Executive Summary / Abstract
Viteos Capital Market Services Ltd. (Viteos) is a hedge fund administrator and operations service provider for financial services companies. As a small, but quickly growing company, Viteos began to outgrow its systems and sought a solution that could automate manual processes, reduce paperwork, help the company meet compliance standards, scale up or down to meet changing demands, and remain cost-effective.
The company arrived at a solution that combined an element of its existing system—Microsoft SharePoint—with a more robust business process management (BPM) and document-management solution—EMC Documentum xCelerated Composition Platform (xCP)—as well as virtualization with VMware. This combination enabled the company to meet its increasing document processing needs while maintaining familiarity for its users.
Viteos Capital Market Services Ltd. (Viteos) is a hedge fund administrator and back-office service provider offering tailored solutions to hedge funds and institutional investors around the world. Headquartered in the United States, with offices in the United Kingdom, the Cayman Islands, and India, its global delivery model combines cutting-edge technology with 24×7 support from highly qualified professional staff across the globe.
As a small firm within its industry, Viteos encountered challenges faced by the industry as a whole as well as those that reflected the company’s need to compete with larger firms. One industry-wide challenge was the necessity of automating manual processes and reducing paperwork to save time, increase efficiency, and decrease errors. K. B. Venkataramanan, senior vice president and chief information officer at Viteos, describes the team’s philosophy behind automation: “Any process that is repeatable is automatable.” The team wanted to build the new processes to be as “straight-through” as possible, with minimal human interruption. However, they recognized that they must also bring human interaction into play when subjective decision-making, understanding, or judgment was needed.
Another industry-wide challenge was to more consistently meet compliance, regulatory, and legal requirements in each country in which the company operates. Finally, achieving secure, 24×7 uptime was critical, because, as a global service provider, the company deals with markets and customers in every time zone.
One challenge related to being a smaller firm was the need to pay as little as possible for infrastructure to help keep profit margins high. The other challenge was to ensure scalability; the company foresaw growth and required a platform that could grow with it.
The new solution consists of Microsoft SharePoint (already in use by Viteos) on the front end and EMC Documentum xCelerated Composition Platform (xCP) on the back end. This solution helped Viteos meet all of the challenges mentioned earlier.
The new system retained SharePoint as a user interface (UI), making the transition largely transparent to end-users. Documentum xCP provided additional benefits, including process simplification, a decreased need for additional IT specialists when work increases, increased capacity, a reduction in audit time, a reduction in time to onboard clients, and productivity improvements.
To drive success, Viteos needed to make improvements in several areas of its operation.
Once trading commences, Viteos electronically captures all trade information, determines the profit and loss (P&L) for each trading day, and calculates the P&L of the fund, which determines investor returns. The faster and more reliably these processes can be run, the more clients the company can service.
At least six pieces of paperwork are associated with each client transaction, including a background check, a money-laundering check, citizenship verification, and bank communications and processes. When multiplied by many transactions and clients, there are numerous opportunities for error when these documents are handled manually. Fewer errors result in more efficient processes, happier clients, and greater compliance with regulatory requirements.
Another area needing improvement was Viteos’ profit margin. High returns for the company’s high–net worth clients are critical to the company’s success, so every expenditure must be reduced as much as possible. The company wanted to reduce its investment in computer hardware, data center rentals, and the need for additional IT staff.
Viteos also needed to refine its process with regard to audits—an expected part of operations within the heavily regulated financial services industry. There were two ways to do this: (1) become more capable of retaining documents to meet compliance, regulatory, and legal requirements, and (2) have a fast way to provide documents to regulatory agencies when audits did occur. The company needed features to help it accomplish these two goals. In addition, Viteos needed to improve its uptime to better serve global clients in world markets on a 24×7 basis. Finally, as a company growing at 15 percent year over year, Viteos required a solution that can accommodate everything from a small team to thousands of users.
Viteos sought a solution that would improve all these elements of its operations.
The Key Innovations
Viteos caters to a large number of clients spread across the world and across multiple time zones. These clients need to be able to access information about their assets at any time of day or night. The new solution included the development of a web portal that allows clients to securely access the information they need when they need it. The portal helps Viteos reach out to clients as well as the investors, brokers, and fund managers who interact with them.
Previously, the company’s processes were well documented in the form of standard operating procedure (SOP) documents. Each SOP defines a process and the controls associated with it. The goal was to determine which of these processes were automatable, using the guideline, “Any process that is repeatable is automatable.”
The result is a fully paperless system. As an example, the company’s trade-confirmation process was converted from paper to electronic format. When a trade is complete, a confirmation is generated that describes the trade. Historically, the confirmation was a paper-based system that used fax. Now, the process involves efax, instead. Fund managers can view “confirms” onscreen rather than on paper. When they need to communicate with clients, they can log in to a portal and check how many confirms are open as well as the value and volume of each.
The know-your-customer/anti-money-laundering (KYC/AML) cycle has also been automated. This cycle confirms for regulatory agencies that records related to investors are kept, including verification of investors’ existence, credentials, and where investment funds originate.
Similar processes have been converted throughout each phase of the trade life cycle:
- Trade capture
- Corporate actions
- Content management system and over-the-counter processing
- Reconciliation and control
- Investor services
The major impact on employees is the way training is delivered upon hiring. Training time has been reduced considerably now that it is delivered via a categorized knowledge repository consisting of videos, product documentation, and process maps. Because of this change, hands-on training is no longer needed.
The IT team took a unique approach to developing the end solution. They wanted to pair Documentum xCP as a back end with SharePoint (which they were already using) as a front end. They were unable to find system integrators who understood what they were trying to do, so the team of five learned the tools and built out the solution themselves. To serve their internal customers, the system needed to meet the following requirements:
- Processes needed to run
- Processes needed to be repeatable, with no tolerance for error
- The requirement for end-users to learn new technology needed to be reduced as much as possible
- Back-end technology needed to be transparent to end-users
Mr. Venkataramanan notes, “Once we understood the goals, implementation was simple.”
Because end-users were already employing SharePoint, its continued use was critical to adoption of the new solution. With uninterrupted use of SharePoint, the company was able to realize pronounced benefits, with no training or implementation of new software required. As a result, the IT team attempted and achieved 100 percent adoption with virtually no learning curve; user adoption was instantaneous and straightforward.
Cost savings have been realized because of IT virtualization, compliance, and a reduced need to hire additional employees:
- Virtualization (the ability to run more applications on fewer servers) has reduced the need to purchase additional physical servers by 30 percent.
- Compliance has been increased to 100 percent, considerably reducing auditing and legal fees.
- The previous solution, consisting of SharePoint only, required a good deal of support and infrastructure to maintain. The new solution, which incorporates Documentum xCP, is designed for the enterprise environment and therefore requires less administration and maintenance. So, there has been no need to hire additional IT staff, even as the business has grown.
Time savings can be measured in full-time resources, audit time, and the time it takes to onboard a new client:
- Continuation with the previous system would have required hiring approximately 15 full-time employees; the new system avoided this costly increase.
- Previously, a first-time audit took 45 working days; Viteos is now able to perform the same function in fewer than seven days.
- Using the previous system, new clients were onboarded in about one quarter (three months). Now, they go through the same process in about one month.
As a result of the new system, Viteos’ capacity has increased by 35 percent. As a result of this increased efficiency, the company is able to grow its business by 15 percent year over year.
Mr. Venkataramanan describes productivity improvements in terms of the number of defects and the speed with which information is turned around to clients: “I am happy to state that defects have come down to a negligible number, and we are now able to turn information around in under 45 minutes.” Productivity has been seen in these areas, as well:
- Ease of use
- Effective management of volumes of data and their quick retrievals
- Ability to be flexible as the market changes its processes
- Organizational consistency
- Simplified processes
Every process that Viteos performs must have a maker and checker. By automating the process, the workflow auto-routes the data to the checker for verification and captures the date/time stamp of when the data was verified before delivery to the client.
In addition, auditors are given access to the system to check the transaction flow. Because all the documents generated are available, time spent by the process heads has been reduced to a minimum.
Best Practices, Learning Points and Pitfalls
Best Practices and Learning Points
- It is important to be aware of all customer touch points—that is, always think about the customer. Business process can often seem like a back-end thing that is automated, and people are not involved. But, if you don’t think about customer touch points, your efforts will not be successful.
- The company’s success in this transition was driven by user requests rather than “the IT team’s imagination.” Every process was defined from a business perspective in terms of the corresponding benefit.
- It is important to have goals for what you are trying to achieve rather than simply adopting the latest trends.
- For best results, view the situation as an enterprise-wide initiative rather than a single problem initiative. When evaluating a solution, ask how it will benefit the enterprise.
- Anything that can be done to automate information makes operations run faster and better. E-forms are useful for this process.
- Security must be considered from the beginning, as it is much more difficult to build in after the fact.
- It is critical to ensure a certain level of “process maturity.” That is, any processes being considered for automation should already be set. If you try to convert processes that will continue to change or evolve, you will not get the kinds of benefits you expect.
Although many companies dabble in business process management (BPM) or automate one part of their business, other parts may be technologically behind. Viteos has standardized on a platform with a broad feature set that lets the company address applications and processes in every area of business. Efficiencies in each area contribute to those in other areas, creating a fully optimized system.
Having created a thorough, reliable system, the company can focus on fund trading and wealth management rather than its IT services. By eliminating paper-based processes, Viteos has greatly improved the speed and accuracy of interactions with consumers, governments, and businesses, thereby creating a significant competitive advantage.
This ability to operate at full effectiveness also brings down the costs associated with broken or antiquated systems, keeping margins at competitive levels. If not for these cost savings, the company could not sustain its success.
Viteos’ previous system ran on an outsourced model. Applications were hosted outside the organization by various service providers. These services were scattered, and there were too many applications to manage. The goals were (1) to consolidate all services under one roof and (2) create the ability to expand and contract to meet seasonal demands. The team sought a system flexible enough to meet these goals and inexpensive enough to keep costs down.
The new system incorporates Documentum xCP as the back-end document reposito y and SharePoint as the front-end UI. Viteos was already using SharePoint, but SharePoint lacked the ability to grow with the company and meet its demands. So, the team sought out a solution that would pair well with SharePoint and meet its challenges—now and into the future. The great benefit of this pairing is that users did not have to learn a new interface, saving time and money that would have been spent on training.
After researching other solutions, the team settled on Documentum xCP. The solution was not the least expensive and required learning Java, but Viteos has been happy with the results. In particular, the company values the agile nature of the software, which can change along with procedures and laws. IT does not have to shut the entire system down to upgrade. And the system can support users running different versions.
The new system also incorporates VMware for virtualization. With this solution, the number of physical servers needed has been reduced considerably. The new solution allows the company to maintain servers at two separate locations (Mumbai and Bangalore) that are replicated and seamlessly communicate with each other. So, no matter where in the world clients are, data are always ready for delivery to them.
The Technology and Service Providers
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset—information—in a more agile, trusted and cost-efficient way.
EMC products and services leveraged in this solution include:
- EMC Documentum xCP (http://www.emc.com/xcp)
- EMC Documentum Consulting
Copyright: This case study was originally published in the Excellence in Practice series in the book entitled “Delivering Competitive Advantage” published by Future Strategies Inc. ©