Planning and executing IT projects is a challenge for all chief technology and information officers — but for those at broker-dealers and roll-up RIAs, it is a never-ending battle.
In order to ensure a project goes smoothly, they must understand the potential drawbacks of developing, integrating and/or maintaining wealth management technology in-house versus buying it at a one-stop enterprise software shop, like ours.
While building or integrating may appear to offer more flexibility and independence in designing the solution, these options depend on successful project execution, keeping up to date with advances, hiring and retaining top IT talent, and world-class data protection. Many projects fail to meet their intended objectives due to incomplete requirements, uninvolved project sponsors, shifting project objectives, inaccurate estimates, unanticipated risks, unknown dependencies, limited resources or poor project management.
The rate of technology advancement can be both a blessing and a curse for CTOs. More technology options are available today than ever before, including vendors, languages, open-source frameworks and architecture. But one thing is certain: the technologies available today are guaranteed to change, and changes in technologies may not only require reengineering of solutions, but also investment in new skills. This makes the “build” and “integrate” options very challenging for CTOs at financial services firms.
In addition, most organizations aren’t prepared for the actual cost of the in-house software. It is estimated that maintenance such as security patching, modernization and elective development can be 20% to 30% of initial costs. Like a car, information technology requires regular maintenance for the depreciable life of the solutions and a replacement plan. In our view, only through purchasing an external software system can a firm be equipped with all the “parts” they need to maximize their colleagues’ efficiency.
Arguably, a financial firm’s most important asset is its data. Done right, data provides advisors tremendous value in creating customized, individual experiences for their clients. However, disparate systems, lack of enterprise data management expertise, fragmented data models, and point-to-point data integration solutions present realities that must be overcome in order to capitalize on available data.
Many organizations will attempt to solve these challenges through modernization or enterprise data management programs or invest in master data management or enterprise data warehouse solutions. These are significant multiyear undertakings for organizations requiring massive investments, new technical expertise and commitments for the long term. They are also notoriously difficult and expensive to implement. The failure rate of data warehouses, despite being around for 30 years, is high, and data warehouses do not solve the inherent problem that many companies face: trying to integrate many different systems.
When it comes to cybersecurity, every company has its own risk and information security management systems that attempt to protect the assets of the firm by identifying and mitigating inherent risks. Enterprise software should be unified with a firm’s data in a way that allows an effective software solution to manage the entire data lifecycle — from ingestion to consumption. Companies that manage this achieve clean and normalized data — one of the most difficult parts of any implementation — already built, secured and industrialized.
Developing and maintaining software is both expensive and fraught with challenges. This is complicated by the fact that projects are composed of people who, in general, do not have the ability to process complex systems well. The best enterprise software solutions unify data with software and design, delivering a comprehensive yet modular solution that removes the risks and complexities of software development and data warehousing, giving companies more time to focus on serving their clients and advancing growth.
CTOs can help transform their firms into agile, digital-at-the-core organizations by electing to use enterprise software that integrates data. A digital-first company leans on software that aggregates and cleanses data to help automate workflow and save financial professionals time so they can focus more on their clients instead of struggling through multiple, unconnected software systems.
