Making a case for a RoI

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22 February 2016
Singapore, Singapore

In this blog article, Simon Cornwell, co-founder of Vermilion Software, explains why asset managers should involve their vendor in the process of making their internal business case.

When Operations, Client Services or the IT department are driving forward a procurement process within an asset management firm, one three-letter acronym is almost certain to crop up early in the discussions: RoI. Actually proving that a certain Return on Investment will be derived from any system selection process is often, however, rather difficult to ascertain.

Asset managers always need to make the case internally for a new (or different) client reporting system, but they rarely have the actual data to substantiate their claims. Obtaining these metrics can be problematic for a number of reasons, not least of which is that the metrics need to be predictive to be of any real value. Does the reporting vendor, however, have enough insight into the client’s business and how it is run financially in order to assist in the process of building the business case – including the Return on Investment?

There are multiple issues associated with delivering a RoI for a software system. For a global asset manager, requirements might include a good understanding of:

  • all the divisions of the business that will use the system and how the internal charge-backs work;
  • the costs associated with ‘switching off’ the current reporting system and ‘switching on’ the new one;
  • the staff costs. The vendor would need to understand the role of the current staff in the Source Operating Model (what they use now) and the Target Operating Model (what they will use). They also need to determine how easy it would be to ‘repurpose’ certain staff for more productive activities.

If you think you can trust your vendor to provide a reliable software system, why not trust them to help you make your business case? It will involve an investment in time and the sharing of some sensitive information, but the payback will involve a more accurate picture of the Target Operating Model and hopefully shorten your procurement process.