Enfusion, an established provider of global investment management software and fund services that’s focused on “automating and simplifying full front-to-back office functionality with one vendor,” notes that as funds continue to grow, many patch together tech solutions, adding new functionality or capabilities as they become available, and then attempt to integrate them into legacy IT systems.
According to Enfusion, it’s possible companies end up with several different systems, like one just for trading purposes, one for managing accounting processes, and maybe another for risk management. But can these independent systems effectively communicate with each other? How seamlessly (or not) does data flow from one platform to another? Enfusion claims that in many cases, the data flow is not very smooth or seamless.
Michel Finzi, Senior MD, Head of Investment Engine Software Products at Enfusion, noted:
“Stitching together different technologies can result in excessive reconciliation work and introduce multiple points of failure, due to the connections and active maintenance required to keep everything running in unison and at scale. A single and seamless system where all mission-critical applications are natively designed to interact together frictionlessly from the start is, by design, much more reliable and scalable, saving operations teams much unnecessary headache.”
For most asset managers that means moving key processes to the Cloud for all-in-one or comprehensive solutions that integrate different systems, while improving data management, trading, compliance, and accounting (by bringing these processes together to function seamlessly as part of a single or unified platform).
A survey performed recently by Enfusion reveals that around a third of hedge fund managers are fully Cloud-based, another third use some type of mixed Cloud and on-premises platforms, and a final third has decided to keep IT “entirely on-premises.” However, if you add together the Cloud and hybrid (partly cloud-enabled) managers, the Cloud is dominant, with around 70% of hedge funds “hosting at least some of their systems in the Cloud.”
Mid-sized companies (with assets anywhere between $250 million to $1 billion) are “more likely than very large ones to be fully Cloud-based,” Enfusion claims.
They added:
“We believe this is because managers that have launched in recent years are more likely to have started out in the Cloud. Unburdened by issues, such as legacy infrastructure, these managers have skipped one stage in their digitalization journey and can fully benefit from the speed and scalability that the Cloud enables.”
Hedge funds are now increasingly using vendor-managed private Clouds to host their operational infrastructure—functions such as order management, execution management, portfolio management and risk management. Funds are about 10 percentage points “more likely to have their systems in the Cloud than their data,” Enfusion reveals.
North American companies are the “most prolific Cloud users, while European managers have been more cautious—though, currently, about half of all European managers host order management and execution management systems in private vendor-owned Clouds.”
The Enfusion team points out that developing an operational infrastructure that can meet your requirements is of “the utmost importance” to asset or fund managers. They claim that many providers offer rather slow implementations, “constant migrations” to new vendors, and a lot of confusion between your teams. According to Enfusion, it should be clear that choosing and working with the right or appropriate turnkey solution is “a make-or-break success factor.” They claim that with Enfusion, there’s a 94% client satisfaction rate, so you can “confidently” make the choice to use their products.
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