Tame Your Technology Costs eBook | SS&C Eze

Facing sustained fee pressure, rising operational costs, and the threat of volatility, financial firms are forced to scrutinize every dollar spent to keep revenues up, including the often-overlooked costs associated with their investment technology. This constant pressure can leave firms feeling overwhelmed and uncertain about how to control expenses.

If this sounds familiar, it’s time to take back control.

With this guide, uncover your investment technology Total Cost of Ownership (TCO), identify hidden expenses, implement cost-saving strategies, and make informed decisions about your technological future.

Discover how to:

uncover how much your investment technology is really costing you, and learn if you're overpaying

identify hidden fees and hidden values impacting your bottom line

apply operational strategies like cloud, AI and automation, data management and analytics, and more to rationalize the cost of your existing investment technology

determine whether it's worth optimizing the cost of your existing systems or if it's time to move on to a new solution

select a new vendor to meet your cost objectives in just 6 steps

You’ll come away from this guide having gained essential insights and actionable steps for achieving significant cost savings and a more robust bottom line.

It’s not always easy to determine the long-term TCO or ongoing value and fit of your investment technology. The lack of transparency around investment technology costs can be frustrating and confusing. A good deal of this confusion comes from the fact that the price listed on a vendor's proposal is often different from the solution's TCO.

Much of the difference between the proposal and the solution’s TCO is due to “hidden fees,” costs not disclosed or discussed upfront. Regardless of intent or reason for non-disclosure, these “hidden” fees can have a significant impact on your total cost and bottom line over time.

On the opposite end of the spectrum, there are also “hidden values” that can have compound benefits over time to the firm without having a direct cost impact.

Only by factoring in the hidden costs and hidden values your investment technology offers can you truly understand how much your technology is costing you.

Here is a simple framework for uncovering both the true total value and true total cost of your technology. The calculation is relatively simple but will require some analysis.  

Basic Firm Requirements

To start, look at your firm’s basic requirements. These are the baseline features and capabilities you’d expect from any investment technology provider on the market. This requirements list should be the minimum set of features you need to accurately meet the basic needs of your firm.

Is your current vendor able to meet your basic requirements? Or are you supplementing with other solutions? If you are, make note of those additional costs.   

Basic investment technology solution requirements may include:

Front-office capabilities
- Trading
- Realtime PnL & exposure
- Allocation methodologies

Back-office capabilities
- Fund accounting and reporting
- Investor accounting and servicing

Reporting capabilities

Compliance functionality
Open architecture for building out your investment ecosystem
Flexibility and scalability

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Hidden Fees

Next, it’s time to do some digging. Review your most recent invoices from your vendor and check for any “hidden” or unexpected fees. Though these items may not be apparent in a vendor’s pricing proposal, they can and will add up over the lifetime of your technology solution.

Examples of hidden fees include:

Maintenance and upgrade costs

Market data fees

Support and end-user training costs

Infrastructure fees

License fees

Customization or integration costs

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Hidden Values

A solution’s “hidden values” add value or efficiency either from the start or as your firm grows but are often overlooked when evaluating a solution’s TCO.

Though hidden values are often more difficult to quantify, they are nonetheless critical to the analysis of the cost of your technology. Take a moment to make note of any of the hidden values your vendor offers.   

Examples of hidden values include:

R&D commitments to continued product enhancements

A service model large enough and scalable enough to fit the needs of your team

The breadth of offerings available to you as you scale, including managed services

A platform approach that leverages technology and process best practices to provide maximum value

Outsourced Trading Desk (OTD) integrations

Stock loan and collateral management

Easy access to third-party apps and solutions

Industry tenure and reputation

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Investment Technology Total Cost of Ownership

By calculating your solution’s TCO, you now have a more accurate idea of what your investment technology is truly costing your firm – and the value it will provide over the long run.

If, after completing this calculation, you are satisfied with your outcome – congrats! You’re spending soundly so as to meet investor demands and internal benchmarks. However, there is always room for improvement. Jump to chapter 4.

If you are less than satisfied with your outcome, you have 2 choices:

Optimize costs with your current solution.
Begin seeking a new solution.

To help you choose between options 1 and 2, consider these 3 things:

1.  Your Firm’s Vision 

Define your current and future business priorities, including where you hope to be in two, three, and five years.  

Think about your current competitive advantages; what does your firm do better than the rest? What could it do better? Consider what you do well today and what you’ll need to add to grow in the future.  

Once this list is defined, the big question is whether your current technology vendor is helping – or hindering – your firm's vision. To achieve the future you envision for your firm, you need to start laying the technological foundation today. 

2.  The Functionality of Your Investment Technology 

Too often, firms resign themselves to the less-than-ideal configurations, workflows, and accessibility of their current systems, incorporating workarounds and "making do." While these tactics may finish the day's work, they do nothing to advance the firm's long-term goals.   

Determine if your technology is keeping up with your firm by asking these questions: 

Does your system meet the workflow needs of your operation? Does it have the views and analytics you need to execute effectively and efficiently?

Does your system support the entire trade lifecycle, from order entry to settlement? Can it handle complex trade types and derivatives?

Can the system support the compliance rules necessary to satisfy investor mandates and meet changing regulatory requirements?

How difficult is configuring the technology to fit your front-to-back-office workflows? Can you change the workflows yourself, or do they require custom work?

Can your traders view all the information they need in a single dashboard, or do they have to navigate between screens, putting them in the dreaded “swivel chair?”

How many clicks does it take to process and allocate an order? Keep track and multiply those clicks by the number of times you do them daily. Are these small things adding up to inefficient processes?

Does your system ensure accurate and complete data capture, validation, and reconciliation? Can it handle complex fund structures and multiple accounting standards?

Does your system generate accurate and timely investor reports? Can it customize reports to meet investor preferences?

Does your system handle the increasing complexity of regulatory reporting requirements? Can it generate reports in the required formats and with the necessary level of detail?

Does your provider offer connectivity to pre-vetted partner solutions you can add to your system easily as your needs change?

Does your current vendor offer the flexibility of seamless browser, desktop, and mobile access?

3.  Your Vendor’s Service and Support Offerings

Service and support are other areas where firms may be “making do” with their technology vendor. With so much on the line, you need a vendor who will be there when you need them today while supporting your growth for the future. 

When you work with your vendor’s service team, do you feel confident they have the expertise and experience to help you with whatever challenges you may face? Do you feel confident that the person you are talking to knows the technology, the industry, and the demands of your business?   

Are you getting one-to-one support from your vendor when you need it, or do you struggle to get in contact with anyone from your support team, sometimes not hearing back for hours – or even days? Some vendors will take a tiered approach, servicing their highest-value customers first while other clients wait. 

And when you do get in touch, are you shuffled around from team to team, explaining your issue repeatedly and wasting your time?

As you plan to grow, is your vendor there to help you? For example, do they offer services you can add to help your firm navigate new business challenges, projects, and initiatives or augment existing resources?

Once you’ve made these considerations, analyze your responses.

Does your existing solution align with your current and future vision? Does it offer the functionality your firm needs to operate effectively and accurately? Do you feel that the service teams at your vendor are true partners in your firm's growth?

If yes, then you are with the right solution. Your next step will involve examining your current spend to see where you may be overpaying or ways that you can streamline your operations to decrease costs.

In the next chapter, learn some strategies for doing so.

If one or more of these areas is not providing satisfactory answers, it may be time to look for a new investment system. Because over time, misaligned or inefficient technology and services will not only cost you time and money but can threaten your credibility with your clients. 

If this is the case, skip to chapter 5 to learn how to get started finding a technology partner that understands the demands and vision of your firm, one with the experience needed to guide you through the switching process and a cost that better matches your firm’s goals.

Below is a list of areas firms can target to rationalize costs in their business and achieve operational alpha.

Although this list is not comprehensive, it provides several options to start on your cost optimization journey.

To start, consider giving your firm a score in each of these areas. Then, choose the 2 or 3 lowest-scoring areas to improve first.

Leveraging the Cloud: If your investment technology is not hosted in the cloud, consider making the switch. Cloud technology is often a more cost-effective solution compared to an on-premise infrastructure managed in-house.

AI and Automation: These technologies can be used to enhance efficiency by reducing the need for additional headcount and freeing up employee time for tasks with higher returns. For example, tools such as algo wheels and rules-based order routing help trading desks automate low-touch orders and refocus traders' efforts on high-impact trades, helping improve trading desk ROI.

Outsourcing: Outsourcing allows firms to focus on their core competencies and hire external teams to handle non-core tasks more efficiently and at a lower cost. Learn more about how the buy-side is improving its bottom line with outsourcing.

Proactive Compliance and Risk Management: Being proactive about risk and compliance assessments – and investing in the right tools to support you – can help identify potential issues before they arise and mitigate costs associated with losses or penalties.

Data Management and Analytics: Robust data management can streamline processes and reduce costs incurred due to manual data entry errors. Additionally, using data to inform decisions can optimize resource allocation and cost management.

Process Optimization: Regularly analyzing and streamlining workflows to identify inefficiencies can reduce operational costs. Some vendors have a workflow review team to help you identify processes that may have fallen out of step as your business evolved and propose the best course of action for maximizing your resources.

Vendor Consolidation and an Investment Ecosystem Approach: Technology vendors can tie together workflows and data seamlessly across more systems and partners than ever before. The simplified operational framework created by this approach lets investment firms keep pace with shifting market conditions while minimizing TCO. Learn more about the investment ecosystem technology model.

Tax and Insurance Optimization: Work with your tax professionals and insurance providers to ensure you’re not overpaying in either of these critical areas. To maximize profitability, explore tax-saving opportunities you can harness while remaining compliant with tax regulations. And, regularly reviewing firm insurance coverage can ensure you’re receiving adequate protection at the best possible cost.

A Culture of Continuous Improvement: To ensure these cost optimizations are not a one-time effort but an ongoing commitment across the firm, gain team buy-in, and work to foster a culture of continuous improvement. Build time to revisit opportunities for improvement in expense management control and tracking processes.

If, after making the considerations in chapter 3, you’ve identified critical flaws in your current system, it's time to start looking for a replacement. Prolonged use of inadequate systems is not only costly but can be damaging to your business.

Although switching systems can seem intimidating, your work to choose the right technology partner will pay off, as your new vendor will be instrumental in supporting your firm's transition from one system to the next. With the right vendor, a solid plan, and ongoing communication, moving to a new system should be a (relatively) smooth and painless process. 

By following our 6-part plan, you'll be able to find the right vendor for your firm, one that provides the technology and support that meets your investment firm's specific needs at a TCO that fits your budget. 

1. Reflect on Your Firm’s Vision 

The first step in switching systems is to determine which partners might be the right fit for the goals and objectives of your firm.  

So, how do you know which partner is the right fit? Think back to your firm’s vision and key functionality you identified in chapter 3. This should give you a fairly comprehensive list of vendor attributes and functionality you can designate as must-have, nice-to-have, or can-not-have.

2. Engage in Preliminary Vendor Research 

It’s now time to compile a list of vendors you think may have the necessary functionality and qualities to support you. Once you have defined a list of vendors you may want to talk to, do some preliminary research. 

To start, find out if your potential vendor is known in the industry – and what they are known for.   

Look at the vendor's tenure – how long have they been in business? Review the vendor's website thoroughly to better understand the company and how its technology supports its clients.  

Once you have learned all you can, request a demo to dig deeper into the technology's functionality.  

3. Assess Your Potential New Vendors’ Functionality 

Demos can be an excellent opportunity to learn more about how technology might meet your investment firm’s demands.  

But be aware: some vendors will use these meetings to show you slick-looking product demos that don’t translate to real life or make promises about specific capabilities that will never come to fruition – anything to get you to sign the deal.   

Only after the demo is over and you use the technology in your day-to-day will you discover that the reality is very different from what you were promised.  

To ensure this doesn’t happen to you, keep your list of desired technology features and vendor qualities handy and reference it throughout this process. Don’t be afraid to push potential vendors to be very specific about what their technology can and cannot do.   

4. Evaluate Vendors’ Service and Support Offerings 

As we’ve covered, you need a vendor who will be there when you need them today while supporting your growth for the future.  So, assessing the level of service you can expect before you switch systems is vital.  

First and foremost, to identify whether a vendor’s service team has the expertise and experience to help you navigate any challenges you may face, consider the firm's investment in its service group. They should invest heavily in both staffing and training.  

Secondly, see how their service team is structured. Looking at the structure, you should feel confident you will receive 1:1 knowledgeable support when you need it rather than being shuffled around from one rep to another, explaining your issue repeatedly without resolution.  

Ideally, you should look for a service team that offers 24-hour support during all global market hours and services all major markets and time zones through a blend of geographically distributed and centralized support teams. At a minimum, ensure the service team is local and available during your hours of operation.  

It may seem like common sense, but make sure you look for a vendor whose client service team is well-versed in how their systems work and who takes responsibility for cultivating software expertise in the context of your business. Not all vendors take this responsibility seriously.  

Finally, you'll likely want to access advanced service offerings at some point in your firm's growth. So be sure the vendor you choose has services you can leverage to navigate new business challenges, projects, or initiatives or augment existing resources. These services are also helpful if you want to offload critical business activities without the cost and hassle of onboarding an additional third-party vendor or increasing headcount.

5. Determine Whether the Vendor Will Support Your Firm Today and in the Future  

You want to choose a technology provider with proven experience helping firms thrive, regardless of size, market conditions, or industry headwinds.   

To do so, look at how long the technology vendor has been in business and what types of firms they have experience working with. It's essential to find a technology provider who is experienced not just with firms your size but with firms that are the size you want to be in the future.    

You’ll also want to know what you can expect from the vendor regarding technological innovation. To learn your vendor's potential for future innovation, look at their past. Do they have a demonstrated history of developing technology that keeps pace with trends in the industry? Ask the vendor what factors inform their technological developments. Is it driven by customer demands or by other factors?   

Finally, you know the market and its volatility. Can your vendor ensure your firm will have the resources it needs to keep pace as the market changes? Ask your vendor for a list of customer references that have used the technology in different market conditions. Were those clients able to capture opportunities and navigate downturns? Were there any technical limitations that caused them to miss out? 

6. Examine the Total Cost of Ownership of each Investment Technology

As we’ve established, technology’s TCO can significantly impact your bottom line over time.

Using the calculation we shared at the start of this guide, identify potential hidden fees and values that may arise once you switch.

When completing this calculation, one additional consideration is to add any internal resources you will need to devote to converting the system. For example, do you envision any custom work to ensure smooth interoperability? Can the vendor’s implementation team address this work before the go-live date, or will that responsibility fall to your teams?    

The responsiveness of your solution provider’s service team is also essential in this calculation. If things go wrong, can you rely on them to get back to you promptly? Or will you need to dedicate internal resources to troubleshooting and chasing down your vendor support team?   

Be sure to add time taken away from your team’s daily responsibilities throughout the switching process to the cost of onboarding your investment technology.  

Evaluating the TCO of the solutions you’re considering before switching, rather than just comparing up-front costs, lets you more accurately compare vendors and establish which solution will provide the most value to your firm over the long run.

Once you’ve found a vendor that delivers the required capabilities, fits your firm's strategic goals, and provides a compelling TCO, you’re ready to take the next step. For help with this process, our guide, Switching Systems Simplified, offers expert advice to make the process as smooth and efficient as possible, as well as a three-phase tactical guide on managing the transition.

Break free from the cycle of overpaying for investment systems and reclaim control of your technology budget.

Whether you've chosen to optimize your current system or seek a new solution, you now have the tools to understand the current condition of your investment technology spending, implement strategies for cost reduction, and make informed decisions to optimize your technology investment.

Revisit these exercises annually to ensure you're not incurring unnecessary costs that will cut into your bottom line, client returns, and revenues.

Over time, regularly reviewing these considerations and making iterative optimizations to your technology costs can significantly reduce your firm's expenses. But this isn't just about saving money; you can increase operational efficiency, improve decision-making, and gain a competitive edge by taking control of your technology costs.

Take action today and unlock the full potential of your firm.

SS&C Eze delivers more robust functionality at a greater value.

Increase your ROI with one vendor for front-to-back technology applications, architecture, service, and a growing ecosystem of plug-and-play solutions, saving you money on new features and tools as you grow.

And with transparent pricing, you’ll know what to expect. Instead of hidden fees, Eze offers hidden values, like R&D commitments – $110M annually across SS&C wealth and investment technology offerings – a client-first service model and ease of scalability.