Read article and learn about:
- How Ashmore can quickly react to new opportunities in emerging markets
- The importance of “owning the IBOR” to ensure consistent data
- Why new markets must be assessed on a case by case basis
- How new entities can be integrated into a global framework
About the author:
John Gregory is Head of Technology & Middle Office at Ashmore Group.
John Gregory joined Ashmore in 2010. He is responsible for the group's Global Operating Model working closely with the Ashmore Board to ensure the growth aspirations of the company can be achieved through an efficient and scalable operating platform.
John has previously held major global COO roles, most recently as Global COO for the Front Office at Fidelity International headquarters in London.
About Ashmore Investment Management
Ashmore Investment Management Limited is one of the world's leading investment managers dedicated to emerging markets. Ashmore focuses on a number of investment themes including external debt, local currency, special situations (incorporating distressed debt and private equity), real estate, corporate debt and equity.
Today, Ashmore manages USD 58.9 billion (at 30 June 2015) in pooled funds, segregated accounts and structured products. In 2006 the ordinary shares of Ashmore Group plc were listed on the London Stock Exchange and it is a FTSE250™ company.
Back in 2010, Ashmore Investment Management (Ashmore) had a primary office in London - five years on, we are on track with our high-growth strategy with 12 offices in 10 countries, seven of these in emerging markets. Entering new countries can be complex, and as a specialist in emerging markets, we realized that we’d need an agile and flexible IT solution to help us manage global expansion efficiently.
Growing on a global scale can be challenging. Not only is there regulation, time zones, language, currency, and a dispersed work force to consider, but each new market requires in depth local knowledge and support. Ashmore’s strategy takes all factors into account and has followed a three-step process:
- Establish emerging market asset class (Largely completed)
- Diversify developed world capital sources and themes (Underway)
- Mobilize emerging market capital (Commenced)
Ashmore doesn’t just strive after a numerical, defined figure for growth each year, but instead takes a more considered, holistic view of growth management – constantly reviewing new opportunities in emerging markets to achieve growth in the most suitable and sustainable way. To achieve this, we have developed a mobilization strategy to be able to quickly and efficiently leverage any opportunity that presents itself, no matter the geographic location.
… we have developed a mobilization strategy to be able to quickly and efficiently leverage any opportunity that presents itself, no matter the geographic location.
A Global Operating Model
Ashmore has successfully driven a high-growth strategy fundamentally linked to its strategic objectives. Protecting and growing the business, Ashmore has implemented a flexible, scalable and global operating platform to seize market opportunities. Our Global Operating Model was established to provide a framework to enable growth while at the same time protecting Ashmore’s existing business. The framework established London as the “model office” offering standard operating practices for each new location to follow (unless regulatory obligations determined otherwise).
The Global Operating Model is a robust and re-deployable framework, enabling elements such as cost containment, regulatory oversight, group-wide compliance and risk reporting, as well as business development plans and corporate activity. Our end objective being of course, to establish local presence, expertise, and knowledge in emerging markets.
Ashmore has ensured that it can react quickly and efficiently to new opportunities, thus enabling its fast-paced growth strategy over the past five years. Ashmore’s flexible IT platform, controlled and managed from London, allows rapid deployment whether the entry into a new market is by acquiring a business, establishing partnerships, or setting up new offices.
IT as key growth strategy enabler
Early on, we realized that for our Global Operating Model to succeed, it needed an “opt-out” clause, meaning that as we launched domestic asset managers, the new entities or partners must prove what aspects of the local regulations and/or client obligations the global platform cannot support. We don’t allow divergence unless there is a requirement to do so – for instance local regulatory obligation. To date, all our asset management subsidiaries around the world are using the same global platform. For the “opt-out” policy to work, it is important to differentiate between local regulations and local market practice – otherwise you run the risk of having lots of systems used globally, rather than a truly global operating model. My mantra has been: a single platform and consistent data are key to success.
Our opt-out policy has also ensured the removal of legacy platforms from the businesses concerned. Old parochial IT applications and IT infrastructure would weigh down Ashmore’s operating model and prevent the efficient business practices we rely on. We strive for a lean infrastructure, which we are able to control and keep current; legacy systems often lack the necessary functionality and have a high running cost.
To streamline global operations, integrating a web of different IT platforms is less than ideal. Having a modern and efficient IT platform on a global scale ensures Ashmore is in the best possible state to act on its growth strategy, rather than struggle with inefficiencies.
Entering new markets on a case-by-case basis
As mentioned above, Ashmore’s growth strategy has seen us enter many new markets in the past five years. To be able to do this, we enter new markets by either establishing an office, acquiring a local asset manager, or establishing a joint venture. Each market is assessed on a case-by-case basis, and only then can the best approach on entering that market be decided. No matter the disruptions that come with entering a new market, whether it’s managing regulatory compliance or consistency of data, our Global Operating Model provides the framework to support us.
“Owning the IBOR” ensures consistent data
The Global Operating Model has been strategically underpinned by our investment book of record (IBOR) – helping us integrate our offices and facilitate efficient communication and dissemination of information throughout the firm.
For Ashmore, we need to know what we own, what we might want to own, how we get there, what the risk is, and to ensure we are compliant. We also need to ensure that when our employees log-on each morning that they are looking at up-to-date data that is consistent, timely and trustworthy. If your data is in different warehouses, or different parts of the world, people are always scratching their heads figuring out what their start of day is. With our IBOR, we don’t have those questions, and that is critical when operating globally as we do.
Ashmore’s strategy to “own the IBOR” means that a single source of truth is created and the need to aggregate data from multiple sources is almost eliminated – meaning that distribution of data from the system to any part of the business can be achieved. With our global pool of data recorded in the same instance, regulatory obligations can also be satisfied in the same way.
Having thorough investment records has been vital for the management of our business. In 2008 we adopted SimCorp Dimension which gave full and detailed records of our portfolios and funds, and could be used for all internal reporting. Recently we have extended the use of these investment records and rely on them for external obligations as well. We now use our IBOR to drive everything and the entire firm relies on it, front-to-back.
If we’d pursued our Global Operating Model without an IBOR, of course we would have still grown, but I surmise it would have cost more and taken longer.
Competitive advantages created by IT platform
Between June 2010 and June 2015, Ashmore increased assets by 62% while at the same time maintaining a zero growth rate in IT support staff and reducing global middle office staff by 5%. The company’s assets under management increased by $22.6 billion to $58.9 billion and the firm now has offices in 10 countries, employing approximately 280 staff.
In April 2014, Ashmore was granted a license to establish a local investment platform in Saudi Arabia, the largest Gulf Cooperation Council economy. Saudi Arabia’s real GDP growth is expected to average approximately 5% over the medium term, and the country has favorable demographics and a high domestic savings rate relative to neighboring countries. Its asset management industry, however, is fragmented and under-penetrated, reflecting the dominance of small family offices. Utilizing the Global Operating Model framework, Ashmore was able to seize this opportunity and establish the Riyadh Local Asset management business with no external consultancy or incremental operational or IT cost to do so (notwithstanding physical equipment).
Whilst a great deal of analysis and planning is required when deciding to enter a new emerging market, the actual roll-out via Ashmore’s Global Operating Model is relatively fast. Using standardized processes and systems,
Ashmore has the flexibility to seize opportunities and grow. For example, Ashmore established a business in Indonesia in July 2012 and could already launch a range of funds by early 2013, the regulatory approval process tends to be longer than our Global Operating Model deployment timetable.
Striving for growth
Local knowledge in a global firm boosts competitive advantage by adding critical insights and understanding into local markets. To be able to connect that local knowledge on a global scale and run an integrated firm requires a Global Operating Model – a framework that can integrate offices via Ashmore’s global infrastructure to facilitate efficient communication and dissemination of information throughout the firm.
… The Global Operating Model has allowed us to quickly react to new opportunities in emerging markets and then integrate new entities into the global framework.
The Global Operating Model has allowed us to quickly react to new opportunities in emerging markets and then integrate new entities into the global framework. This agility and singularity of platform has provided the foundations for our growth, and made it possible to turn strategy into reality.
Ashmore Wins SimCorp Growth Management Excellence Award 2015
This award recognizes investment management organizations that achieve exceptional results within growth management. Ashmore’s ability to expand its global footprint while reducing operating costs is highly impressive. The award recognizes innovation and outstanding performance across the global investment management industry. Ashmore took the top spot by demonstrating significant innovation and achievement over the past 5 years.