Five Factors in Picking an Order Management System
October 26, 2011
As order management systems expand their functionality beyond just the simple idea of placing an order, fund managers have to be a lot more picky in who they choose and why, according to a research report just issued by Woodbine Associates.
The report offers fund managers five criteria to use when selecting an order management system: vendor initiatives; hosting options, support, cost and time to implement.
"The homogeneity among many offerings has made it necessary to look beyond the basic technology features, and functionality of vendors," says Matt Samelson, principal of Woodbine Associates, who authored the report entitled: "Order Management Systems: Understanding the Offering and Selecting the Optimal Vendor and Solution."
Order management systems-- used by small and large fund managers alike -- allow buy-side firms to not only to place orders but also automate the entire workflow process. That includes calculating the impact of "what-if" scenarios, ensuring the firm meets investment guidelines, and sending the order to back-office applications.
Samelson cites Advent Software, Bloomberg, Charles River Development, ConvergEx's Eze Castle, Fidessa, Indata, Investment Technology Group, Linedata Services and SunGard as being the best known OMS providers to service larger traditional and alternative fund managers.
Here is Samelson's explanation of the four criteria fund managers should use:
Vendor Initiatives: "The client firm should be professionally intrigued by the business activities, direction and activity of the vendor," says Samelson."This interest should span beyond the scope of the order management technology." Samelson defines the scope as: the business model, types of offerings, and how the vendor interfaces with clients.
Hosted Services: Hosted services lower the cost of ownership for the fund manager who no longer has to pay for hardware and support. However, fund managers must also be wary of the risk for inadequate support.
Support: Hosting can mean anything from simple application management to full-blown, comprehensive application and hardware support at remote locations. "Accordingly the range of support options available to clients is becoming a means of differentiation," says Samelson.
Costs: Cost, in itself, is not applicable in picking an OMS, says Samelson. It is what the cost represents-- the value for money or the utility-- that is the real consideration. Among the key costs associated with order management systems are licensing fees, installation fees and ancillary costs.
Time to Implement: The time it takes to implement an OMS is too often overlooked. Fund managers considering a "complex" or customized platform should consider the implementation time which could run as long as two years, says Samelson.
