Our Insights

Achieving operational excellence amid market disruption

Lessons from the asset management industry

Today's asset managers are striving to balance a number of conflicting priorities including the adoption of new technologies, ongoing regulatory change, technology risks, and the cost of innovation—all of which is unfolding against a backdrop of significant market disruption.

Key insights

  • “No free lunch:" IT-heavy solutions necessitate IT spending—whether they are fully customizable or plug-and-play options
  • Quick wins keep engagement high: delivering on tactical objectives can function as a way to ensure project participation is maintained throughout a multi-year lifecycle, allowing strategic objectives to be accomplished
  • Sharing project ownership across sectors, and breaking big projects into smaller, achievable deliverables, may increase the business viability of projects by keeping the focus on executing business strategy

Delivering operational excellence while finding balance was the focus of a panel discussion at KPMG in Canada’s Asset Management Forum 2019 attended by representatives from across Canada, including Stasha Ninkovic, Director, Client Solution Design at RBC Investor and Treasury Services. "Technology is evolving faster than the asset management industry," Ninkovic commented, "and today's asset managers may need to re-think and redesign their approaches in order to leverage new technologies."

The panel discussion focused on three key themes:

  • How innovation can be folded into multi-sector projects to keep engagement high throughout multi-year project lifecycles
  • Mechanisms to ensure projects deliver solutions-focused outcomes regardless of shifts in project scope
  • The challenge in choosing an appropriate IT solution: does it offer opportunities for customization or is it easy to implement?

Who owns innovation? Integrating enterprise-wide experience to deliver enterprise-wide benefits

The promise of innovation is that it can help asset managers solve business problems, including those arising as a result of market disruptions. Yet a recurring theme in the panel discussion was the question of where responsibility for “innovation" rests within an organization. For example, different business lines within an organization typically have their own objectives. Reconciling how those objectives align and intersect over the course of a multi-sector project can pose challenges in project implementation, particularly those that may extend over several years.

The traditional practice was to locate project governance within the IT function. As panelists noted, however, if projects become “too IT-focused," they may lose viability. “Implementation needs to have a lot of business credibility," commented a panelist, “otherwise it can be stifled at every turn." To overcome this limitation, the goal of executing on the business strategy, as well as the IT components, must be incorporated into projects.

An alternate approach is the adoption of agile techniques using virtual teams

An alternate approach is the adoption of agile techniques using virtual teams. To tackle high-value, shorter-term initiatives, resources are assembled from relevant areas of the organization to collaborate on a specific project or objective. When the project is complete, team members return to their full-time roles. This approach shares the responsibility for project implementation across the team, which helps ensure a sustained business focus throughout the project lifecycle.

Reconciling objectives among business lines may not seem to have a direct correlation on enhancing the client experience, but executing on operational efficiencies can clearly produce client benefits, panelists commented. Improving efficiencies frees up internal resource capacity, which in turn can focus on added value client experiences such as faster turnaround times on client-facing projects and opportunities for deeper client engagement.

Staying focused on shifting targets: Methods to keep projects on track

A second theme during the discussion was how to address the challenges of multi-year projects which may need to shift focus over time.

We need to be careful that we stay focused on building what is necessary to get us across the finish line

In many cases, the pace of technological change is such that it can be challenging to keep up. "Technology is advancing so quickly. Bringing organizational structures and processes up to the speed of technological change requires deliberate and careful planning," commented Ninkovic. “Multi-year projects usually have a different scope from start to finish. “We need to be careful that we stay focused on building what is necessary to get us across the finish line. Additional bells and whistles can be added later," she said.

To manage project focus over extended timeframes, panelists noted they had explored breaking longer-term projects into smaller, modular pieces, and employing “much more rigorous budget tracking" for each module, while still “leaving room for unknowns." “The trick is to balance rigorous planning with some allowance for the unknown," commented Ninkovic. “Unallocated expenses can potentially derail a project if they are not tracked."

Another approach is to identify smaller, tactical “quick wins" that can be implemented throughout the course of a multi-year project. Delivering quick wins requires that project participants avoid pursuing specific project elements “too deeply," and instead find a balance between interim and long-term solutions. Although this approach can seem counterintuitive, as one panelist commented, it can also ensure that buy-in remains high as the longer-term project unfolds, because shorter-term frictions or pain points are being resolved along the way. "That can feel more productive," said Ninkovic.

Plug-and-play versus build-as-you-go: Balancing ease of implementation with customization

Panelists discussed how to manage the dual goals of ease of implementation and customization when selecting IT-focused solutions, such as a trade execution platform, for example. While both goals have merit, most solutions tend to address only one of these objectives as generally the solutions easiest to implement are less customizable, and vice versa.

“This is an 'Apple versus PC' problem," commented a panelist. “On one hand, we can choose a fully-customizable solution—the PC option—but this requires a substantially bigger IT footprint than choosing a 'plug-and-play' solution—the Apple option."

In both cases, however, IT engagement is still required: even a plug-and-play solution necessitates the flow of data through operations, requiring IT support.

“Either way, we invest to build out customized solutions," commented Ninkovic, “or we may spend the same amount assessing how we might optimize a plug-and-play option." There is no 'free lunch', she adds.

You may also like