If investment managers are unhappy with the services that they’re getting from their legacy system provider, there may be a good explanation why.
To clarify, not all investment firms are dissatisfied with their legacy technology, and in spite of a system’s limited capabilities, they can receive an adequate product and level of support from the provider.
Still, not all is well. According to a WealthBriefing report in 2017, 21% of survey respondents “saw issues around legacy systems and a lack of connectivity curtailing their organization’s adoption of cloud-based technology to a significant or very significant degree.” For 2018, that percentage more than doubled to 46%.
Do you feel a similar dissatisfaction?
Even worse, the technology provider may show little concern to your needs; it’s not just your imagination if you sense apathy when you call the support team.
And it’s not by accident or coincidence the quality of product and service may have eroded.
It sounds harsh, but there is some truth to the statement.
The service you’re using might be one of many offerings, and for the software provider, what you’re using is no longer one of the more important ones.
Whether it is due to changes in management or simply reacting to competition and changes in the marketplace, newer products are being developed in other areas, just not in the area that you want to see improvement.
As a result, resources will be allocated to support for the new offerings. You will be left with the scraps.
You call for support, and you wait a long time to get an answer, or they reply to call your or email several days later. Sometimes, they do not reply at all. When you do get a response or speak with someone live, you don’t sense confidence that they will be able to fully deliver what you’re looking for.
While the legacy systems service providers would never directly say you’re not a priority, there are enough clues to reach that conclusion.
It may not be that they “don’t care”, but the legacy services provider may not have the resources to make any new developments. They’ve placed their investments in other areas, or they’re just not driving in the revenues they once used to that would be needed to support those needed upgrades.
They might know what they need to develop, but without the necessary cash flow, they can’t make the investments, and in the end, the clients will be dissatisfied and reminding the service provider about what needs to be done. It’s a vicious cycle.
Some of the changes you’re requesting, be it more robust functionality for multi-currencies or a more efficient way to handle certain securities and transactions, just won’t happen anytime soon so long as finances are an issue.
Similar to offering a new line of services, the software provider may feel like they can let the legacy systems that the current clients are using run its course.
As resources will be directed elsewhere for new products and services, they figure they might as well get the most out of what they already have without having to put too much extra investment into it.
Perhaps they know the clients will eventually move over to one of their new services, or that they will switch to a competitor software altogether.
But in the short term, there is a big enough clientele to satisfy revenue requirements.
The portfolio accounting software company may also know that with an older and outdated system like theirs, it’s very difficult for the clients to switch to a rival service. There will be integration and compatibility issues, as well as challenges with mapping the data.
A successful migration of the data could take several months, and in some cases, well over a year. (Data migration really shouldn’t have to take that long.)
If it is that much of a hassle to switch, why bother?
In the end, you feel stuck, and the worst part is, the services provider probably knows that you’re stuck, and they might as well use your weakened position to their advantage.
There are certainly pros and cons for hedge funds, wealth managers, and asset managers to maintaining their legacy systems, and while these firms may be satisfied with what they’ve had for years, a growing number of investment companies are no longer content with the old systems, as newer and more powerful technology can get the job done better and faster.
And there is a “dark side” to legacy systems that stem from business decisions, changes in management, changes in the marketplace, and competition. Whatever the influences may be, the end result is a portfolio accounting software that isn’t improving.
Even worse, it’s not so easy for investment firms to switch to another system.
But it’s not all bad news. Just as the legacy services providers know hard it is for their clients to switch to a rival system, rival service providers are looking for solutions to make it easier for said clients to switch to a newer, more powerful, and cost-effective system.
No matter what, always keep your options open.