Beyond the Numbers Blog

Selecting Software: Lead with Effective Solutions not Visualizations

Posted on November 16th, 2020

Why do family offices, hedge funds, and other asset management firms spend thousands of dollars on back-office accounting and reporting software?

What may sound like a trick question is instead an earnest query with a straightforward answer: companies purchase accounting software – or any software for that matter – to solve day-to-day problems and achieve business goals. These goals can be as varied as the firms themselves, but typically include some combination of improving efficiency, increasing accuracy, reducing risk, gaining insight and elevating client service.

When selecting a software provider, focus on the effectiveness of the solution in meeting your needs. Be sure to look out for the following two pitfalls in particular, which can snag your firm and lead to a less-than-optimal decision.

The technology disconnect

The first pitfall is prioritizing technical requirements over meeting business needs. Solutions that simply satisfy check-the-box technical requirements – one of the greatest downfalls of RFIs and RFPs – only ensure the system will run smoothly in your existing environment. It does not guarantee the software will solve you firm’s business challenges.

Also keep in mind that going from manual processes to a next-generation accounting solution is a huge leap. Since technical requirements for new software are often developed based on legacy systems, they may not reflect the broader capabilities of the new solution.

If you prioritize business needs to drive your procurement decisions, then you will also need to embrace process re-engineering. Process re-engineering is the glue that binds your business needs to the technical capabilities of the solution you choose. The benefits will be evident in faster and less expensive procurement as well as more effective and complete utilization of the selected software. And it means faster and less costly implementation so you can go-live more quickly. You will also realize a more rapid return on your investment by adopting the new technology and using its capabilities to greater effect.

Visualization blindness

The second pitfall is succumbing to “bells and whistles” over substance. While a beauty competition is nothing new in software demos, the powerful visualization capabilities of today’s modern accounting software have brought the impact to an entirely new level.

Visualization has completely changed how asset managers – and their clients – interact with data. It provides a more efficient way to filter, analyze and view complex information, helping to identify trends and provide actionable intelligence.

However, firms should tread carefully. Don’t assume visualization capabilities and custom reporting are a panacea. They won’t solve your firm’s business issues if they are only surface veneer and the data behind the reports is flawed.

“Visualization versus effective solutions is a common theme we see within the family office sector,” said Ashley Whittaker, President – Global Sales for FundCount. “Firms need to be aware of this when selecting software so they purchase a functional system that provides true value and not just an impressive interface with no muscle behind it. In other words, an effective software solution must be backed by data that is accurate, aggregated and accessible.”

Accurate data, meaningful reports

Asset managers must meet the increasingly specific reporting requests of various stakeholders. That can include slicing and dicing data by a user-defined sector, running proprietary calculations, or tracking cash flows between entities in complex master-feeder structures. Presenting this information in visually striking reports is only helpful if the accounting and analytics behind the visualizations are based on accurate and timely data.

Legacy systems were not built with the flexibility to accommodate today’s needs. They are ill-equipped to automatically aggregate siloed information for a holistic view of wealth. As a result, family offices, for example, spend more than 20% of working hours on manual work, according to a study by Family Wealth Report. And, a recent survey in a Financial Technologies Forum webinar suggested that nearly four in five asset owners were still processing 20% to 100% of corporate actions manually.

The best advice when selecting a new system – leave the legacy system behind. Understand that moving forward may mean completely re-engineering processes and workflows. Start by addressing data integrity and other structural issues to ensure the “plumbing” is set and the core functionality delivers what is should. Look for a modern back-office accounting solution that:

  • Automates data capture to eliminate manual input and improve accuracy of the underlying information
  • Eliminates silos for an aggregated view of financial activity across the firm and greater accuracy in analyzing risk and performance
  • Delivers real-time updates to the general ledger so information is always up-to-date across all aspects of the system
  • Offers APIs to easily integrate best-of-breed tools that expand the capabilities of the software
  • Enables customized, on-the-fly reports with information tailored to the needs of each stakeholder.

Once the infrastructure is set properly and data is accurate, visualization takes it to the next level. It empowers your firm with deeper insight and new dimensions for smarter, more informed decisions.

FundCount offers a highly effective solution backed by accurate, easily accessible data. Fully automated, FundCount software eliminates spreadsheets and manual tasks to improve efficiency. Out-of-the-box reports and visualization capabilities are enhanced with a range of robust APIs to popular applications that extend the value of FundCount. Download our Vendor Selection Checklist to get your next software project started on the right foot or contact us for more information.