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Based on one-on-one interviews with executives of investment management firms, the report covers a range of topics, including current buy-side technology initiatives, business and budgetary drivers, and the changing attitudes towards buy versus build. A clear theme emerged around the search for value in operations and the opportunity for investment managers to make the most of their infrastructure by strategically partnering with service providers that support both current and future business goals.

“While assets under management, investor demands, and regulatory requirements are all still growing, overarching uncertainty has discouraged firms from similarly expanding their resource allocations,” said Jim Warren, Head Solutions for SEI’s Investment Managers Service division. “The resulting budgetary immobility has shifted the pressure onto technology initiatives to deliver far more efficiently in order to achieve growth. It’s become clear that the current environment supports the trend toward outsourcing back- and middle-office functions to create that efficiency. It’s no longer a decision of ‘buy versus build’ for investment managers, it’s become ‘partner or perish.’”

The executives who were interviewed for this paper also identified reporting and data management as the top technology initiatives, and believed that having clean and consistent data throughout the pre- and post-trade life cycle will offer advantages over their peers. Additionally, they explored key drivers in determining budgets, the trade-offs between the different levels of outsourcing, and the process of selecting service providers. Despite an array of available service provider solutions to choose from, many struggle with the trade-offs between longstanding or emerging technology, best-of-breed or integrated solutions, and which providers will prove to be the best long-term partners.

“Selecting the right service provider can be a drawn-out experience, and it’s important to choose a provider that clearly adds value, one you consider a true partner,” said Ross Ellis, Vice President, Knowledge Partnership for SEI’s Investment Manager Services division. “Ultimately, the goal is to establish a long-term relationship with a provider that understands your firm, is easy to work and grow with, offers good value, and has a good industry reputation. While not a one-size-fits-all business proposition, outsourcing is clearly the direction this industry is trending.”

The paper was published by the SEI Knowledge Partnership, which provides on going action-oriented business intelligence and guidance for SEI’s investment manager clients. To request the full paper, visit www.seic.com/ReinventBuyside.