Taken from CFA’s Annual Global Investment Standards Conference 2011

Running out of resource bandwidth to support critical business objectives is a common problem for performance measurement teams. Often too much time is spent managing spreadsheets and manually cross referencing data to ensure accuracy. As a result performance teams simply cannot meet the competing demands of clients, regulatory bodies and new business requirements. This is where strategic technology partners can help with performance measurement software. While at the Annual Global Investment Performance Standards Conference in October, we heard from a StatPro client specifically focused on the key criteria his company developed to evaluate service providers. To keep the evaluation timeline to under 3 months and limit the amount of resources devoted to the search, they created 9 critical questions to help navigate the search.  Hopefully these questions will help define the search criteria for the right analytics partner.
1. Define your business needs and your vendor selection criteria

What are your company’s important, very important and extremely important criteria in vendor selection? Things that were very important to us in our evaluation were installation time, ease of use, quality of support, consistency with performance numbers, customization/flexibility of reports, good quality data and transparent data interface, instrument coverage and most importantly the accuracy of the results.

2. Make sure that the system and the vendor can handle your unique company requirements

Thoroughly review vendor collateral, arrange to meet the vendor for a presentation of their solution, interview reference clients and test the solution in house. In other words, do your due diligence!

3. Ensure that the system architecture will work with your existing infrastructure

If you are looking for a replacement component or a completely new piece of analytics for your performance measurement needs, make sure that the system works with the other systems that you have in place. Your I.T. department will be able to help determine the how the pieces of the puzzle will fit with a new analytics platform and determine the scale of the project.

4. Does the vendor’s calculation model work with what you are currently using and how does this model alignment with your investment strategy?

Don’t try to shoehorn a vendor’s calculation engine. It won’t work. Look for a vendor that offers the same type of calculation that you run.

5. If you evaluate a vendor who offers a hosting solution, what data requirements do they have?  Are you able to provide the data? 

Fortunately or unfortunately, if you’re looking at a hosted solution, the technology vendor does not have access to your data so you are going to have to work with the vendor to figure out how to get it to them. Many offer FTP functionality or can work with you to set up feeds that work for your internal teams.

6. What security does the vendor have in place for your data?

This question applies towards those considering the hosting route, look for specific certifications like SSAE 16 Type II or ISO2001 to make sure that they are audited and in compliance with industry regulation for hosting data. Vendors invest in such certifications to ensure that their infrastructure supports heightened protection for their clients’ data security.

7. How do you deal with difficulties during the implementation and post implementation?

You don’t want to feel like you’re alone on a desert island if you run into difficulties.  If you are running mission critical operations, it is imperative that you look for a vendor that offers a ULA that stipulates strong support so that you are not stranded in the most calamitous of times. Also, check on the whereabouts of the support and ask if there is additional support from external consultants depending on the project.

8. Look for a vendor that leverages client feedback to feed product development

Many vendors offer product user groups or product focus groups to help them define strategic updates to make that meet specific client demand. When vendors offer this, you have special reassurance that your voice is contributing to product development that will ultimately benefit your company.

9. Ask whether the vendor incorporates industry regulation or rule changes into their product

Aligning with a company that incorporates the latest GIPS rule changes, therefore ensuring GIPS compliance and is up to date on regulation that can impact external reporting can dramatically help you streamline your processes.

In the end, every company has different needs and will have different systems requirements.  Collaborating with all members of the performance measurement team, vendors and vendor references will help get a complete picture of how the vendor will meet your needs.

Neil Smyth

Neil Smyth

Marketing & Technology Director, StatPro Group

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