Aging Op Models: Don’t Let Yours Become Obsolete


An operating model that once worked brilliantly ten or even five years ago may no longer be producing the best results for your organization today. As the asset management environment changes over time — more complexity in asset and transaction types, cost pressures, regulatory changes — the op model must continue to evolve. Moreover, the pandemic underscored that change doesn’t always come with an advance warning. The status quo can shift in an instant, and last year served as a test of the vitality of firms’ op models, exposing and exacerbating preexisting weaknesses.

It may seem that it’s never the right time for a review; firms today are knee-deep in the daily grind. But now that the pandemic’s dust has finally begun settling, it’s time to dig out in order to spend some time today to benefit tomorrow…and prepare for whatever may be next. So here we’re exploring 4 key triggers to initiate an operating model review.

1 – When Your Technology is Aging
Tech capabilities have advanced significantly over the last decade, but many firms are still getting by on outdated legacy systems, struggling with gaps that have emerged over the years and compensating through their operations teams. To build an effective modern-day operating model, you need to start by intertwining technology and data strategy with the operating model. Your technology should be focused on data access, availability, and interoperability with internal and external infrastructure.

2 – When There are Margin Concerns
Whether costs are too high or your firm is experiencing a revenue problem, when the financials of the firm show inadequate margins, it often falls to Operations to cut expenses. Too often these cuts are applied blindly without first evaluating implications to the operating model. It’s critical that data quality is preserved (and improved where needed) to avoid further setbacks to the financials. Careful analysis on how to transform the op model is needed so that service and the well-being of the teams do not suffer, risk is controlled, and the desired savings are achieved.

3 – When There are Risk Concerns
When data or processing errors have caused financial losses or near-misses, and daily ops tasks are inconsistent, heavily manual, or rely on user-developed databases, it’s time for a review of your operating model. Holistically evaluating controls and procedures, task ownership, data governance, and technology tools is key to arriving at a synergistic data and op model strategy to reduce risk.

4 – When You’re Planning to Outsource or Reviewing Your Existing Provider
The RFP process is its own major undertaking. But avoid fast-tracking the RFP without first understanding the current model’s gaps and establishing the characteristics of a target model that will position your firm to scale for growth. The current state of the operating model must be well-understood to capture comprehensive requirements so that your firm’s service and data needs get met. It will also guide you to outsource the right functions, structure the retained team optimally, and develop an effective oversight model.

Regardless of the trigger, following a disciplined methodology for an operating model review is crucial. The right tools, skillsets, and capabilities must be on deck to ensure an optimized, data-forward model is achieved. Leverage a partner who can provide resources with deep industry knowledge and experience in op model reengineering, outsourcing, data strategy, and enabling technologies. If you are contemplating a review of your model, reach out to us today.

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