A Simple guide to implementing family office technology.
SoftwareUpdated on May 2, 2023
Table of Contents
Technology has become a popular topic of discussion in family office boardrooms across the globe. What kind of tech should you look at? How do you select the right tools? How can you set up a technology project plan that actually helps achieve your goals? To execute a successful technology rollout in any family office, there has to be forward-planning, with clear objectives and required outcomes. This guide lays out how to get started with implementing family office technology to start improving your processes, promoting productivity, and saving time now.
Technology brings data to life
Modern family offices recognise the need to automate and optimise in order to support swift decision-making, transparency and information security. Efficient access to real-time data that provides holistic and detailed tracking of overall wealth and wealth allocations is a minimum requirement for family offices that wish to prioritise their focus on what really matters – achieving growth. To fulfil this need, there are many new digital applications that have been developed specifically for the family office, offering functionality that goes beyond just asset and wealth tracking. Successful adoption of new technology can improve processes, save time and promote productivity, which is why technology investment has become a popular topic of discussion in family office boardrooms across the globe.
Don’t be a statistic
With the ever-increasing plethora of new tools available and the complexity and cost associated with introducing new software solutions, the decision to implement new technology should not be taken lightly. In 1849, French journalist Jean-Baptiste Alphonse Karr wrote what was to become a famous epigram: “Plus ça change, plus c’est la même chose.” Or “the more things change, the more they stay the same.” This saying is relevant to many businesses and family offices who embark on a journey of change but realise too late that they have spent considerable time, effort and money on a solution that does not deliver what they really require. Research indicates that 70% of all change initiatives fail, whilst Mckinsey reports that 80% of companies reviewed have undertaken digital transformations in the past 5 years yet less than 30% of these initiatives have delivered any sustainable performance benefit.
Our intent with this guide is to give family offices simple and practical steps to manage the implementation of new technology successfully while highlighting the typical pitfalls and creating awareness of what is required from a resource perspective.
Project management tips and guidelines
The project leader
Some family offices prefer outsourcing technology projects to consultancies whilst others use internal resources ranging from accountants to investment advisors and client-reporting specialists. A project leader is preferably an individual who understands the various stand-alone systems currently in use and who has been actively involved in one or more successful technology transitions. While a background in information systems is beneficial, the ideal project leader should have a firm understanding of both accounting and investment focus areas to help balance project requirements and priorities. Excellent communication skills are also required to ensure effective collaboration with key stakeholders throughout the duration of the project.
Before selecting your project team, ensure that all major tasks are identified and separated into workstreams. Thereafter, these workstreams can inform the creation of project roles and the assignment of individuals to these roles. It is important to establish a cross-functional team of individuals with diversified skill-sets to ensure that all impacts and requirements of the transition are properly considered and managed.
It is essential to set specific timelines and milestones to manage stakeholder expectations and keep the project team on track. When establishing timelines, consideration needs to be given to the normal daily demands on the project team, as well as holidays and vacation time. Also be aware that, if you require a vendor to customise a solution, this could result in potential delays.
It is important to identify areas where there is a high of overspending. Typically, customisation requirements and having to employ third-party consultants are key contributors to overspending.
A project requires peoples’ time. The current responsibilities of individuals as well as their significant deadlines need to be taken into account. Consider offloading non-core responsibilities to other team members who are not involved in the project and perhaps look at a time-management system to track individual time contributions to the project.
What you put in is what you get out
Family offices that have enjoyed the rewards of a successful technology transition are those that have planned ahead and have a clear idea of what they need to improve and how technology can assist in achieving their objectives. It is also important to remember that technology is just a tool. It can’t fix poor data and broken processes. By putting in the hard yards to clean data and optimise structures and processes upfront, a digital transformation becomes a far less daunting experience. Once a decision has been made to invest in new technology, it is important to follow a clearly defined process, ensuring that the right vendor and tool is selected to tackle your core business challenges. A technology project can either be a very rewarding or frustrating experience – it all depends on how you approach it.
Action plan for implementing new technology
When exploring an investment into new technology, the questions that family offices typically ask are: Where do you begin? How do you go about selecting the right tool? What does a technology project plan look like? How do you evaluate the effectiveness of the tools you choose? The below step by step plan should answer these questions and provide some much-needed structure to the project planning process.
1. Clearly identify needs
The first step is recognising your needs and desired outcomes and establishing whether new technology can actually assist. A new tool needs to solve a business challenge and deliver tangible value in the process. Common requirements of family offices include access to real-time market data and customised wealth-management reporting to support more swift decision-making and productivity. Other family offices may be looking to improve information security, so will prioritise document management and establishing a secure communication platform for family members.
2. Launch project
A technology transition needs to be treated as a formal project. This means that a project team needs to be set up and a project plan drawn up with budgets, timelines and resource allocations. With all technology conversions, there are many hurdles to cross and many potential pitfalls. However, with a strong leader and a well-defined project plan, a capable team should be able to successfully deliver the desired end-product. However, success will be dependent on a good communication plan and buy-in from all key stakeholders.
3. Request for proposal (RFP)
Once a project has been launched, the first key task of the project team is to approach multiple technology vendors with an RFP. It is advisable to put time and effort into creating a document that provides the vendor with a good overview of your organisation, current systems in use and what you expect from your technology partner in terms of way-of-working, support, functional and technical requirements as well as timelines. Ensure that all stakeholders, especially family members, are consulted and have signed off on the stated requirements. Prior to releasing the RFP, you may want to consider conducting a more casual survey with a large number of vendors to eliminate those who do not meet the minimum criteria.
4. Vendor selection
Once vendor proposals have been assessed, a shortlist must be agreed upon. Selected vendors can now be invited to present their solutions and offer user demos with sample data. This is an opportunity to ask questions and pose challenges to each vendor. The next step would be to select one, or possibly two vendors, to participate in a workshop where detailed functional requirements, timelines and costs are discussed in detail. A final selection should now be possible and collaboration can begin. Before signing any contract, a gap analysis should be completed with your chosen vendor. This should give all stakeholders a view of what still needs to be developed and customised and what actions are required.
The initial implementation stage begins as the contract is signed. The vendor can commence with development work, whilst the project lead ensures that all stakeholders deliver what is required according to the timelines of the project plan. Once the functional system requirements are complete and ready, data migration can commence.
For a period of time, both the new and old systems will run in parallel. This is a crucial evaluation phase where functionality can be stress-tested and data integrity and accuracy can be scrutinized by comparing outputs from the two systems. This would also be a good time to conduct functional training for all users.
Once all minor issues are resolved, the old system can be deactivated. A designated project team member should remain responsible for addressing any user issues or queries that arise post-go-live and the project lead should be responsible for the evaluation of the project against the objectives of the business case.
Why Technology Projects Fail
1. Definition and scope challenges
Often, project outcome requirements are not aligned to the strategic priorities of the family office or they are not defined correctly. This results in a weak business case that is unlikely to deliver any value to the family office or the family which it serves.
2. Management challenges
Poor project management, inadequate communication, and a technology-resistant culture are key barriers to successfully implementing new technology in the workplace. Without a strong project team that has clear roles and responsibilities and effective communication, outcomes are severely compromised. Resistance to change, especially digital transformation, also contributes to technology projects not getting the priority attention that they require.
3. Talent challenges
An inadequate internal talent pool that lacks experience in managing technology projects may not be able to serve as a dynamic problem-solving team, often delaying progress and resulting in an end-product that under-delivers against expectation.
What is technology transition in a family office?
Technology transition helps modern family offices to support swift decision-making, transparency and information security. Automatisation and optimisation of existing technologies are integral parts of the transition.
Do family offices grow?
Family offices achieve growth by focusing on what really matters. Efficient access to real-time data and detailed tracking of overall wealth and wealth allocations is a minimum requirement.
How to implement technology in a family office?
It is crucial to be clear and precise in defining the needs of technology implementation. Handling the process as a formal project is important – set up the team, budget, timelines and resource allocations. Approach various technology vendors and start collaboration with the best fitting one(s). Together set up a functional system and start the data migration. Don't skip the test-phase before deactivating the old system and fully launching the new one.
How do I start technology transition in a family office?
The process of starting technology transition in a family office take several steps. Clarify the needs, launch a project, request for proposals, select vendors, implement new technologies and test them.
How to successfully transition a technology in a family office?
It is important to know how technology can assist in achieving the objectives. Planning ahead and having clear idea of what to improve will help to reach aimed outcomes. But remember - technology is just a tool, it does not fix poor data or broken processes.
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