Engagement

In Q2 2010, a newly appointed COO of a mid-sized investment management firm (approximately $150B AUM) in downtown Boston commissioned a comprehensive operational assessment. The objective was to identify efficiency opportunities and develop a strategic roadmap for transformation and target operating model.

Discovery Phase

The engagement began with a structured discovery process across key departments:

Operations

  • Trade Operations
    • Post-trade processing workflow analysis
    • Exception handling procedures
    • Vendor relationship management
    • Technology platform assessment
  • Settlement & Reconciliation
    • Cash management processes
    • Position reconciliation workflows
    • Corporate action processing
    • Break resolution procedures

Performance & Analytics

  • Performance Measurement
    • Calculation methodologies review
    • Data sourcing assessment
    • Report generation processes
    • Attribution analysis workflows
  • Risk Analytics
    • Risk measurement procedures
    • Scenario analysis capabilities
    • Limit monitoring processes
    • Risk reporting workflows

Compliance

  • Pre-trade Compliance
    • Rule implementation review
    • Exception management process
    • IMA Documentation procedures
    • Forensics Testing protocols
  • Post-trade Monitoring
    • Breach detection workflows
    • Resolution procedures
    • Reporting mechanisms
    • Audit trail and case management

Billing

  • Fee Calculation
    • Rate card management
    • Asset-based fee processing
    • Performance fee calculations
    • Invoice generation procedures

Marketing

  • Client Reporting
    • Report generation processes
    • Distribution methods
    • Customization capabilities
    • Data aggregation workflows
  • Document Management
    • Contract administration
    • Regulatory filings
    • Compliance documentation
    • Policy maintenance

Assessment Methodology

The project employed multiple analysis techniques:

  1. Stakeholder Interviews
    • 45 middle managers interviewed
    • 12 department heads consulted
    • 6 executive steering committee meetings
    • 15 focus group sessions conducted
  2. Process Analysis
    • 25 critical workflows documented
    • 150+ hours of job shadowing
    • 30 system interfaces mapped
    • 100+ pain points identified
  3. Industry Benchmarking
    • Peer group comparison
    • Best practice analysis
    • Technology landscape review
    • Operating model trends

Key Findings

The assessment revealed several opportunities:

Near-Term Opportunities (0-6 months)

  1. Automation of Daily NAV Review
    • Manual review elimination
    • Exception-based processing
    • Automated validation rules
    • Estimated 2 FTE savings
  2. Standardized Client Reporting
    • Template rationalization
    • Automated data population
    • Centralized distribution
    • 40% efficiency gain potential

Medium-Term Initiatives (6-12 months)

  1. Trade Operations Modernization
    • FIX integration vs Nightly Blotter Batch Processing
    • Exception automation
    • Middle office outsourcing
    • 30% cost reduction potential
  2. Performance System Upgrade
    • Daily on demand calculations
    • Attribution enhancement
    • Fee calculation integration
    • 50% process improvement

Strategic Projects (12-24 months)

  1. Technology Platform Consolidation
    • System rationalization
    • Vendor optimization
    • Cloud migration
    • 25% cost reduction
  2. Operating Model Transformation
    • Department Reorg strategy
    • Outsourcing assessment
    • Shared service evaluation
    • 35% efficiency gain

Implementation Roadmap

The strategic roadmap was organized into waves:

Wave 1: Quick Wins

  • Process automation initiatives
  • Report standardization
  • Workflow optimization
  • Technology quick fixes

Wave 2: Foundation Building

  • System upgrades
  • Team restructuring
  • Vendor consolidation
  • Process reengineering

Wave 3: Transformation

  • Platform modernization
  • Operating model shift
  • New strategy execution
  • Service model enhancement

Results

The engagement delivered comprehensive recommendations:

  • $12M annual cost savings identified
  • 35% efficiency improvement potential
  • 40% technology cost reduction opportunity
  • 25% vendor consolidation possibility

Critical Success Factors

Several elements proved crucial:

  • Strong executive sponsorship
  • Comprehensive stakeholder engagement
  • Detailed current state documentation
  • Clear prioritization framework
  • Realistic implementation timeline

The project not only identified significant optimization opportunities but also provided a clear roadmap for transformation, considering both immediate efficiency gains and long-term strategic objectives.