide you step by step to complete your tasks and this becomes really powerful when taking the context into account. For example, you are no longer following just the steps to transfer an employee from the New York office to the London office. WalkMe would recognize the context that you are performing the office move task in – the employee is transferring, not just moving. You could be prompted to perform related tasks such as updating a home address, converting salary to the local UK salary or updating the retirement benefits. And if you have never done these steps or forgot how to do them? WalkMe has got you covered..

Retaining Talent

When employees leave, it causes strain on the organization’s employees and the organization itself. Employee morale can suffer. The organization can encounter the adverse effects from lost industry and institutional knowledge and the necessity to kick off recruiting a replacement. Recruiting itself is arduous and time consuming and there is no guarantee that the replacement is a good fit for the organization. But what if you could  potentially prevent this or at least be prepared when someone inevitably leaves? AI can scan and analyze employee behavior and cues and identify those at risk for leaving. With this knowledge, potential issues can addressed before they become issues and the transition plan becomes a proactive exercise rather than a reactive exercise.

Veriato, a user behavior analytics and employee monitoring software company, offers AI platforms designed to identify employees that may be leaving. By tracking the employee’s behavior from their computer activity, tone in emails, keystrokes, internet browsing, etc., a baseline is created for that employee. The AI can monitor and detect deviations to the baseline that would indicate if an employee might be leaving. For example, the AI may detect a change in tone to a negative tone regarding the company in emails or disengagement from work through reduced work activity.

Summary

AI is being touted as the next great solution much like the Internet was in its early days. To take advantage of AI now, start small and practical. Small improvements can be implemented quickly with less organizational resistance and risk. The benefits of AI will be realized quicker and will help you present tangible benefits as supporting arguments for implementing AI with a larger organizational impact. FinServ has helped many of our clients evaluate their current processes, implement process efficiencies and select technology that best fits the organization. For help in evaluating where AI can benefit you and implementing it, contact FinServ at info@finservconsulting.com or give us a call at (646) 603-3799.

Recent News

The fund administration business is no stranger to the merger mania that has affected other service providers in the financial services industry. In the race to build out the most complete, feature-driven platform, these outsource providers have taken the route of buy (versus build). Recent examples include State Street buying Charles River Development, JP Morgan moving part of their business to Arcesium’s technology platform and SS&C buying Eze Software. These are a few of the more well-known names in the industry, but there are much more. The common denominator in these three cases is that in an effort to build out and expand their product offering, these administrators have chosen to buy a complementary product rather than develop something in-house.

How Did We Get Here?

To understand today’s landscape, it’s worthwhile to go back in time just a few years to give some context. As recently as ten years ago, most fund administrators were perfectly happy to strike a NAV and run some basic reconciliations for a hedge fund (and were paid handsomely for it). As the industry went through a transformation, asset managers in search of alpha started to increase the breadth of their trading. With regulation added to the mix, not only did asset managers have to contend with internal and investor reporting, they had to now consider things like FATCA and Form PF. As a result, fund administrators were finding themselves having roles in the front, middle and back office.

A few of the common themes that we’ve come across in our research is that investors have started having an increased appetite for analytics. This is in turn requires their fund administrators to be able to sate their appetite. If the platform has no capability to handle big data or provide business intelligence, they will immediately find themselves at a disadvantage. One reason why JP Morgan moved part of their fund administration business to Arcesium was for its one-stop shop of integration across the technology stack. In this new paradigm, clients would have access to their own technology and an in-place data model, while providing Middle Office services, NAV calculation and investor reporting.

Joan Kehoe, global head of JP Morgan Alternative Investment Services said, ‘we have seen opportunities to streamline and automate this two-way information transfer between those records we keep as an administrator and our clients’ systems, a task that has historically been complex due to different applications, data models, sourcs of information, and timing.’ In this case, we can go back to the buy vs build question that everyone faces. In this case, even a well-capitalized corporation like JP Morgan decided that there was no internal appetite to build all of these integration points. Instead, they went out to the market and found a service provider in Arcesium, which has already built a tried and tested product. Arcesium today manages more than $100bn in AUA (assets under administration) and counts Balyasny, Blackstone Alternative Asset Management and DE Shaw as clients.

The eternal hunt for alpha has also forced fund administrators to adapt to their clients’ trading activities. Being able to handle multi-asset servicing in an automated fashion via the cloud has become a key driver to fund administration expansion. In the past, with relatively small volumes being traded by few clients, administrators could live with manual processes in the short term. In today’s world, increased volumes from multiple clients require automated solutions. When you add to the mix, algorithmic and high frequency clients, automation has become a must-have. When SS&C closed on the purchase of Eze Software in July 2018, industry veterans pointed to Eze’s new cloud platform, Eclipse, as a prime driver for the acquisition.

The world’s largest fund administrator, BNY Mellon, which has $33.1 trillion under custody and/or management, has recently started an initiative to revamp their Middle Office platform. Their decision included a combination of buy and build. They have a proprietary OMS and their derivatives system remains Summit, which is a product from Finastra. There are plans to upgrade their Collateral systems with new messaging software. Their fund accounting system remains Eagle, which they purchased almost twenty years ago.

It should be noted that asset managers have also looked to fund administrators to outsource their back office operations. Back in 2011, Bridgewater Associates made the decision to outsource their back office to BNY Mellon. This involved carving out roughly 200 employees and turning them into BNY Mellon employees, while still employing them out of the same office in Westport, CT.

Integration of the Front, Middle and Back Offices

Like any other industry, added competition causes everyone to become leaner and provide improved, scalable service. One way of doing this is finding and choosing the best-in-breed component for your product.

When you take a look at the chart of Front-to-Middle-to-Back Office activities, you can see that the Middle Office function has a lot of opportunities by which fund administrators can improve and scale their offering. This area has traditionally been the driver of the mergers we mentioned in the beginning. When State Street bought Charles River Development, it was for their award-winning trade capture/order management offering. They likely looked at competitors like Blackrock, who for years, have had their own OMS system in Aladdin. Lou Maiuri, the head of State Street Global Markets accurately summed it up when he said, ‘the reality is building things internally, starting this from scratch organically, it’s a long journey.” Acquiring another market-leading vendor also ensures that your existing client base is much more likely to continue buying your services.

But, this can be a double-edged sword. When there is opportunity for integration among all the different Middle Office functions, there is also ripe opportunity for things to go wrong. If you can imagine each vertical (ie Trade Support, Derivatives, Collateral, Accounting, Risk and Client Services) coming from a separate module or vendor, there could be up to 6 different disparate systems in the Middle Office! Imagine what could go wrong as a fund administrator attempts to ensure data flows automatically between the six systems. Some of the pain points we’ve seen is: 1. keeping a golden source of trade data as it goes through the trade lifecycle; 2. ensuring that Collateral is kept up-to-date in the Derivatives system and 3. ensuring reference data is persisted throughout the Middle Office.

As much as you can expect each vendor to have integration points upstream and downstream, fund administrators have realized the best way to mitigate data risk is to own your platform and the data that comes with it. Past market surveys that we’ve seen have noted that the three most important factors in selecting a fund administrator are: technology ease of use, technology ease of integration and willingness to customize. What better way to ensure your technology is easy to use and integrate than having control of the product and the platform, in-house?

RPA – Robotic Process Automation

Robotic Process Automation is the technology that allows anyone today to configure computer software, or a “robot” to emulate and integrate the actions of a human interacting within digital systems to execute a business process. RPA robots utilize the user interface to capture data and manipulate applications just like humans do. They interpret, trigger responses and communicate with other systems in order to perform on a vast variety of repetitive tasks¹.

Often times, when RPA is being written about or discussed, the image of robotic arms on an assembly line or drones in the air are displayed. The truth is, RPA, in the services industry, has a much different connotation.  The purpose of RPA is to gain scale and eliminate repetitive, time-consuming processes. The use cases for implementing RPA solutions at Investment funds are typically around large operations teams that perform many standardized functions to reconcile positions and clear trades. However, a case can still be made for the implementation of selective automation at smaller funds.

Marketplace

The Robotic Process Automation market continues to grow — projections reflect that the industry will be worth $3.1 billion by 2019 and reach $4.9 billion by 2020.  When the workload is large enough, RPA programs will cut costs and eliminate manual work, allowing for more value-added activities.

RPA Technology

The technology for RPA has been around for several years. Some of the players in the industry got its start in automated testing or QA. At the core, RPA is a series of scripts that can be written to automate routine processes and take the human element out of the process. Examples can be around scraping websites for data or logging into applications to query for data. Reconciliations are a key business case, as well as the steps towards clearing trades that can be routinized.

RPA can be used to update spreadsheets, calculate position exposure, perform post-trade compliance checks or any other process that is considered manual and detracts from analytical activities.

Industry Leaders

UiPath – the most widely used RPA platform in the world today, drawing together elite enterprises, global partners committed to excellence in implementation and product innovation, and the largest RPA developer community ready to make an impact on the world.

Blue Prism – As the pioneer, innovator, and market leader in RPA, Blue Prism delivers the world’s most successful digital workforce. The company’s software robots automate repetitive administrative tasks while meeting the requirements of the most demanding IT environments, where security, compliance, and scalability are paramount. Blue Prism provides a scalable and robust execution platform for best-of-breed AI and cognitive technologies and has emerged as the trusted and secure RPA platform of choice for the Fortune 500.

Automation Anywhere – Automation Anywhere is a developer of robotic process automation software. The company’s product, Automation Anywhere Enterprise, caters to enterprises looking to deploy a digital workforce composed of software bots that complete business processes end-to-end.

We would recommend going with a robotics program which is a carefully planned, project-managed approach with proper ongoing support as opposed to having one random developer creating scripts on an ad-hoc basis.  For funds with less headcount and limited operations teams, however, RPA can still be leveraged to allow valuable time to be freed up for key individuals.

FinServ Consulting has been providing technology and business solutions to financial services firms for over 15 years.

For more information on how we can help or guide your strategic direction, please contact us at info@finservconsulting.com or 646-603-3799.

¹ UiPath website

Common Reasons SaaS Applications Aren’t Being Optimized

Software as a Service (SaaS) is a method of software delivery and licensing in which software is accessed online via a subscription, rather than purchased and installed on individual computers. These web-based solutions make it convenient to perform business on any computer, tablet or smart phone. Applications can be as simple as Microsoft Excel (via Office 365) or they can be more complex to allow business lines to manage their data and business processes, securely. The software and servers are maintained by the vendor, which makes these applications attractive to business lines such as Human Resources, Finance and the IT folks that normally support these groups. However, if the software isn’t configured correctly during the initial implementation or maintained to keep up with frequent version updates then you aren’t optimizing your SaaS and getting the best return on your investment. Following are common reasons why we see firms not optimizing their SaaS applications:

1. Over-purchased Functionality – Often, as part of the original software license negotiation process the client purchases more functionality than can reasonably be implemented in the time-frame budgeted. Sometimes functionality is rushed and rolled out just for the sake of putting it into play, whether it was designed correct or not. In other cases, functionality is shelved for later so that the core implementation can be rolled out to meet the project deadline and budget. Implementation projects are typically scheduled to complete in time for an old system to be replaced and/or just prior to the business having to enter their busy season. As a result, any functionality not completed usually gets placed on the back-burner and in some cases it never gets implemented.
2. No Maintenance Program – The SaaS vendors change the software with each version upgrade, release schedules varying by vendor but some releases happen quarterly. As the software change, chances are so does your business. Each version release should be viewed as a mini-implementation project. Some changes are forced on all users whereas some are optional and they need to be configured in order to take advantage of them. If the business isn’t actively monitoring the functionality that is being released, reviewing it against their business needs and activating the optional enhancements, then the software isn’t being maximized.

Helpful Things to Know About SaaS Applications

• Usually software license fees begin when the contract is signed, not when the software is implemented in production. There is a negative return on investment until the system is implemented and being used. A delayed or extended implementation continues to eat into the return on investment.
• These applications are typically highly configurable, they are not custom. The application is designed to work for the masses so in some cases functionality doesn’t work as desired. Fully understand your business needs and match them to the system functionality to ensure it will work for you before you purchase it.
• The software is maintained by the vendor, however new functionality and changes to existing functionality are released on a scheduled basis. Some functionality is forced on all users whereas some functionality is made available through additional configuration. Make sure you have the resources who know your business and the technology being used.

Recommendations to Optimize Your SaaS

• If you are negotiating a contract with a SaaS vendor, consult with an experienced implementer to confirm the reasonableness of implementing the modules being purchased. A high-level discussion of your requirements can help determine if a module will work for your firm. Also, be careful of biting off more than you can chew. Don’t purchase modules that you can’t implement in the near term as you don’t want to pay recurring license fees on software that won’t be used. An experienced implementer can guide you on the core functionality that needs to be implemented at first and what functionality can be implemented later. In most cases it’s best to work with the core functionality first to help you understand it better, before venturing into new features.
• If you haven’t been maintaining the software version releases, develop a plan and assign the proper resources who know the business and the software. If you don’t have an internal resource who can be assigned to this, there are several vendors who offer this service. However, the best practice is to assign someone internal to your organization who knows your business.
• If you haven’t reviewed the system functionality in 12 months, consider hiring a vendor to perform a gap analysis and/or operational assessment to review your current business needs compared to the current system functionality and best practices.

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

When a customer implements Workday Human Capital Management it’s often an exciting event for the Human Resources team but can be an underwhelming experience for the firm.  For Workday Human Capital Management customers we’ve seen them struggle to increase user engagement. Implementing Workday is a significant investment so it can be frustrating if there isn’t a sense that it’s used firmwide. Customers that have Workday Financials or Payroll in addition to Workday HCM tend to have higher user engagement. It’s much more frequent that an employee will log into Workday to submit an expense than to update their home address. For those HCM customers that are looking for ways to increase user engagmement, FinServ has a few tricks that have worked for our clients:

1. Explain the impact. Oftentimes the best way to get employees to complete the task you’re asking of them is to explain why you need them to do it. For instance, if you explain to an employee that they need to complete all their tax forms before they can be paid, you’ll likely have a much higher rate of success among your employees.

2. Create a winner. A sure way to increase user engagement is to create an incentive for employees. For example, you can hold a raffle for those employees that enter information you’ve requested. Our clients have had success when asking employees to update their education or career history and entering employees into a raffle for completing their profile.

3. Make the ask easy. Of course if you want your employees to use the system (and like it too) you’ll want to make sure their experience is painless. We suggest leveraging Workday functionality at every opportunity. For instance, if you want employees to update part of their profile, leverage the business process Distribute Document or Task. This will send the task, like updating your Education history, directly to the worker’s inbox so they can easily execute the task without having to navigate to their worker profile.

4. Lastly, include ample instructions. There are many opportunities to include instructions and we encourage our clients to be very explicit. For instance, if you distribute a task, include a customized instructions on how to execute the task. For very detailed instructions, we include a link in our email notifications that brings an employee to a PDF with screenshots on how to complete the task. When creating the task in Workday you are also able to include instructions that will then appear in the worker’s inbox.

FinServ has helped many clients increase their user engagement and demonstrate the ROI for their Workday HCM platform. We also work with clients to plan their annual Workday initiatives, build new functionality, and maintain their system security. To learn more about FinServ Consulting’s services, please contact us at info@www.finservconsulting.com or (646) 603-3799.

Most companies are not getting the value for the investment in their applications. Plain and simple. Firms are practically throwing money down the drain by purchasing these expensive platforms and not getting the bang for their buck. A fully configured application should be able to provide your firm with increased efficiency, reductions in cost, and provide overall scalability.

However, if you are not gaining these benefits from your software, it’s time to take a step back. A failed implementation could cause the opposite of the desired outcomes. This under-utilization can be due to:

1. A weak support system in place for the maintenance of the software
2. Lack of communication to the employees of the software’s full functionality
3. Lack of proper employee training in the application

Having the right support model in place to oversee the setup and continued maintenance of the application can help insure that the platform is properly aligned with your firm’s daily operations and all updates are made regularly to avoid lag or error.

Establishing a communication plan within the firm for internal resources to fully develop an understanding of what the application is capable of creates a baseline for what the expectation is from the platform, and how it could best be used to meet the client’s goals. Identifying the right material requirements to develop a robust platform to best fit your firm’s needs requires personnel that truly understand the software’s usability and functionality.

Having a team dedicated to software training creates a sense of ownership for the system, as this team can communicate to other members of the firm the immense capacity for automation across different functional areas which they can train other firm members in. Openly communicating the status of the platform’s setup and capabilities also reduces the risk of functional teams working in silos.

FinServ has had experience with high-growth clients going through similar pain points during the implementation of an systems to automate their day to day operations. We take a comprehensive approach in order to understand your bespoke business processes to help guide your firm towards a seamless software integration and ultimately, future success.

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

It’s a new year and Workday’s Semiannual Release is fast upon us. As always we recommend thoroughly reviewing the Announcing and Feature Consideration documentation and review the notes in the Release Center prior to the release date, March 9^th, 2019. With new features available in Preview Tenants starting on February 2nd, your team can get a jump start on reviewing and testing the new release features to ensure there are no major impacts to your tenant. Here are a few tips that have served us well with past clients:

1. Prioritize the features. The first action we recommend customers take is to review all the release features and prioritize which items are High or Low impact. It’s important to identify which updates may directly impact your tenant or indirectly impact other systems. Use the tools Workday provides, they offer a spreadsheet that categories each new release feature. It’s a quick and easy way to understand all the release features. In this semiannual release the Workday Inbox worklet is being retired and there  are new updates for Payroll integrations. We’d label the Workday Inbox worklet as Low Impact since the Inbox now is featured directly on the Home screen. For those clients with a third party payroll system, the Payroll integration updates could be a High Impact so it’s important to review the release notes and thoroughly test.

2. Adjust your project plan. In a previous post we wrote about the importance of creating an annual Workday project plan. Once you’ve identified how the release will impact your tenant, make sure to adjust your project plan so that it accounts for the time you’ll spend testing the new features. Ideally, you factored the Release into your Workday project plan but make sure you adjust appropriately if other initiatives need to take a backseat while you prepare for the semiannual release.

3. Enlist help. Enlist the help of your team and other users to make sure that you’ve adequately tested the functionality. It’s okay to have one person lead the Semiannual release preparation but we recommend spreading the testing among your Workday team and other employees at the firm. You’ll want to make sure you test every scenario and examine all the details, which is doable with the help of others.

4. Communicate to your Super Users. If you’ve identified items that will impact your tenant or new features your team could leverage we recommend getting the word out as soon as possible. In past releases we’ve seen updates to functionality that seem minor, like modifying the way a phone number is entered into Workday, create a lot of noise for your other infrastructure teams.

FinServ has experience advising clients on Workday’s semiannual release, including assessing which features will impact the client’s tenant, recommending new features to adopt, and testing existing functionality and integrations. We also work with clients to plan their annual Workday initiatives, build new functionality, and maintain their system security.  To learn more about FinServ Consulting’s services, please contact us at info@www.finservconsulting.com or (646) 603-3799.