Managing "Managed" Service Providers: Five Tips for Converting to a SaaS Trade Order Management System

The Managed Service trend continues and is clawing its way into the front office with the availability of more cost-effective Software-As-A-Service products and services. A paradigm shift in how these project implementations are managed continues to evolve. Many investment managers and technology teams that we have spoken with are often facing a difficult time with this transition - specifically with how to “manage” their service providers and control costs. If you feel the same way, then you’re not alone.

So, what is a Managed Service Provider? Is it an Application Service Provider (ASP)? A Software-As-A-Service (SaaS) Provider? Is it on the “Cloud”? All of the above? 

We hear this question a lot. To make it simple, a Managed Servicer provider is any firm that provides either a service or software (or both) for something that has traditionally been executed in-house. For example, companies that offer to outsource your middle-office or companies that host and provide accounting and trading systems as software-as-a-service (SaaS) can both be grouped as managed service providers. 

At IMP, we’ve been fortunate enough to be on the front lines of helping our clients make this transition, specifically with conversions from the traditional in-house hosted Trade Order Management Systems (OMS) model to a Software-As-A-Service (SaaS) model.  In this article, we discuss several recommended and basic techniques to help you to manage your projects effectively and successfully.

1.    Know Your Short-Term Costs

2.    Enforce a Release Management & Change Control Management Process

3.    Don’t Just Have a Generic Test Environment, Implement a “Prod-like” Test Environment

4.    Always Verify, Then Trust

5.    Don't Let Go of the Vine (At Least Not Yet)

The flux of vendors providing managed services and software will continue to grow as long as the market continues to have an appetite for the risk and the long-term cost savings. The good news is that these new services and products are getting much more creative, affordable, efficient, and improving conditions for many investment managers. It’s allowing firms to off-load things that they no longer want to manage themselves, and putting it in the hands of firms that are beginning to really specialize.  As long as you are able to effectively “manage” the managed service provider, you can develop a long-term mutually beneficial relationship.