Tech as a driver of strategy: Why now is the time for asset managers to consider enterprise SaaS 

Asset management in flux

In today’s asset management landscape, firms must remain agile and data-driven to stay competitive. Mounting investor demands, fee pressures, and regulatory changes are pushing asset managers to adopt technology that can scale quickly and deliver real-time insights. 

While most industry leaders understand these imperatives clearly, the technology approach for addressing them can be confusing. I’ve seen this situation unfold and become more intense in my past eight years as a CTO and senior engineer. My buy-side peers struggle to overcome these challenges. 

That’s why I believe taking a modern, enterprise-level approach to SaaS is essential for firms seeking to future-proof their operations while maintaining flexibility and efficiency.

A change in mindset

While institutional asset managers have been slower to embrace these advancements at enterprise scale, many are now rethinking their investment operations and operating models. Many of them see an enterprise approach as the right fit for heavily interconnected business processes and systems.

A recent Accenture survey of 250 asset management executives in North America reflects what I’ve been seeing. Nearly all respondents (95%) believe that technology, data, and digital capabilities will be key differentiators for asset managers by 2025.

— Accenture, The Future of Asset Management: Business models and strategies for 2025

To do so, they need to reduce their reliance on legacy technology and benefit from more flexibility to support any investment strategy or asset class, scalable operations, and more efficient technology solutions.

Asset management: A snapshot of the opportunity

In 2023:

Source: Financial Institutions Global Asset Management Report 2024, 22nd Edition

Given these trends, I believe that now is the ideal time for asset managers to consider transitioning their core investment management platforms to a forward-looking SaaS solution architecture, specifically to adapt to changing industry and market conditions. This transition can offer the flexibility and scalability needed to navigate the challenges and opportunities that lie ahead.

The legacy trap

One of the primary reasons asset managers have been slow to embrace change is their extensive investments in legacy technology. For many managers and software providers, the shift from on-premises systems to cloud environments has been approached with a “lift and shift” mentality—moving existing technology to the cloud without rethinking the underlying investment operating model or delivering the strategic and technical benefits of SaaS.

What is “lift and shift”?

"Lift and shift" refers to the practice of migrating existing IT systems or applications to the cloud without fundamentally changing their design or functionality. While it allows for a quick migration, it doesn't capitalize on the benefits of cloud-native solutions. As a result, many of the underlying issues, limitations, and inefficiencies of the original system remain intact, leading to higher costs without the benefits of re-engineering the solutions.

The challenges are clear. Both on-premise and lift-and-shift models come with high operational complexity and costs. Maintaining these systems demands significant IT resources, both in terms of personnel and budget. The upgrade trap compounds this issue, as each update requires costly and time-consuming processes, often resulting in downtime and operational disruption. Clients still face the challenges of managing upgrades, while providers continue to grapple with multiple distinct environments and versioning issues.

Cost efficiency beyond TCO: The case for true SaaS

Cost is a common driver of decisions to move to fully SaaS solutions. They deliver savings far beyond traditional total cost of ownership (TCO) by addressing both visible and hidden costs. 

You can imagine this by seeing TCO as an iceberg. The visible portion above the waterline includes upfront costs like software licenses. But beneath the surface lies a much larger mass—hidden expenses like hardware maintenance, version control, software upgrades, patches, and the dedicated staffing needed to manage these tasks. With on-premise solutions, these hidden costs accumulate, often unnoticed, until they significantly impact your bottom line. 

In addition, each separate system creates its own iceberg. Firms that rely on multiple platforms for front-, middle-, or back-office workflows—or use different systems for different asset classes—face the challenge of navigating past multiple icebergs. Every system and integration point adds complexity, compounding costs related to maintenance, compatibility, and support. 

SaaS, however, eliminates many of these submerged costs. The service provider handles maintenance, updates, and infrastructure, allowing your team to focus on core business activities. Moreover, a robust platform that supports any asset class from front to back allows firms to consolidate, retiring unnecessary systems, and bypassing multiple icebergs at once.

When SaaS also integrates other platforms, it helps eliminate the additional knock-on costs of licensing and running those platforms completely in parallel. Modular, open architecture with APIs offers flexibility for CTOs to customize and integrate with their firm’s unique processes, eliminating the need for heavy customization while still allowing fine-tuning where needed.

As one CTO described it to us recently, “asset managers don’t just buy a product—they’re buying an integration point.” Open architecture allows firms to adapt the solution to their existing systems with minimal disruption, offering a balance between leveraging out-of-the-box benefits and supporting custom internal processes. As a result, what might seem like a marginal saving at the surface level represents a much larger reduction in total expenses, creating a far more cost-effective solution in the long run.

Future-proofing asset management with Enfusion

Moreover, SaaS delivers business benefits far beyond the immediate cost savings. That has been our mindset in designing a system that would scale with our clients while remaining secure. Asset managers can have an investing operating model that helps pivot quickly to support and scale new and evolving assets, investment products, and new business demands such as investment lifecycle insights or reports across the organization.

This approach strategically future-proofs asset management firms by equipping them to navigate the rapidly changing industry landscape. It solves the challenges I routinely hear from industry CTOs.

These platforms offer the speed and adaptability needed to stay ahead of these challenges. They enable rapid deployment of new features and compliance updates to all clients at once, allowing firms to respond proactively to emerging trends and evolving regulations. As firms seek to diversify their investment strategies and offer new products like direct indexing or ETFs, SaaS solutions can easily support the scalability and customization requirements.

They provide the operational agility required to execute these shifts efficiently. By embracing SaaS, firms remain agile, competitive, and compliant, positioning themselves for long-term success and alpha creation in a dynamic environment.

Operational uptime and system reliability

Operations benefit from SaaS as well as strategy. Solutions like Enfusion can deliver numerous benefits, including offering reliable core data such as a pre-populated security master / Investment Book of Record (IBOR) and ingesting and managing data feeds like reference, pricing, and corporate actions data. This all-in-one approach—in a real-time, transactional, or wipe-and-load system, allows firms to manage cash and positions effectively without the delays or inaccuracies that occur with legacy systems—relieves firms of the burden of sourcing and integrating this data themselves.

SaaS is no longer an emerging paradigm; it's a mature, proven solution that can transform your firm’s operations. We built Enfusion as a SaaS platform from day one, specifically designed to meet the evolving needs of modern investment management. This modular and future-proof approach offers asset managers the flexibility and scalability required to stay ahead.

In an industry where hedge funds have often led the adoption of cutting-edge technology, asset managers are now reaping the strategic and operational benefits. I see clear advantages—improved efficiency, enhanced security, and adaptability in a rapidly evolving landscape. As new technologies emerge and continue to shape the future, don’t let legacy systems hold you back. 

Take the next step and unlock the potential that SaaS offers. The future of asset management is here. Contact us to learn more.

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