New Age of SaaS - SaaS and Asset Management

Posted by Christophe Volard, Global Head of Product Development, BISAM on Jul 28, 2015 9:00:00 AM
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Peter Ellis: The growth of SaaS for generic business applications seems to be relentless. Do you see a similar growth pattern in the asset management industry?

Christophe Volard: The asset management industry is not homogeneous, there are different types of asset management organizations such as investment managers, fund administrators, transfer agencies, custodians, consultants/advisors, and asset owners. And there are different types of investment managers such as hedge funds, global institutional managers, specialist boutique managers, retail managers, and wealth managers. These different types of organizations have different attitudes towards the operating model for IT and Operations. For example, hedge funds are more likely than global institutional managers to make extensive use of the capabilities of 3rd-party service providers. And there are different attitudes in different geographies. So, you really need to look at the asset management industry like a chess board with organization types as the vertical columns and regions/countries as the horizontal rows. In some of the squares on this chess board there is major growth in the take-up of SaaS, but in other squares the growth of SaaS is more gradual.

 

Peter Ellis: Can you expand on why that is? Why does SaaS have more appeal in some segments of the asset management industry than in others?

Christophe Volard: SaaS is an extension of deployment models for IT and Operations such as ASP, IT outsourcing and operational outsourcing that have been used by asset management organizations for many years. It is the technology that’s different about SaaS, not the model of utilizing external 3rd-party services for IT and Operations. The take-up of these older deployment models was different in different areas of asset management; for example, operational outsourcing is less common in some countries than in others. So, it isn’t really anything about SaaS that has more appeal in some areas of the industry than in others, it’s more about the operating model characteristics of the different areas.

 

Peter Ellis: I know that the Cloud and SaaS are not the same, but do you think that what you have just said also applies to the take-up of the Cloud in asset management?

Christophe Volard: Yes, to some extent. But there are also different attitudes towards the Cloud than towards SaaS. The main area of concern for asset management organizations regarding the Cloud relates to their data being maintained in a Public Cloud infrastructure. But it is possible for vendors to address this concern by utilizing Private Cloud infrastructures. And it is also possible to separate processing and data, and to have different deployment models for each. Application processing could be accessed via a Cloud-based infrastructure while all the data is stored locally within the organization’s infrastructure. So, the application acts like a black box processor – data is input to the black box and results are output, with nothing being stored within the black box. So, at BI-SAM we don’t see the Cloud as an all-or-nothing option for asset management organizations, we see a spectrum of options. At one end of the spectrum, all data is kept out of the Cloud and some application processing is accessed via the Cloud. At the other end, most of the data and processing is in the Cloud. And between these two ends of the spectrum, there is a range of options for the proportion of data and application processing that is in the Cloud, with different segments of the asset management industry positioned at different points along this spectrum. When you look at the Cloud like this, then you realise that while there are some areas of the industry where it will be a long time, if ever, before all processing and data is in the Cloud, we are not too far away from the point where most asset management organizations will have some data and/or processing in the Cloud. And bringing the discussion back to SaaS, that is exactly where we are today with SaaS – many asset management organizations utilize SaaS for some component of their operating platform, while some organizations are moving towards SaaS as the major component.

 

Peter Ellis: What are the business functions where you see SaaS being used most?

Christophe Volard: There are SaaS applications available across the whole range of business functions within asset management organizations. But probably, the areas where SaaS is most applicable is where there is a high degree of calculation processing, like performance and risk. The measurement and analysis of investment performance and risk involves sophisticated calculation processing and so this is exactly where the scalability of SaaS solutions delivers real benefits. Also, recent industry trends mean that asset management organizations now have to provide more sophisticated analyses of performance, in more detail, and deliver it sooner to more people through more distribution channels. This means that many organizations have to upgrade their performance capability and SaaS offers a flexible, fast way to achieve this.

 

Peter Ellis: Many thanks for taking time to talk to me, Christophe.

 

Topics: Technology

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