Cost, ease advantages of cloud irreversible, says StatPro
Neil Smyth, marketing and technology director at StatPro says that the industry has overcome its last remaining barrier to more widespread adoption of cloud based services – security – which has sparked a race away from internally implemented IT projects.
With security questions answered, the clincher is cost advantages, Smyth suggests, with CEOs and CTOs of financial services firms recognising the benefits from using software as a service (SaaS) rather than buying and installing applications in situ. This extends to the ability to provide more frequent upgrades to users, and distributing upgrades to all users simultaneously.
StatPro itself decided to position its activities this way as far back as 2007, Smyth said, resulting in its Revolution service, which offers web accessed portfolio analysis tools to investment professionals. It also gave the software company an early mover advantage, which Smyth said is resulting in a strong pipeline of sales.
What this type of service illustrates is the ability to significantly reduce costs for users, and the ability to set prices for users that historically would not have been possible – in StatPro’s case it charges per portfolio not per user.
Another advantage of serving up services via the internet is it enables point of sale use in addition to pure analysis work being done in an office environment. Revolution’s take on this as a product has been to emphasise graphic illustrations to facilitate point of sales meetings, which while simple in form are actually based on complex mathematical modeling and reliance on servers crunching ever increasingly large sets of numbers.
It also is focused on enabling quicker response times within organisations, where historically the accessibility to specialist analytical tools by definition would have been limited by expense and time to implementation.
Revolution, ultimately, is about speeding up the ability of fund selectors or others to drill down to underlying assets, while also obtaining better aggregated views across portfolios of trends in risk exposure, as well as, for example, understanding to what degree returns are down to stock picking skills versus asset allocation.
Pension funds are an interesting area for StatPro currently, Smyth said, because factors such as regulation are requiring selectors working in this area to become better aware of risks as well as improving their reporting capabilities. Smyth said he met with the UK’s National Association of Pension Funds (NAPF) to discuss the sorts of analytical tools available.
StatPro is not involved in trade or execution functions, Smyth noted. However, it would work with clients to develop solutions for linking products such as Revolution to other solutions, given that the analysis work done in StatPro’s product ultimately would lead to a buy, hold or sell decision. An improved API is in development he confirmed. However, he added that StatPro preferred to think of Revolution as a platform for users to develop capabilities on, rather than a locked down system.
Other possible developments include replicating the current centre in Toronto, which is essentially responsible for collecting all the data that goes into the Revolution product, subsequently used for modeling and analysis. It may be that similar centres are developed in Europe and Asia, Smyth said.