For fans of the hairband era, those are the words of one of my favourite bands from the 80s, Cinderella, but they also apply to Investment Performance. How so you may ask? Is it due to the rocker lifestyle of performance analysts or their over-the-top hairstyles? Well, neither.
In fact, it is related to performance systems. Many, if not most firms, will implement a performance software system at one point and maintain it for a prolonged period of time. Then comes the moment that the system does not “meet the needs” of the firm anymore and the firm embarks on the process of searching for a new system and most likely a new vendor.
Now I know what you are thinking, why did I use quotation marks for meet the needs? The reason is that for the most part, many firms have not properly implemented nor properly maintained the system to begin with. Initially, it was enough for the firm to have a functional performance system but over time, it begins to become more problematic than useful. With the addition of new accounts, new products, management requests, and reporting configurations, the old system starts to malfunction under the weight of the additional complications. It is at this point that the firm is convinced that it is the system’s fault. One of the main reasons for this is that it is easier to blame the system than to look internally at the firm’s operations and make the necessary changes.
Now, cue the chorus:
“Don't know what you got till it's gone
Don't know what it is I did so wrong
Now I know what I got
It's just this song
And it ain't easy to get back
Takes so long”
Quickly deciding to abandon the old system or not even consider the newest version of it, may be the worst decision the firm can make. As the song says, “…And it ain’t easy to get back, Takes so long…”. It’s important that any investment firm completes a thorough review of its performance operations with experienced and qualified performance professionals (internal or external) to correct existing issues, smooth out inefficiencies and raise its standards. With the same qualified staff, conduct a thorough due diligence on any new system/vendor to maximise the transparency on the capabilities of the new system. In almost every project, firms are caught flat footed finding out the new system does not do what they thought it did.
New projects are always exciting and give purpose to a few within a firm that otherwise would be left with a lot of free time on their hands, but for those whose time is limited working close to maximum capacity, they are a significant weight on their shoulders and demoralizing. For these reasons, it is very important to consider the necessity for changing systems. If the old system, and its newer version, do not TRULY, and I mean TRULY, TRULY, TRULY meet the firm’s needs, then yes, by all means, look into a new system but only after you have improved operations.
Lastly, if all else fails, you can just RUNAWAY from the project: