An IT partner will usually supply its customer with a system solution that will aid a number of the customer’s different user groups in their work. But what if the IT partner were to supply not only the system itself, but the entire service?
This is the solution that FIM chose when it was time to renew the asset management system that the company uses to manage S-Bank’s asset management and Private Banking services. In 2016, FIM decided to outsource its fund-related back-office functions, such as value calculation and share register system administration, to Digia.
FIM’s Administrative Director, Heli Sirkiä, thinks back to their reasons for choosing outsourcing a few years ago.
“The system that we used for value calculation had fallen badly behind the times. As a result, value calculation required a large number of personnel, which naturally increased the cost of managing funds. There was an obvious need to invest in a new system.”
Strictly regulated, routine back-office functions tie up resources, but it is difficult to make them generate added value.
“We were considering how business-critical this function was to our operations. During discussions with Digia, we hit on the idea that they could supply us with not only a system, but the entire service,” says Sirkiä.
Outsourcing requires careful planning
The outsourcing project began by transferring administration of value calculation and the share register system. Outsourcing the function progressed in stages, and new funds and functions were also included along the way. Digia currently provides the majority of FIM’s fund-related and individual asset management back-office functions as an outsourced service. FIM is responsible for any activities relating to fund management that require official permits. The backend system is Digia Financial Systems.
A major change like this involves many moving parts that can sometimes be difficult to predict. Sirkiä stresses the importance of careful planning and accurate specifications.
“When moving from an old system to a new one, it’s important to understand how things need to be developed or taken into account so that the required functionalities can be included in the new system environment. This will help you avoid a lot of nasty surprises and worry along the way. You also need to reserve enough time for testing,” says Sirkiä.
Sirkiä says that involving end users in design is also important. You need to include the people who will be using the service and are familiar with the fine points of the work.
According to Sirkiä, one factor that helped the project run smoothly was that some FIM personnel transferred to Digia as a result of the outsourcing.
“We had familiar faces at work, and thereby confidence that they had the required expertise to provide the service.”
Close dialogue allays concerns
Outsourcing functions often involves concerns about service quality, pricing or flexibility of development. Sirkiä says that regular meetings and open dialogue play a key role in smooth collaboration.
“We held regular service meetings with a standard agenda that included some set indicators for monitoring quality. There was also the opportunity to give feedback or raise any issues that came to mind.”
Sirkiä gives top marks to Digia’s smooth cooperation with FIM.
“Our cooperation with Digia has gone really well. We engage in open dialogue and, if we encounter any challenges, we can talk through the issues openly and learn from them.”
Although outsourcing back-office functions is very rare in Finland, Sirkiä says that it is much more common in the rest of the world.
“It’s a good question, why this kind of outsourcing isn’t more widespread in Finland yet. I would recommend considering the cost-effectiveness and benefits this kind of solution can achieve. For example, I don’t believe that we’d be able to manage so many funds as cost-effectively by doing everything in house,” says Sirkiä.
Outsourcing has enabled FIM to place a greater focus on its core business.
“Now that things are up and running, they just motor along in the background and we don’t need to pay any attention to them on a day-to-day basis.”