When evaluating investment software solutions, wealth and asset managers need to look beyond the initial purchase price or licensing fees.
The costs associated are so much more than the product itself, and these expenditures must be looked at through the lenses of Total Cost of Ownership (TCO).
As investment managers grapple with rising costs and “sluggish revenues”, no resources can afford to be wasted, hence a focus on total ownership costs.
Below, you will see what makes up TCO and how it encompasses a broader range of expenses throughout the software's lifecycle.
And ideally, with this expanded understanding, investment managers can make well-informed, financially responsible decisions.
These are costs associated with configuring the software, integrating with existing systems, data migration, and user training.
Recurring costs for software access, updates, and support may apply. Pricing models can also vary, based on number of users, AUM, or tiered structures.
Hardware costs (if running on-premises), cloud hosting expenses, storage, networking, and disaster recovery provisions should be factored in.
Investment in cybersecurity tools, monitoring, penetration testing, incident response planning, and ongoing vigilance to safeguard sensitive financial data.
These costs include technical support, bug fixes, troubleshooting, and accessing vendor expertise.
Costs associated with implementing new versions, adding features, or ensuring compatibility with evolving industry regulations.
If not fully outsourced, include the time and salary costs of internal IT staff dedicated to managing, maintaining, and troubleshooting the investment software.
Assess the cost of productivity losses or missed opportunities due to outdated technology or inefficient legacy systems.
Cloud-based solutions (SaaS) often shift infrastructure and some maintenance costs from the client to the software provider.
Highly customized integrations with multiple legacy systems can increase both implementation and ongoing total cost of ownership.
Evaluate the level of support included in licensing fees, and the cost of additional support tiers or incident-based billing.
Compliance with evolving regulations may necessitate software updates or additional security measures, impacting long-term TCO.
Work with your IT and finance teams to accurately quantify existing costs associated with legacy systems or manual processes that the new software aims to replace.
Ask potential vendors to provide granular TCO breakdowns, not just initial purchase prices. Inquire about multi-year pricing models for predictability.
Consider how your firm's growth, expansion into new asset classes, or increased regulatory demands might impact future TCO.
Assessing the Total Cost of Ownership is essential for wealth and asset management firms to make responsible investment management software choices.
And by carefully considering all direct and indirect costs, investment firms ensure alignment between their technology investments and the firm's long-term financial goals.
At Empaxis, we understand the importance of transparent and informed decision-making when it comes to investment software. Our solutions include:
Want to get the most out of your technology and operation and keep your total ownership costs under control? Contact Empaxis.
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