The New Age of Buy vs. Build in Asset Management

Given the advances made in vendor systems over the past 25 years, the business case for buy over internal build is overwhelmingly in favor of performance vendors. A recent industry report by CEB TowerGroup, Buy Versus Build, Two Radical Shifts Impacting IT Service Delivery in Capital Markets, found that asset management firms’ middle- and back-office systems will become entirely commoditized and outsourced due to two major shifts:

• Hosting and services have made technology and solutions easier to implement and use
• New technology has driven competitive success for those willing to embrace it and those providers able to deliver it

With performance systems, two key factors make choosing a vendor solution an automatic option for most investment management firms:

• Many of the methods used to calculate performance returns and equity attribution are now standardized, thus removing the need for bespoke developments
• The capabilities and features offered by vendor solutions to support non-standard processing have evolved significantly and are much more sophisticated and powerful