It is very difficult to determine what some software vendors actually do these days. Many software firms with propositions based around emerging technologies are so vague in their techno-babble that it is very difficult to pin them down as to what business problem they are trying to solve. Some appear to be deliberately opaque in their positioning so that they are flexible enough to move into whatever market niche that emerges.
The next generation of data management players is a case in point. Many are offering a service that sits alongside or on top of an EDM platform and most of these firms are, to my mind, on thin ice. The problem is that most asset management firms want a data management vendor that can deliver the entire data management service. The incumbent players will always say that they cover the niches that specialist vendors claim. Any firm that comes to market with a data management program solving only a small part of the puzzle has either to partner with an EDM provider or put together a consortium to supply the entire data management service. If anything, such firms will only be adding to the complexity of an already frighteningly complex industry and even if there is a market for them, if they do not work alongside existing EDM players it is hard to see how they will survive.
The problem with data is that it is very difficult to prove an RoI or that the vendor is saving the client any money. Pricing data may be an exception, but in a lot of other areas it is a leap of faith for the investment manager. Vendors are coming into the data management marketplace to solve a specific problem, but they cannot articulate the business benefit or quantify how they have delivered.
Data management is just one example where this trend is being manifest but there are many others: AI, robo-advisory, blockchain. The focus should be on developing software from the user perspective, rather than the technologist’s perspective.
Vendors need to be able to articulate their business value and be able to create a viable business case. Having a good idea is not enough and there are too many vendors coming to market who are technology led and are building what they see as smart technologies. The power of the IT department is on the decline therefore selling technology into an asset management firm is very difficult today.
Software firms need to be able to sell a business benefit using business functions that are enabled by technology – not driven by it.