The Future of Back Office Systems


Date: July 2006
Author: Catherine Doherty

This report explores the benefits of 'one big system' in the back office versus the 'lots of specialist systems' approach. Is it feasible to ask a system to cover all functional areas and securities? How good is the technical architecture that links together multiple systems and processes? What does the future hold?

The research report also discusses vendors and systems - who are the rising stars and who might be cash cows? We explored a number of case studies of whole replacement projects and operational models. Who's getting it right?


Table of contents

  Management Summary 1
1 Introduction 3
  1.1 History 4
  1.2 Paper aim and methodology 5
2 The Scope Challenge 7
  2.1 Core back office services 9
  2.2 Supporting investment services 16
  2.3 Supporting client experience services 22
  2.4 Challenging new processes 26
3 The Asset Class Challenge 31
  3.1 Cash and money markets 32
  3.2 Equities 33
  3.3 Bonds and collateralised debt 34
  3.4 Unitised funds 35
  3.5 Multi-manager 36
  3.6 Property 37
  3.7 Private equity 38
  3.8 TBA (To Be Announced) contracts 39
  3.9 Derivatives 40
  3.10 Repurchase agreements 42
  3.11 Producing combined views 43
4 The Complexity Challenge 45
  4.1 Organisational complexity 45
  4.2 Process complexity 46
5 Selecting a Solution 49
  5.1 The changing vendor marketplace 50
  5.2 Why can’t we use a sell-side system? 52
  5.3 Buy/build influencers 53
  5.4 Bureau service 54
  5.5 Code purchase 55
  5.6 Partnering 55
6 The Back Office System Project 55
  6.1 Technical considerations 58
  6.2 Case study 1 - The back office albatross 65
  6.3 Case study 2 – Consensus as king 67
  6.4 Case study 3 – At what cost progress? 69
  6.5 Case study 4 – Mid-project departures 71
  6.6 Case study 5 - Encapsulation 73
  6.7 Case Study 6 – Creating change 74
  6.8 Project costing 76
7 Conclusions 77

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