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Building vs. Buying: The Case for Investment Data Integration Solutions

By Backstop Author

By: Chris Anderson, Senior Vice President of Integrations 

Investment management means data. Lots of it. All of the time. Critical data, streaming in endlessly from multiple sources, every bit of it utterly integral to your team’s ability to make the right decisions. It’s, therefore, vital that the myriad internal and external systems used by your firm can speak to each other and share information as seamlessly as possible. 

Integrating these data sources in a way that truly supports your people is a huge responsibility. It’s also an ongoing challenge as the data-related processes and applications used by your institution change over time and in their own unique way.  

The upshot? Your own optimal integration approach is likely to be radically different from that of any other firm. What’s more, getting it wrong can have a cataclysmic impact on your team’s potential to excel. Forcing employees to fetch and juggle data manually from disparate sources is a drain on time, morale, revenue, and profitability, while poorly executed integrations result in inaccurate information that your team is reluctant to trust. 

The pivotal question’  

How do you ensure you get data integration right? For many organizations, a key decision dominates: do you build these integrations in-house or outsource them to a specialist in the field, like Backstop Solutions’ own integrations team? 

“Less cost, more control” – a compelling argument for an in-house build?  

“Build vs. buy” decisions have, historically, often come down to dollars and cents’ On first consideration, this often leads investment firms down the in-house route. It allows them, so the thinking goes, to own delivery, leverage their in-house IT resource to the full, and, in so doing, keep a tighter rein on costs. 

In the not-so-distant past, this position was given added weight by the fact that most software providers lacked the expertise to create fit-for-purpose integrations that would suit each client’s unique way of accessing data, along with the practical needs of its people. Solutions tended to be of a “cookie-cutter” nature, with a single integration being created for a specific data source, then being replicated repeatedly in different contexts without reflecting nuances in need and circumstance.   

Integration outsourcing: all grown up?  

Nowadays, though, that’s no longer the case. Investment technology providers have upped their game considerably and can now build faster, more bespoke integrations with the power to transform how your organization works with, and benefits from, your different data sources. So advanced are these capabilities that the in-house option is now struggling to compete on several fronts.  

At the very least, investment institutions owe it to themselves, their people, and their clients to be fully cognizant of what outsourcing can achieve.  

Why technology alone is not enough. 

No data integration is likely to be truly effective unless founded on a deep insight into the desired end-user experience and the unique way your organization uses its data. When a new client asks our integrations team, “How do I best leverage Backstop?” they’re really asking something far broader: “How do we best leverage all of our information to make decisions?” 

As we’ve seen, the answer typically involves a lot of “moving parts” (apps, systems, data sources, platforms, etc.). It also requires a fairly nuanced grasp of accounting, admin-specific data feeds, fund performance calculation, transaction processing, and countless other devilish forms of business-specific detail. This is something few in-house IT teams possess, and nor should we expect them to ” just as we shouldn’t expect investment managers to school their IT team in the finer points of series-based or tranche-level accounting.  

Without this contextual awareness, though, in-house integrations often fall short of their intended purpose: to help investment professionals leverage data cleanly and efficiently for dynamic, informed, and effective decision-making. All your IT team can do is make their best guess, place data feeds accordingly, and move on to the next project. 

By outsourcing integrations to a provider who’s specialized in the investment arena, you can be sure your solution will be based on an ability to ask the right questions, prioritize the user experience, and ensure APIs (however complex) receive data in a way that’s genuinely valuable to colleagues.  

In-house integrations: does the cost argument really add up? 

While the up-front cost of an in-house project might be slightly lower than an outsourced equivalent, few firms reckon with the biggest unforeseen cost: ongoing maintenance and optimization.  

Firms evolve. Data evolves. Consequently, the way information is shared is always changing. Integrations, therefore, need to be planned and executed with this in mind – ideally with a rolling three-to-five-year view.  

If your integrations aren’t maintained as data changes, sooner or later, you’ll have no choice but to address the issue. By then, the scale of the task is likely to be daunting, the timings urgent, and the IT person who wrote the original integration may no longer be in your employ. Sorting things out will be costly – not just in terms of time and money, but of your investment team’s ability to deliver client value. 

Invest in your people’s time and reap the dividends. 

Such considerations are bread-and-butter for Backstop’s specialist integrations team.  

Whether you’re a prospective new client or an existing user looking to unleash the full power of your data, the time to make integration a core component of your thinking is now. Connecting Backstop optimally to any third-party system is our sole focus – just as running your organization is yours. 

As well as opening up an expanded range of integration options, our tailored approach takes a long-term view that’s both strategic and tactical, giving you the agility to respond as the data landscape changes. The result? A single point of truth for all your investment information, along with faster, more accurate decision-making. You also enjoy a better ROI, not just on Backstop but on other data-based solutions you use to empower your firm. 

If you’re interested in learning more about how Backstop can integrate your systems, download our datasheet for asset allocators or datasheet for asset managers. 

By Backstop Author