Cost of an Order and Portfolio Management System

Order and portfolio management systems, such as the Limina Investment Management System, Charles River Development and Bloomberg AIM are essential for asset managers and asset owners. However, understanding the total cost of ownership (TCO*) of these systems can often be difficult. In this article we look into what can, and ultimately will, impact your TCO over time.

* the yearly average of all costs associated with the system

Delivery mechanism is the first driver of TCO. There are three ways systems can be deployed: software (on-premise), cloud-enabled (hosted), and cloud-native (SaaS). On-premise systems require you to pay for and manage hardware and/or virtual servers, while cloud-enabled and cloud-native systems are managed by the vendor. Implementation and training costs are lowered as you move from on-premises to cloud-enabled to cloud-native, as there are fewer parts for the client to be trained on. Upgrades are handled by the vendor for cloud-native solutions, while for deployed and cloud-enabled solutions, upgrade projects are usually required including testing of the new version.

Future changes to your business should also be taken into account when calculating TCO. If your vendor doesn’t have the functionality you need, you could ask the vendor to develop it (with or without cost), or you will end up having to resort to building a process outside of the investment management platform. 

Another important consideration to analyse is potential organisational changes when implementing a new solution. These can be both positive (staff freed up from repetitive tasks to business development) or negative (larger operations team required).

Market data costs can also be affected by the investment management system you choose.

Doing an estimate of how the cost of ownership will look over time, including up-front investments and switching costs, is important in order to understand the true return on investment (ROI) in your system selection, and to compare vendors like-for-like from a cost perspective. Understanding the different drivers of TCO for investment management systems can better equip you to compare quotes from different vendors, and achieve the best value that meets your firm's needs.