While Everyone Is Talking About AI, a Different Software ‘Revolution’ Is Happening

Many firms have refused to give up Excel at the expense of new speed and depth of data. But according to one consultant, the tide is turning.

Illustration by II

Illustration by II

Artificial intelligence tools are all the rage in asset management today. But it’s not the only new tech being adopted, as another software “revolution” is — finally — underway in the industry, according to Alpha FMC, a consultant to all of the top 20 asset managers globally and others.

For decades, asset management luddites have clung to Microsoft Excel. In 2018, nearly half of all private equity firms relied exclusively on it to monitor their portfolios, in lieu of more sophisticated offerings.

Today, Alpha FMC’s biggest clients still have a problem that the firm calls the “messy middle”: a finance department that is forced to aggregate data from disparate sources into its own system, so the data can be reported to company decision makers.

But the spreadsheet days could be numbered.

Asset management has remained a healthy industry despite the current tough economic conditions. Still, falling markets and net outflows have been a revenue drag in recent quarters. Meanwhile, the cost of operating continues to climb: On Wednesday, the Securities and Exchange Commission adopted new rules that will require hedge fund and private equity firms to file more frequent disclosures about certain events.

In addition to reducing headcount and compensation, two of the most meaningful levers they have left to pull, asset managers are looking for other ways to save. Streamlining operations could be the solution they’ve been looking for.


“Asset and wealth managers aren’t immune [to] the global drive toward automation and the inherent complexity associated with this, which is why Alpha FMC thinks we’re approaching an Enterprise Performance Management (EPM) revolution in the industry,” the firm said in a recent paper.

According to Alpha FMC, private market firms are leading the way when it comes to adopting dedicated EPM tools, but other managers are also realizing the benefits and have begun to catch up. Cloud-based software specifically designed to help companies plan and analyze their corporate finances are also on the rise, and customized versions are delivering finance and operations insights at a “depth and speed beyond the capabilities of Excel or legacy technology.”

“The natural complexity, the huge amounts of data, the complexity of the organizations, [and] the disparate systems — I’ve never seen an industry so ripe for transformation,” said James Bryson, director of the financial services EPM practice at Lionpoint, an Alpha FMC company.

Big financial services companies with several different types of businesses — investment banking, consumer banking, asset management, insurance, and others — have been the slowest to adopt new software and systems due to the huge scale of that change, Bryson said.

And cost and complexity aren’t the only challenges. Some employees have been doing similar tasks in Excel for decades. Changing the software they use and their own processes is a hard sell.

“It’s change-management in organizations as well,” said Michelle Sutherland, director of the EPM practice at Lionpoint. “The difficulty is changing people’s mindset.”