The rise of the product ecosystem

The last few years have seen considerable progress in how vendors offer their performance measurement, attribution and risk (PMAR) tools and services to the investment management sector. The traditional view was very much that the client can order functionalities from a set menu. Anything off the list requires a lengthy development effort, with the client in the meantime having to wrestle with onerous manual workarounds.

The spate of M&A activity over the last ten years saw vendors attempt to enhance their set menu by integrating functionality from other vendors. Whilst in theory this sounds like a rational approach, in practice full system integration can be a lengthy and costly process. Furthermore, the integration can end up being in a corporate branding capacity only, so the client ends up having to run and pay for additional applications to utilise the full range of PMAR services.

In particular, we have seen the rise of the Enterprise front-to-back solution where PMAR reporting capabilities are available. Unfortunately, given the size of the vendor, any specific client development requirements will undoubtedly end up on a roadmap for 2039 (see The view from 2039). So again whilst the menu is bigger, it is still set and the client is limited on choice.

Fortunately, there are ways round this logjam. The way forward is to provide clean, well-documented APIs, so that each vendor's offering does one thing and does it well.

So what does this mean in practice?

We see a Spotify or Netflix type approach to vendor applications where the client can pick and choose what applications they want to use. A nod to the good old days of best-of-breed, but in a vendor ecosystem; an old idea, but in a new wrapper.

Whilst we at Flametree do not profess to have a crystal ball, we have designed our product to be as future proof as possible. FIA is not just a bolt-on attribution engine for any system that can calculate security level weights and returns. OpenPrice and OpenRisk also allow security modelling and risk analytics to be tailored and customised, whatever your requirements, at reasonable cost.

So however you want your attribution, we offer the full a la carte.