Six key steps to combat process and technology drift within a services firm

By Joe Maxwell, SS&C GlobeOp

Published: 21 March 2022

In the financial services industry, a firm’s reputation is partly defined by the consistency of the services it provides to its clients. Many service-level mandates depend on this reputation. The COVID-19 pandemic emphasised this axiom once again when firms had to test their business continuity capabilities. Quickly, the industry evaluated the cracks within a service provider based on its response to COVID-19. In the early days of the pandemic, the industry gossip channels gave a good indication of which firms were thriving and which were struggling. Any firm paying attention to its processes and technology model has a better chance of achieving greater margins and handling industry shockwaves, such as a pandemic, more smoothly. Our new fund admin platform SS&C GOCentral incorporates AI and better processing to allow firms more transparency.

Processes and technology will drift from its original design

Designing and implementing superior processes supported by leading technology yields valuable business results. However, setting up processes and technology and forgetting about them leads to process drift. Process drift is best described as the natural deterioration of process and technology efficiency over time due to organisational changes and outside influences. There are several different change factors contributing to drift, leading to efficiency deterioration: 

  • Expansion or contraction of business
  • Regulatory changes
  • Advancements in industry infrastructure
  • Technology advancement
  • Management or employee changes
  • Bespoke client requests
  • Competition

These change factors act as catalysts to the business operation, stimulating change. Their impact can be subtle and resolved by quick adjustments. For instance, the business team involved in the process may create a spreadsheet to handle the change or request a change to the core system. However, the change factor can sometimes generate a panic response, resulting in an ‘emergency project’ approach if there is a perception the firm is losing revenue. The issue with an emergency project is it acts as a ‘repair’ instead of a re-examination of the business process and technology in alignment with corporate strategy.    

Drifting from original process decisions without an examination of overall workflow impact can deteriorate efficiency. While it may not look impactful at first, the effect will erode margins over time. These changes start to become the silent killer of efficiency.

Time to examine your process drift 

The need to achieve a daily deliverable sometimes masks the need to zoom out and re-examine the overall process and technology used to provide those deliverables. Retooling processes and technology when paying attention to clients and delivering can be difficult but necessary. The biggest argument against preventative maintenance is: “We are hitting our deliverables and margin—everything is fine.” The counter to this statement is: “With improved processing and technology—could we be doing better?” Management teams driving process and technology deep into their business strategy inherently know the answer. 

Six steps to examining process and technology drift 

To do a process review, a firm should consider the following:

  1. Start with a focus on a goal
    Don’t try to rebuild the entire engine. Instead, pick the highest-priority process areas and select a single area to focus on first.
  2. Create a process map with the cognitive process steps 
    Break down your processes into steps conducted daily. Then, record these steps into a process-mapping document. The Value Stream Mapping technique stemming from the Lean For Service methodology is an excellent template to use. We found it is crucial to capture the distinct process step definition, the data used within the step, the duration of effort, wait cycles, and staffing when mapping a process. 

    As AI technology becomes more prominent, capturing the cognitive process steps is also critical

    Find out what the end-user thinks during the process and how those thoughts translate into a processing activity. The process engineer should be an expert in uncovering hidden details by constantly asking why things are done a certain way. Then, AI technology can build solutions to transform the cognitive process steps into huge efficiency improvements.
  3. Take inventory of your technology 
    Inventorying the tools used within each process step and the connectors between tools is critical. These tools are the crucial gears to push processes and data through the organisation. Typically, older systems patched many times over the years with added functionality to the original design and a high degree of user intervention are good areas to focus on for efficiency. Of course, legacy systems aren’t always inefficient, but they are a place to start when looking for a business process and technology reduction of efficiency.
  4. Assess your IT leakage into the business  
    IT leakage happens when the end-users build their desktop tools to supplement the core system functionality. This leakage is one of the greatest areas of process drift and can be an efficiency killer. For example, the role of spreadsheet processing is widely misunderstood. A spreadsheet should only be used as a stop-gap until the technology team can provide a solution. As a rule of thumb, if a spreadsheet is used in the production process for more than six months, the functionality of that spreadsheet should be prioritised into the development plan of the core system it is supplementing. 
  5. Assess your efficiency 
    The process engineer responsible for researching the process and technology drift will need to take an unbiased view. This is not always easy if the staff assessing the environment was instrumental in building the process and technology. This is typically why a firm will use outside consulting help to get an unbiased opinion. 

    Start with manual processes and then move to automated ones. First, it is essential to answer these questions:
  • What is the processing throughput? 
  • Is there an excessive amount of wait time between process steps? 
  • How long have these steps been in place?
  • What is the data being moved through the process? 
  • What percentage of the overall end-to-end process is done manually?
  • How much is spreadsheet processing used? 
  • Is there an increase in FTE when there is an increase in volume? 

    The more challenging part of the assessment will come from analysing the cognitive steps. Assessing the impact of these steps brings new information regarding the overall delivery process and creates a potential for automation.  

    6. Measure twice, re-engineer once 
    Measuring the cost of the current state process is an important exercise. So is measuring the downstream impact of the process and technology on other workflow processes in the business value chain. Equally as important is measuring the newly implemented process or technical change outcome. The outcome measure compared to the starting point will provide the success factor.