Excel – a Necessary Evil in Investment Management?

Updated: Jun 8

Jamie Keen, CEO FundSense

June 6th, 2022





Ask any investment management firm how they manage processes across the organisation and more often than not, at some point during the explanation the word ‘spreadsheet’ will be mentioned. From fund launches to investment commentary to regulatory reporting, spreadsheets are all too often the ‘go to’ method for gathering, storing and disseminating information.


Excel is far from ideal for managing anything but the simplest of processes, yet many firms feel like they are stuck with it because they see no obvious solution – either because it is so embedded into their day-to-day workflows, or because downstream requirements dictate that they have no choice but to use it.


There are solutions to both of these challenges, but before we address them we shall first take a look at the many reasons why spreadsheets should no longer be a part of any investment management processes that extend beyond the calculation and storage of basic data.



Error-prone


Various studies contain different estimates for the percentage of spreadsheets that contain errors, but the consensus is that the figure is over 75% - with the majority of these being caused by human error. And even when there was no mistake when the data was first entered, the fact that multiple people with different knowledge or ideas may update it at different times means that the chance of it containing inaccuracies is even greater.


The lack of data-cleansing capabilities within Excel also means that finding and fixing the errors can be both manual and time consuming.


Lack of governance


Alongside the error-rate, the lack of audit trail providing visibility on who made particular changes, when, and why is a significant risk to the business. Multiple users making changes at the same time can cause chaos from an accuracy perspective, but it can also make finding out who made specific changes virtually impossible. It is also difficult to ensure that people only enter / edit / approve the elements that they are supposed to.


Such an audit trail may become critical from a compliance, client or regulatory perspective, so incomplete visibility is not acceptable. In addition, the lack of MI and underlying analytics available make it very difficult to identify inefficiencies and bottlenecks, and thus improve the process on an ongoing basis.


Poor user experience


There has been much talk in recent years about improving the client UX, but what about that of the employee? Updating spreadsheets on a phone or tablet is challenging, it is impractical to use attachments (even hyperlinks often fail over time) and there is no integration with other technology that could make the processes smoother.


Highly manual


Much of the management of processes within spreadsheets is highly manual – data entry, data cleansing, sign-off, updates etc. There are no alerting, notification or SLA capabilities to ensure tasks are completed when they should be, in the right order, or before a deadline. In addition, when dealing with large amounts of data it can be difficult to find the right information or filter data based on multiple or more complex queries. Automation is not a key feature of the Excel experience!


What can be done?


To answer this, we will split the problem into two parts – internal reliance on spreadsheets, and reliance outside of the organisation. The solution is the same in both cases but the approach is different, as where it is possible to remove the dependence on spreadsheets within a firm, it is much harder to dictate this new approach to a third party.


The solution is to find a Business Process Management (BPM) platform that incorporates functionality such as Process Management, Workflow Automation and Robotic Process Automation (RPA). There are many excellent platforms that can provide this – Nintex, Appian and Pega to name but three – but for the purpose of this article we will refer to the FundSense platform as it has been built to directly address the challenges that investment managers face. (Definitions of the terms used above can be found on our website fundsense.io)


Use within the firm


Like every firm, investment managers use spreadsheets across multiple industry-agnostic functions, such as HR, Finance and Legal. They may, however, see it as a bigger challenge to replace them in industry-specific processes like product data management, fund launches and investment reporting.


The answer is to replace the spreadsheets with powerful, automated workflows that replicate the best of the current processes and eliminate / replace the worst. Platforms like FundSense can eliminate manual tasks, perform ongoing data cleansing, and deliver optimal efficiency by ensuring that every user / department has the access and user rights they need, with the appropriate alerts and SLAs in place to ensure tasks are conducted how and when they should be.


Furthermore, FundSense comes with hundreds of in-built business rules relevant to the industry to ensure that data, operational and regulatory best practices are adhered to (with unlimited capability to add company-specific data, rules and processes on top). The low code / no code approach ensures that every solution is built to the exact specification of the firm, improves communication and collaboration across departments and removes the reliance on spreadsheets within the business once and for all.


However, the end goal for many processes that end up with third party output will continue to be the creation of a spreadsheet…


Use outside the firm


..So how is it possible to create the same output, without all of the problems outlined above? In simple terms, it is by using the same automated workflow approach to prepare all of the data, then RPA to map it to the appropriate data points and cells within the spreadsheet. We see this as a particular benefit for client departments faced with populating documents such as vendor and administrator new fund forms, KID / factsheet provider data templates and industry standard templates such as EMT, CTI and now EET. Combining both internal and external data and business rules ensures that accurate, complete and timely reports are disseminated (as a part of the workflow) and accepted first time.


Conclusion


Excel is an effective and indeed appropriate tool for investment managers when it is used in the right way – which is for simple data calculation and storage. However, it is not fit for purpose for a wide range of processes that firms currently rely on it for. Switching to a flexible BPM platform will dramatically increase efficiency, data accuracy and governance, and ensure all processes are underpinned by powerful data and business rules, which when combined with analytics and MI will deliver ongoing process improvements and future-proof the solution.



For more information on how FundSense removes dependency on spreadsheets across investment management firms please contact info@fundsense.io

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