Principal – Investment Operations and Outsourcing, Australia
Chanelle Crabtree has extensive experience consulting for the asset management industry in Australia for the past 20 years. Chanelle has considerable knowledge and expertise in investment management, outsourcing, and the development of operational models that support the investment management lifecycle. Chanelle leads Cutter Associates’ Investment Operations and Outsourcing practice, and oversees Cutter’s Australia office. She has decades of experience working for investment management firms, custodians, and consulting firms, in roles that included middle-/back-office operational, business analyst, project management, consulting, and senior management. She has a deep understanding of investment management, covering the operational, governance, and system requirements to support all types of clients, products, and asset classes.
A former Director at Deloitte, Chanelle led key engagements, particularly for complex clients with diverse asset classes, covering target operating model design, sourcing, and implementation. Prior to Deloitte, Chanelle was a Lead Consultant at Morse Consulting Pty Limited, where she led various engagements that covered target operating model design, sourcing of custodians/systems, and implementations with investment managers and superannuation clients.
May 31, 2022
We’ve all been there. When all of that time and preparation goes out the window ─ and it seems there’s no way to recover.
Golf is a great sport, but it can be incredibly frustrating. And if you focus on a negative outcome while on the course, rather than focusing on one hole, or even one shot, at a time, your golf game can quickly spiral out of control.
The same can be said about implementations. The fear of failure can prevent a successful transformation, or even prevent some firms from considering outsourcing.
What if the solution is not delivered on time, within budget, or results in a suboptimal operating model?
These are all valid concerns. The rate of failure is extremely high, and the reality is that such projects fail all the time. But failure is often due to a lack of detailed due diligence and the misalignment of time and expectations.
Your firm can deploy various mitigation strategies to prevent failure, along with the right preparation, resources, and resiliency. You need to establish a plan and a way to stay on track. But you also need to the ability to get back on track when (not if) you get derailed.
Finding the Right Approach
Start with the end in mind. The implementation should be considered during the partner selection process to understand and gain comfort with the provider’s delivery capability. Based on prior experience, service providers can offer guidance on the implementation approach, sequence, resourcing required, and timeline.
But this should be thought of as a “guide only” for clients. Consider the provider’s expertise and experience as an input into your own implementation planning, but do what works for you, as you’ll need to consider other activities in your plan.
As the client, you’re in the driver’s seat during the commercial period. Make sure that your needs are considered in the joint implementation approach, sequence, and timing. Be prepared by identifying potential service gaps and understanding your own resourcing and capacity constraints in order to increase the likelihood of a successful outcome.
You’re not just changing providers ─ you’re changing how your organization operates. Organizational redesign and business process change management are key activities to be scoped ahead of time to ensure your resourcing and implementation plan is sufficient. Decommissioning systems and bespoke tools are part of the overall implementation planning, particularly where key dependencies exist in the current model. Detailed analysis of each service will help to limit unintended consequences or process duplication during this transition.
Firms will also need to be ready to define their business models, going service by service. This is extremely important because it forms the basis of the service-level agreement (SLA), and the service provider will document your firm’s business requirements service by service as well.
All development efforts for both sides will need to be estimated, and these roll into testing. The user acceptance testing (UAT) environment will validate integration and the services performed on your behalf. Testing should be detailed and thorough so you can address issues before go-live, or at minimum understand where problem areas may arise.
For example, if you’re receiving files from the provider, test the integration and how the timing of the file delivery will impact the business. Different valuation methodologies may exist between you and your provider, so determine the implications if your provider’s approach and price source differ from your own. Lots of nuances need to be considered so you can catch as many potential issues as possible beforehand. And some functionality, like compliance, may not get fully tested until production, but try to validate as much as you can before go-live.
One way to be thorough during UAT is to ensure that project teams consist of blended teams ─ not just stakeholders from operations, but the front office as well. By using a RACI (Responsible, Accountable, Consulted, and Informed) model in your project management, you can ensure that engagement takes place across all stakeholders impacted by the transformational effort, and that no gaps occur in testing that could cost you time and money.
Have a Plan (and Stick to It!)
Available time, resources, and funds should drive the client’s approach to transformation
Prioritization and capacity planning are key
Testing should be very detailed and well thought out to eliminate issues or at minimum to identify problem areas heading into go-live
Pick the right provider (your caddy), listen to their input, but ultimately do what works for you
Leverage blended teams during UAT
If anything can go wrong, it will. Hiccups will occur along the way, so expect them.
This is why change management and UAT are so important. Good project governance within your firm and a proper engagement model with the service provider also play critical roles for success. Ensure you mobilize the right resources and establish clear roles and responsibilities across the project team and equivalent lead within the service provider organization (see the project governance diagram below). Before you get started, open the lines of communication, create a strong framework for issue resolution and decision-making, and establish an escalation process so you can deal with issues as they arise.
Transformational change is complex and wide-reaching across the organization. Without clear roles and responsibilities during implementation, roadblocks and/or risks will arise that cannot be cleared or mitigated without adversely impacting your budget or timeline.
Project Governance Structure
Know What Success Looks Like
Outsourcing is a journey that requires a considerable commitment in time and dollars. Success should be measured both quantitatively and qualitatively. Key performance indicators (KPIs) will demonstrate the return on investment and a successful outcome means that all stakeholders should be generally satisfied with the initiative, and you have established an effective partnership with your provider moving forward. Qualitatively, all parties should feel good about the implementation and feel that the implementation matches up with expectations and positions the firm to succeed.
But don’t let perfect
be the enemy of good.
No matter how thorough your preparation and testing, issues always will crop up after go-live. The mitigation approach here is a hyper-care period when the project team supports production to address any issues quickly and embed the model into business as usual. As long as they are small issues that can be remedied, the project was a success, especially if you consider the scale of the transformation.
Your score might not be what you expected, but given the difficulty of the course, you still played a great round.
Monitor and Celebrate Success
Strong governance and effective decision-making
Determine and track quality KPIs that demonstrate the return on investment and positive impact of the initiative
Provide transparency and reporting to the business
Understand outcomes, celebrate success, and track benefits