By Jay Boyd, Application Services Technology Officer, Invesco
The asset management industry is at a crossroads. It is facing several external factors that are causing many firms to reassess their operating models. New financial technology is providing many exciting opportunities for firms to expand their capabilities, but it is going to be through the transformation of their legacy systems and processes that they will achieve the leverage they are looking for in preparation for the future.
The transformation of legacy systems and processes are typically large, expensive programmes that touch many parts of the organisation. They usually involve changing a substantial, end-to-end process that has been in place for many years, whose scope is not fully known and whose architects are often no longer available.
There are two primary objectives: First, introduce new systems and processes and achieve all of the stated upfront goals. Second, replace the hidden cottage industry processes that have been established over the years on top of the legacy systems. These are usually undocumented, opaque, and their scale and scope are unclear.
There are many components to establishing and completing a large-scale transformation programme, but six are critical:
• Clear vision
• Executive sponsorship
• Well-defined road map
• Programme leadership
• Strong execution
It all begins with the vision. If a vision cannot be executed, it is nothing more than fantasy, therefore it should be aspirational, but also achievable. It should be put together in such a way that everyone in the firm understands what it is and why it is important.
Large-scale programmes take time, resources and money. They often build a foundation for future growth and scale, but can also be unpopular since they are not necessarily the “latest and greatest” hot items. It can feel like a home repair to some – necessary but what does it get me?
This makes it easy for people to question the programme. It is often perceived as being in the way of what they want or believe is important. Staff need to see that it is more than repairing your home, that it is vital for growth.
Executive buy-in is absolutely key to the success of a programme. Executive support ensures that it will have the resources, continued prioritisation, air-cover, and the necessary cheerleading. An executive sponsor should be spreading the benefits of the programme and counter nay-sayers sceptical of the programme’s value, fearful of the changes the it will bring or even jealous that it could derail one of their own priorities. Sponsorship can also help ensure that the true cost estimates are transparent, and not being glossed over.
Once you have your vision, you begin to build your road map. The vision is “where you want to go” and the road map is “how you are going to get there.”
It should define the approximate timeframe to deliver the entire body of work, each discrete project and its timeframe, the primary deliverables for each project and the value or benefit derived from each project. You are looking to deliver value in incremental pieces that make sense, without waiting until the big bang at the end of the programme. Solution architects are required to design the work appropriately, and provide insight and direction on how to integrate the different pieces as they emerge.
When a firm decides to take on a large-scale initiative, it must put into place a management and resource structure that will get the job done as fast and as efficiently as possible. Create the leadership team of the programme by carving out the best people within the firm for the job, and then making this their full-time job. While the firm may find it necessary to bring in external expertise to help with various aspects of the programme, they should be putting as many of their own resources in leadership positions as possible.
Where external leadership is necessary, it is best to put “two-in-a-box” so that someone from the organisation can learn new skills from external experts. This is a both an investment in the firm and an investment in one of its key leaders.
The programme director must be someone who is capable of making decisions and empowered to make them. They must be someone who can sell the vision of the programme, inspire team members about its value, and initiate and drive through change.
The programme manager is another key position. They must be willing to help moderate disputes, resolve design issues, and ensure consistent communications across the programme. Often this role is the ‘glue’ the pulls the entire program together.
The planning phase itself is typically a time-boxed period when requirements, timeframes and resources are defined. Here, you should identify many of the unknowns of the vison and road map phases. You will write any necessary RFPs, evaluate the responses and make vendor selections, plan the execution phase and build materials for the project governance process.
There are three crucial issues to highlight: First, an understanding that plans can go wrong. The programme needs to be flexible enough to adapt and adjust. Implementation will take longer than expected and be more complex than anticipated. A balance must be found between scope expansion and scope control to accommodate the likelihood that the plan will change. Providing the programme with a limited contingency bucket can be an effective way to control reasonable scope expansion for the unknowns, while proper oversight from a programme steering committee can provide a cap for scope control.
Second, is decision making. Mangers must have the ability to make decisions with less than perfect information, make decisions that are best for the programme, and be able to pivot if the decision is not working as expected.
Third, is having a robust change-management plan in place. Change management is how the programme will engage the business, where new processes are established, training is conducted, manuals written and test plans and cases devised.
These elements may seem to be basic requirements to ensure a successful large-scale transformative programme, but they are often overlooked or not sustained. There is also one more critical component. There should be assessment points that allow for decisions to be made to either continue to the next phase of the programme, pivot it or if necessary discontinue the programme. This prevents the firm from having to make a single big commitment, and reassures stakeholders that there are controls in place that deal with the unexpected.
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