Read this article and learn about:
- The key difference between ASP and on-premise application management
- Key talking points, such as: data, system flexibility, and specialists
- What the preferred delivery method of the future will be
- Which method has more transparent costs
About the author:
Thorvaldur Flemming Jensen, Head of ASP Division, SimCorp
There are two common delivery methods of technology in the investment management industry. While the majority of firms host their software on premise, there is a growing interest and demand for application management offerings, provided by application service providers (ASP). This article looks at some of the pros and cons of both delivery methods.
While on premise may be the dominant method in most markets today, outsourced application management of core systems is gaining momentum. I predict that within 5-10 years, most asset managers will have made the shift. Just as software-as-a-service (SaaS) re-wrote the rulebook for many businesses, the investment management industry is now playing catch up.
Market research and anecdotal evidence suggests that North America for example, is a little bit ahead in terms of ASP compared to Europe which is still heavily weighted towards the on premise set up. Even so, ASP still remains in the minority in most markets.
In many cases it’s a question of whether the IMS vendor is future proof or not. Some clients may implement on premise, but want ASP as an option, so that they know that it is there as an option if necessary.
We are seeing that some firms are developing strategies in which they clearly state that they will avoid developing their own infrastructure solutions on premise, and rather seek outsourcing solutions such as ASP. These firms realize that they are not technical experts, and do not want an oversized IT department to manage. Rather, they want to focus on managing investments. Having said that, there are also firms that still have a strategy saying the exact opposite, that they want total control and ownership over their IMS, no matter what.
So overall, the reality is that the market is mixed in terms of preferences and it is evident that the future will lean towards ASP.
…the reality is that the market is mixed in terms of preferences and it is evident that the future will lean towards ASP.Thorvaldur Flemming Jensen, Head of ASP Division, SimCorp
What’s the difference between ASP and on premise?
With on premise, firms manage all aspects of their installation, from infrastructure to environments to data centers. This means that they also have a large IT department in order to manage their application. This department needs to be made up of a broad range of very specialist knowledge, much of which may actually not be required on a full time basis, for example, monitoring batch jobs every night or administrating the database.
ASP takes the investment management system (IMS) out of the client’s infrastructure while still allowing them to operate with the same flexibility in configuring and using the application. Firms don’t need resources with IMS application skills, establish and maintain infrastructure and disaster recovery, or cope with all the niche technical application management challenges that are associated with any enterprise solution. Rather than having to stretch resources across tasks, ASP providers have the possibility of having specialists managing specific tasks on multiple installations.