Given the advances made in vendor systems over the past 25 years, the business case for buy over internal build is overwhelmingly in favor of performance vendors. A recent industry report by CEB TowerGroup, Buy Versus Build, Two Radical Shifts Impacting IT Service Delivery in Capital Markets, found that asset management firms’ middle- and back-office systems will become entirely commoditized and outsourced due to two major shifts:
- Hosting and services have made technology and solutions easier to implement and use
- New technology has driven competitive success for those willing to embrace it and those providers able to deliver it
With performance systems, two key factors make choosing a vendor solution an automatic option for most investment management firms:
- Many of the methods used to calculate performance returns and equity attribution are now standardized, thus removing the need for bespoke developments
- The capabilities and features offered by vendor solutions to support non-standard processing have evolved significantly and are much more sophisticated and powerful