When we talk about ‘best of breed’ analytical solutions, what do we mean? Traditionally, in the investment management industry it meant buying the most specialised system for the specific asset class. But as the world of asset management has evolved, perhaps best of breed has been shown to have limitations as multiple systems have led to increased IT complexity, hampering the ability of the business to operate in the most efficient and effective manner.

Whether best of breed is applied to an asset class, geography, or strategy, it essentially means a commitment to not making any compromises on functionality. The asset manager typically expects at least an 80 per cent fit between the system and their business – and as much as 95 per cent in certain key business areas. If the asset manager doesn’t have that fit, it could mean compromising and the system can no longer be seen as ‘best of breed’.

Some investment managers have sought to reduce the number of analytical engines they own in an effort to simplify their systems and IT landscapes. But can broader and fewer systems deliver the expertise and business agility required? The answer for most companies is to make better use of their existing applications, evolving to smarter systems that are quicker to implement, and which remove expensive and large-scale upgrade programmes.

This may be the way forward for the industry; however, it doesn’t mean that asset managers need to have all those systems in-house. If the IT strategy is to ‘lift out’ all those engines and move them to a hosted solution, they may suffer from reduced visibility into those systems. Many asset managers have tried to move away from ‘best of breed’ due to the technological complexity implications but the technology can be simplified by outsourcing, as long as the data can still be centralised.

Moving away from best of breed may simplify an asset manager’s systems but more generic solutions may mean reduced functionality and the cost of deployment is much greater.

The ideal solution is a platform that brings the results and output of all of an asset manager’s specialist systems together in an efficient way, consolidating, enriching and maximising the data therein and realising their full potential. In this way asset managers can unlock the value of their ‘best of breed’ systems and make them work more effectively for their stakeholders and clients.

As the industry continues to evolve to meet the needs of investors and regulators, this fragmentation of IT and business processes will increase. Applications today need to be smart. They must have strong elements of interoperability and be able to protect and extend the existing investments made. It is now uneconomic and more often than not too risky to consider consolidation of applications to a small number of large, all-encompassing solutions.