To address these issues, firms have focused on digitalising system infrastructure and operational processes, but in these scenarios it’s important for them to consider maximum optimisation – even if the area of focus isn’t a prominent area of the business.
For example, insurers often focus digitalisation efforts on B2C, and deprioritise areas such as accounting and analytics. The risk in this approach is missing areas that could generate sustainable long-term benefits.
Consequently, despite comprehensive investment accounting requirements, insurers still rely on software installed on-premises and managed in-house.
1. Quality improvement
The significant improvement of data quality and consistency across the entire investment lifecycle, including reporting, should be a key objective of any IT optimisation project. Using the latest technology, including scalable and flexible infrastructure, will ensure reliable and consistent data and enable fast responses to changing requirements.
2. Optimised data output
Optimisation of data output must be an objective on its own as it represents the usability of the improvements being applied. The data output must include flexible delivery methods so a provider can offer reports in various formats and be able to import raw data via standardised interfaces into different downstream systems.
3. Cost reduction
The main objective of any optimisation project should be a reduction of the total cost of ownership (TCO) of the operating model, achieved through a leaner system infrastructure, optimised use of resources and a targeted make-or-buy-strategy. It’s critical to include both direct and indirect cost in any review.
In negotiations with providers, clients should aim to receive a simple all-inclusive fee model without any hidden costs, when dealing with cloud providers – specifically separate fees for implementation, software releases or new product functionality. The client should also factor in any additional services received from the vendor that could eliminate or reduce manual processes and the associated costs.
4. Increased efficiency
Any optimisation project should increase the overall degree of automation, thus making the business model more scalable and flexible. Market-leading platforms make it possible to adjust business models quickly, as client requirements evolve (for example, investments in new asset classes, products or markets). They are also easily scalable, without the need to significantly increase headcount. A benefit of reducing manual processes is often a higher level of satisfaction across the workforce, as staff members can move from relatively simple and unfulfilling activities to value-added tasks.
Overall, the conclusion is that finance executives – and their teams – must take a close look at their infrastructure. There is hidden potential to improve quality and reduce costs in areas where you wouldn’t normally expect them, and that potential will be much more significant than you think.
Source: Business Reporter
