…. they’re not confident in their accounting systems.
I’m always skeptical when I see press pickup of industry surveys conducted by vendors. Case in point; a survey, released last week by a buy-side tech vendor, noted that the majority of participants “lacked confidence” (translation: are not happy) with their portfolio accounting systems. Diving deeper, you realize it’s hardly comprehensive – total sample was only 58 buy-side firms and 100 “executives.”
That said, this survey does, in fact, prove a point: there are many legacy systems still out there, making it no wonder that there’s a lack in confidence. With that, we put together a short list of vendors (names withheld) that we consider to have legacy systems (with a certain amount of humor added, however, the points raised are all 100% true). Using a common sense definition of legacy, the systems listed below are antiquated because they use obsolete technology platforms and because little to no new functionality has been added to keep the systems up to date with a changing industry and regulatory environment. Here we go:
1 – the portfolio accounting vendor with the flat file database format that makes its money selling upgrades to a SQL database-based version (though not all of it is even SQL!)
2 – the vendor with the blue screen. Yes, the dreaded blue screen. Hardly a modern user interface, although an alleged windows “wrapper” has been coming for years. Still have yet to see it. This same vendor owns another portfolio accounting system which has not had any new or significant functionality enhancements since said vendor bought it.
3 – the financial software conglomerate that is currently acquiring companies left and right and invests little to nothing in new functionality. Instead, it pushes to “link” the bought portfolio accounting system to other products it can sell to its new “captive” client base.
4 – the other financial software conglomerate that has fallen on hard times lately, since most of its revenues come from the sell-side. While focusing on this business, they lost much of their buy-side portfolio accounting system business.
If you dig a little deeper into the buy-side using a common sense definition of legacy, a lot of legacy systems and vendors emerge. In today’s environment, investment management firms can’t afford to hold on to their legacy portfolio accounting systems, as they’ll risk falling behind competitors, or worse, running amuck based on the lack of checks and balances as well as the lack of transparency contained in old technology.