15 Feb 2022 | Cloud Solutions | Investment Reporting

Cloud-based investment management software: 5 reasons you can't afford anything else

Asset and wealth manager attitudes towards cloud-based investment management software systems have undergone a radical transformation in recent years.  

A decade ago most investment managers still relied on internal servers for data storage and management. Strict fiduciary and client protection responsibilities drove concerns on governance, control, reliability and security. Employing cloud-based software seemed too risky.  

Data security concerns were a particular barrier to cloud adoption. The perceived difficulty and danger of migrating from or integrating legacy risk and portfolio management systems with a cloud-based infrastructure were another major factor. As was uncertainty over regulators’ attitudes and fears of regulatory censure.  

No longer. As cloud technology has evolved and become more secure, and the benefits of what it has to offer have become ever more apparent, any apprehensions among managers, investors and supervisors have largely disappeared. 

In a highly competitive world of rising client, regulator and staff expectations, portfolio and risk management capabilities quickly become outdated and unfit for purpose. Firms that fail to upgrade their tech stack quickly enough will soon get left behind. Cloud-based platforms offer the solution. 

Cloud-based investment management software is now table stakes 

Overcoming the litany of common challenges that continue to affect the investment management community is a key priority.  

Yet Excel spreadsheets, legacy software systems, workarounds and manual processes remain rife. A lack of comprehensive, real-time risk and performance analytics means managers often don’t fully understand the risk in their portfolios and struggle to make timely, informed decisions. Many lack robust solutions to support the burgeoning interest in private and other alternative asset classes. Reporting processes are highly manual, slow and error prone. 

Investor due diligence examinations take an increasingly dim view of such IT and process shortcomings. Before allocating assets, investors want to see a resilient, scalable and flexible infrastructure that can deliver quality service with a minimum of operational risk.  

But introducing new platforms and tools to overcome these data and IT challenges raises a host of migration and maintenance problems. Or always had done. Which is why the new breed of cloud-based investment management software, and the benefits it brings, are such a game-changer. 

1) Reduced cost and shorter ROI 

For many asset and wealth managers, the investment required to update their technology acts as a major deterrent. An on-premise implementation brings significant installation costs and multiple hardware and software license expenses. Then there are the maintenance charges – for both the technology and the IT specialists to run it – which make it hard for managers to achieve scalable growth. 

Taking the cloud route transforms technology from capital expenditure to operating expenditure. It removes the initial IT overhead and ongoing investment needed to maintain and upgrade the infrastructure. With less upfront outlay, firms can better afford to make the technology changes they need. Since they only pay for what they use, there is no wastage from underemployed capabilities either. 

Quicker implementations mean project resources are tied up for less time. It also allows firms to get up and running with the advanced investment management software capabilities they need faster, enabling them to take advantage of the efficiencies gained – and financial savings that result – much sooner.  

2) Time savings 

Speed of initial technology deployment offers clear benefits. System upgrades, because they are handled remotely by the software provider, can also be rolled out faster, more frequently and with minimum user disruption.  

And by staying current on the latest software versions, user firms benefit from the functionality improvements included, bringing processing upgrades and faster delivery of more accurate data. That frees teams to devote more time and focus to complex calculations in areas such as risk analytics and attribution, amplified by the reporting capabilities cloud-based software enables.  

3) Technology quality 

Cloud-based investment management solutions benefit from a level of development and maintenance expertise that is hard to match with either an in-house system or on-premise third-party vendor deployment.  

Commercial considerations drive software vendors to constantly innovate and improve their offerings. And the lessons learned and cross-fertilisation that come from working with numerous institutions in different markets feed into the provider’s R&D processes. The result is robust solutions with comprehensive capabilities built to support diverse use cases. The cloud model, by enabling more frequent updates, further encourages this innovation cycle. 

Cloud delivery also ensures investment managers can take ready advantage of all the improvements incorporated into the latest software releases so they don’t get stuck on outmoded legacy versions. Plus users have expert on-hand support to keep the system running smoothly and guard against any outages (after all, no one knows and can maintain the software better than the developer).  

4) Maximise scalability and flexibility 

Business agility is vital in an era of fast-moving markets and intense competition. Cloud-based resources give users almost unlimited ability to scale up (or down) quickly and easily. Firms can innovate using automation solutions not available in their own data centre environments. They gain the operating flexibility to move into and out of markets, and target new client segments, supported by the technology capabilities they need and without having to make significant investment commitments. 

Automation also frees employees from low value, laborious tasks such as manual data aggregation and reporting, allowing them to focus on higher value business development initiatives and deepening client relationships. 

5) Enhanced security and operational resilience  

Security concerns once stymied cloud take-up. Today, investment managers’ data is safer in the cloud than on an in-house server. 

Cloud-based solution vendors employ security measures beyond the affordability of most businesses. Sophisticated detection systems, and strong authentication and encryption techniques to protect user data are standard. The level of investment and specialist expertise vendors can devote to monitoring the infrastructure and addressing new threats as they emerge ensure ongoing security, while fail-safe business continuity protocols maximise system uptime. And automating processes can reduce the number of users with access to data, limiting the potential for security breaches. 

The anytime, anywhere accessibility of cloud-based software is also invaluable for firms shifting towards more remote and hybrid working patterns. 

No time like the present 

Shifting from antiquated, manual and Excel-based processes to automated efficiency has become an existential imperative for investment managers. So it makes sense to get there as fast and with as little disruption as possible. And there is no better way than today’s advanced cloud platforms. 

To explore how cloud-based investment management software can help transform your processes, find out more in our latest data aggregation and risk management white papers.  

Related Content

There are no related posts

Building reports clients love
13 May 2022 | Cloud Solutions, Investment Reporting

6 things you need to build investment reports that clients love

When it comes to reporting, many firms still rely on outdated technology and legacy systems. Combining data from multiple sources and offline spreadsheets is an inefficient process that takes far too long, is highly prone to manual errors, and...

Why investment reporting needs to change
19 Apr 2022 | Cloud Solutions, Investment Reporting

Why investment reporting needs to change

Many members of the investment management community, hesitant to act as early adopters, have resisted pressure to fully digitalise and automate reporting – so far. Firms often want to see that new technology has been implemented successfully at...

10 Mar 2022 | Cloud Solutions, Investment Reporting

Why cloud solutions are the future of performance and risk analytics

In recent years, the complexity of performance measurement and risk calculations and the volume of data required to fuel them has increased exponentially, presenting asset managers with a significant challenge.  

Related content

26 May 2022 | Blog

4 top trends driving the ESG reporting agenda in 2022
Inflows into ESG funds have increased exponentially in recent years, but what is shaping the ESG agenda for asset managers?
Read blog

6 May 2022 | Blog

SFDR Article 6, 8 and 9 products explained. What do the classifications mean?
In this article we dissect what is meant by SFDR Articles 6,8 & 9 and the implications for asset managers.
Read blog

19 Apr 2022 | Blog

Why investment reporting needs to change

Across the investment management spectrum, the need for a radically different approach to investment reporting has never been greater.  

In this shifting landscape, implementing a data-driven, agile approach to investment reporting can help asset and wealth managers get back ahead of the game. 

Read blog

15 Apr 2022 | Webinar

Risk management: What do allocators expect?
Watch as our expert panel discuss the best practices in risk management and what asset managers need to ensure they can attract institutional capital, at a time of increased market volatility and increasing allocator expectations.
Watch now

29 Mar 2022 | Blog

The best practices in investment risk management you need to follow in 2022

For risk management, the ability to demonstrate extensive expertise alongside a deep understanding of the investment side of the business is crucial. But what best practices do firms need to follow to achieve an institutional-level standard of risk management? 

Read blog

23 Mar 2022 | Whitepaper

Risk management: What do allocators expect?

An in-depth guide to risk management featuring insights from asset management and due diligence professionals.


Download now

10 Mar 2022 | Blog

Why cloud solutions are the future of performance and risk analytics
The need to manage large volumes of data and perform complex calculations at speed have left many firms’ legacy systems and outdated technology struggling to keep up.  It’s time to take to the cloud. 
Read blog

11 Jan 2022 | Blog

The cost of meeting allocators' risk management expectations for asset managers

Implementing a fit-for-purpose risk management and reporting function is expensive. But for asset managers, the cost of sub-standard risk capabilities is even higher.

Read blog

16 Dec 2021 | Case Study

Landytech Helps Hedge Fund Achieve Substantial Cost Savings

After a recommendation from a market peer, a UK-based multi-strategy hedge fund approached Landytech for a managed solution that would provide expert risk management support, as establishing and maintaining this function inhouse would come at significant cost. Read the full case study here.

Read case study

15 Dec 2021 | Blog

The 5 must-have capabilities for managing the risk function in-house

So you know you need a robust, institutional-grade risk management capability to attract investor allocations and meet clients’ ongoing demands. But what does a fit-for-purpose risk management and reporting function entail in practice?

Read blog

7 Dec 2021 | Blog

4 things asset managers should look for in a risk management provider

Faced with demanding investor and regulatory expectations, asset managers are increasingly turning to third-party risk management providers.

Read blog

24 Nov 2021 | Case Study

Equity Manager Transforms Risk Management and Institutional Client Reporting Process with Sesame

Skerryvore Asset Management needed a sophisticated risk management and data analysis platform to meet the exacting due diligence requirements of institutional investors and so help grow its business. Read the full case study here.

Read case study

18 Nov 2021 | Whitepaper

The True Cost of Risk for Asset Managers

Comprehensive risk management capabilities are an integral and growing ingredient in asset manager success. Since the 2008 financial crisis, the value a strong risk management infrastructure and team bring has moved to the fore. Download our whitepaper examining the true cost of risk for asset managers.

Download now

Discover the power of Sesame