How one investment manager is transforming and modernising operations
Lounarda David, Chief Operating Officer, IFM Investors talks about the firm's quest for a more strategic operations department and her hopes for the next five years
Fund Operator Editor POSTED ON 3/12/2020 8:27:13 AM
Fund Operator: Where are you in terms of your transformation program within IFM?
Lounarda David: IFM’s transformation program is a three-year program of integrated and aligned projects. We are at the end of our first year of this program.
Our transformation program covers many facets from governance to sophisticated capabilities, capacity, skills, processes, data governance, technology, risk management and analytical insights.
For instance, on the technology front, we designed our future state architecture and operating platform designed for sophisticated global/local capability, flexibility and efficiency with a robust data and risk management framework, including our data lake requirements.
We looked at it from both an external as well as internal perspectives and designed this architecture before we started embarking on the system review.
"Our transformation program covers many facets from governance to sophisticated capabilities"
"We reviewed all the systems and applications that we currently use in the context of future state operating model.
This process also involved assessing market capabilities and initiating a number of technology tenders.
We are halfway through this process. In the interim, we have been developing our data governance framework and data warehouse capabilities.
Many organisations assume that data warehouses will automatically solve their data challenges. That is not the case at all.
So, we have focussed on developing our data governance framework and policies including guidelines and protocols. This is much more complicated and critical than the data warehouse itself. The first stage of our data warehouse went live last year
FO: Does changing of staffing and resources require a different mindset from the people who go into operations, where you are looking at solutions and processes first and not fixes and systems first?
Lounarda: Absolutely, we need staff with multiple disciplines and to be jack of all trades. Very experienced staff in all facets of a transaction life cycle, from portfolio management, to execution, implementation, market convections, custodians, investment administrators, project management, technology vendors etc.
At the same time, we need expertise around the investment products both in private and public sectors and the underlying assets and instruments.
These are sophisticated and different levels of expertise than historically was expected from operations. So, you need a blend of investments, operations and technology expertise.
"We need staff with multiple disciplines and to be jack of all trades
These standards and expectations are changing the trend of investment staff moving to operations rather than the traditional model of staff using operations as a mechanism to get into investment teams.
We have seen some of this shift. One of equity portfolio managers moved from the investment team to the operations team and was subsequently relocated to our New York office to manage our back office activities in the US.
He brought in a wealth of knowledge and experience in portfolio management and execution to our team and has transferred that knowledge to the other staff within operations.
The complementary skill set and knowledge is very important, yet difficult to easily find in the market. The strength of this model is the ability to develop robust solutions that can be implemented in an efficient and timely manner.
FO: If you were to sum up where you would like to see your organisation five years in the future, what would you want to see in terms of harmonised and optimised relationship between operations, product innovation and management?
Lounarda: I would like for the term ‘operations’ to change as it doesn’t do justice to what this area covers.
I like the organisation to recognise operations as an enabler and driver, and also be given the license to perhaps have more input into the strategy and future aspiration of the organisation.
With this comes an expectation that operations will have the requisite vision, skills, experience and drive to live up to the expectations.
"I am confident that in five years’ time, IFM will have a sophisticated robust, cost effective and flexible global operating platform,"
We have developed three guiding principles for operations around simplifying, optimising and innovating and getting the balance right between the three.
These principles have been embraced by operations and endorsed by management. I believe these guiding principles will result in significant capabilities being developed at IFM over time which will benefit and strengthen our value proposition for our clients and investors.
I am confident that in five years’ time, IFM will have a sophisticated robust, cost effective and flexible global operating platform, with the expert staff in the operational hubs.
Operations will be more strongly aligned to the business and a key driver and supported of IFM’s growth and strategic initiatives.
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