BLOG. 5 min read
Why Traditional Investment Operations Systems No Longer Suffice
May 11, 2023 by Dominic Flanagan
Investment managers face a common enemy: patched-together legacy systems as the foundation of their operational ecosystem. These cobbled-together IT environments are complex, and that complexity results in inefficiencies, which hurt margins, increase risks, impact service and block growth. Operational complexity brings extra cost and usually requires daily manual workarounds and additional effort, all of which take focus away from attracting assets and outperforming the market.
But investment operations can also serve as a strategic growth initiative through advanced capabilities available today, putting in place technology that resolves the key drawbacks and failings of traditional systems. Major obstacles to streamlined efficiency stem from the limitations of traditional systems.
- Interoperability between traditional systems is costly and error-prone because they tend to use different models for exposing access to data and different protocols to communicate with each other. They may also use different formats for the data itself. An advanced system is needed that offers open, industry-standard access.
- Data management between traditional systems is batch-oriented, usually via scheduled events, which is very slow; typically an overnight process. An advanced system is needed that offers real-time, intraday data processing.
- Idling happens when traditional systems need to provision a platform of resources that can handle the peak loads of data processing to ensure adequate performance, which means that expensive resources are idle during non-peak loads, which drives up the cost of ownership. An advanced system is needed that offers flexibility with the accessibility and application of computing power.
- Scalability in traditional systems happens vertically to handle the greater volume, which means buying, installing, and configuring new hardware and software—creating both a financial cost and a time lag that impedes business growth and business agility. An advanced system is needed that offers horizontal scalability to grow.
- Constraints stem from the vertical scaling model that is needed to enable traditional systems that are built over relational databases. They have a limit in the volume to which they can scale and require multiple instances of the system to scale beyond that limit. An advanced system is needed that eliminates constraints.
- Deployment of traditional systems with a monolith architecture over a relational database is difficult because they require a full build and the deployment of all code and databases even for small changes. They cause extensive business disruption. An advanced system is needed that eases implementation and upgrades.
An advanced investment operations platform helps to drive growth and efficiency. A cloud-native solution can scale as you grow, and with today’s technology, enhance interoperability and processing efficiency. SS&C Aloha is a new front-to-back-office platform that streamlines investment operations, built on a unified data model that delivers one source of truth that is always up to date. Cloud-native, Aloha is a secure, zero-footprint solution that connects and expands dynamically to address the limitations of traditional systems, such as:
- Interoperability: Aloha adheres to the OpenAPI specification with REST APIs so that Aloha’s model for exposing data, the data format, and the protocol for communicating with Aloha, is a well-understood industry-standard pattern that reduces complexity and errors.
- Data management: Aloha’s ability to interoperate with other systems in real-time over REST APIs or over event-driven messaging enables clients to move from overnight batch processing to real-time intraday data processing, which means that actionable information can be immediately delivered to business users.
- Idling: Aloha’s microservice architecture scales dynamically to ramp up only those microservices containers that are needed to meet peak loads, and then releases resources immediately after peak-load processing. Aloha reduces the cost of ownership because it only uses computing resources when the business needs them.
- Scalability: Aloha’s cloud-based services scale horizontally to increase capacity when a business needs to move quickly and grow quickly, so there is no lag time waiting for supply chain deliveries to vertically scale the platform.
- Constraints: Aloha’s non-relational model, with multiple distributed nodes, eliminates the constraint of a single relational database and enables huge horizontal scalability.
- Deployment: Aloha’s microservice architecture, along with its container strategy, enables Aloha to deploy small footprints of functionality on a very rapid frequency with zero downtime to business operations.
The firms that leverage an advanced platform service model can walk away from the limitations of traditional systems and focus on competing in the market based on their ability to innovate in investment strategy and customer experience to drive top-line growth. SS&C Aloha eliminates costs and risks from cobbled-together solutions and legacy system maintenance and complexity. Learn more about the technology behind Aloha and contact us to schedule a demo.
Written by Dominic Flanagan
Chief Development Officer, Institutional & Investment Management