This is Different: Investment Accounting in the Cloud-Native Era

“This is different,” is a sentiment we commonly encounter in the first seconds of our demos. 

And it’s easy to see why “different” is a welcome surprise…

• The market has reached a tipping point with technology. 
• Digitization is no longer merely a smart investment opportunity but a fundamentally critical component of operational success. 
• Financial technologies continue to accelerate, introducing new sources of disruption for the industry at every turn. 

For businesses, both large and small, adapting to disruption requires “different.” It requires a commitment to transformation and collaboration with strategic technology partners who will lead you away from the status quo.

Yet, that’s not all that is required; business leaders must take on a forward-thinking mindset that recognizes the importance of a complete organizational shift. 

In the following conversation with FundGuard President John Lehner, we explore these themes through the lens of  investment accounting and discuss why “different” matters. 

The Domino Effect of Going Cloud-Native

FG: What is it that makes the FundGuard investment accounting solution so different in the eyes of our clients?  

JL: For decades, all of these firms were dealing with latent pain issues with their legacy platforms. They knew they needed to get away and try something new, but there really was no suitable alternative. 

Now the industry no longer simply recognizes the presence of a problem, it is proactively seeking a solution and we’ve added gas to the fire for clients trying to leave their legacy ways behind. We’ve moved from the initial phases of just connecting with early adopters and investors who see the vision to actually bringing clients into production. 

Cloud adoption has become the standard. If you think of it like a spread trade, FundGuard represents the long leg of that trade by offering a truly cloud-native solution, while legacy providers represent the short leg of the trade that clients now want to bet against. And what we’re also starting to see is that as one legacy vendor falls, the others slowly follow like dominoes, particularly as clients continue to actively move toward the exit due to diminishing support or economic considerations. 

This sends a different type of signal to the market beyond — it lets the market know that we have more than just promises to offer. We have the technology and the expertise to navigate the toppling of the legacy dominoes in favor of a new and cloud-native system.

Out with the Old, In with the New: Conceiving New Accounting Capabilities

FG: One big hang-up we saw early on in the industry was the hesitation to fully embrace a new digital system or approach to technology. How do you view the technological shift that FundGuard supports and how should clients frame it within the context of their businesses?

JL: So there are a couple of dimensions to that.

Each generation of technologies has a specific look and feel to them. It’s no different than cars, for example — 10 to 15 years ago, cars didn’t have all the capabilities they have now. There were no large iPad-style displays, LED lighting, safety features or autonomous navigation, and driving. Cars didn’t have an app to send you alerts about your car’s status and performance, and most cars did not have automatic software updates integrated yet. Recognize the parallels?

In many ways, the cars of today are entirely different products than cars built a decade ago.  When we think of this in the context of investment operations and technology, there are so many things that we can do differently now because modern technologies allow for it. What business leaders need to start considering is that change is not bad, it’s necessary. Sure, the new software we use today has a totally different look and feel based on how it is built, but it also powers new capabilities that the old versions could not, which unlocks significant operating efficiency.

Technological change requires adaptation, and with that adaptation comes the flexibility to scale your business quickly while maintaining a satisfying user interface and experience. But then there’s also the implication of what that means for how you interact with a product and perform basic tasks. 

From FundGuard’s perspective, we’re not inventing investment accounting, that’s a process that has existed for decades upon decades. Accounting technology has been done before and it will be done long after we are gone. How we differ, however, is that we tackle the problem of accounting through the application of cloud-native, genuinely modern tools. 

The nature of how our system operates allows clients to process transactions and data in new ways through innovative and tech-based sequences. FundGuard’s technology operates in a way that gives you opportunities to do things that historically you couldn’t do native to the accounting workflow. Things like queries, search functions, AI, or even basic tasks like workflow configurations and views.

At one point in time, such capabilities were not even conceivable to users. 

But now, my car can automatically update its software, and so can investment accounting systems (with the right tech). I don’t have to take my car for a manual update every six months, and companies no longer need to wait months or years to implement new technologies (or fix bugs!). 

It’s a significantly different process, and because of that, the new technologies can be tailored specifically to how you plan to use them and how you want to interact with them. In the past, you had to jump through hoops and open a huge number of windows just to navigate across a system. By comparison, FundGuard’s system allows you to navigate it freely. 

So, anybody who has historically sat in front of these systems now has to rethink their relationship with said system. With FundGuard, they no longer have to spend loads of time performing tasks manually or having to interact with the system regularly to ensure it is functioning properly, which is a truly novel concept for many organizations that have spent decades handling such tasks manually. Instead, the systems alert you automatically and apply updates and changes accordingly, no manual intervention necessary. 

The foundation of FundGuard is a single-instance and multi-tenant software solution, giving our clients the operational flexibility to embrace and implement new features as needed. 

Other products offering a cloud-enabled experience cannot offer the same streamlined experience because they host single instances in the cloud rather than building an entirely new cloud-native platform. These products require each client to do their own individual upgrades based on their needs, resulting in independent work streams that do not create any value or scale for the company itself. 

What FundGuard aims to do is shift this perspective, positioning software not as something you buy just to take home and lock in a box, but rather as an ecosystem that your business is joining.  

Small vs. Big Business Leadership Mindsets: The Challenge of Being Big

FG: Your point on the need for a mindset shift is a great segue into our final question. One of our previous posts discussed the implementation process and how it requires a new way of thinking. While we are no longer seeing the cognitive dissonance over the importance of technology, we are still witnessing larger businesses struggle to adopt these technologies, while their smaller, more agile and tech-forward counterparts are coming to market faster. Can you speak to the challenges larger enterprises face and how a strong shift in mindset can be the key to innovation? 

JL: The story we’ve seen across the industry is that large organizations are trying to bring their own new software to market but end up facing implementation hurdles lasting two to three years due to the need to unwind and relearn all of the outdated legacy systems and processes. 

By contrast, smaller businesses with less extensive existing IT setups and startups building an entirely new system have greater freedom to adopt new technologies and come to market quickly. Smaller organizations are, by design, flatter and more aligned. When decisions regarding technology implementations are made, these small entities can flip new products faster because there is less complexity to sort out. I don’t want to call it easier, but it is certainly a more definitive process. 

In small companies, everyone has to be rowing in the right direction, at the same time.

Comparatively, large organizations have multiple overlapping components and functions, all operating from their own systems. This creates an operational challenge that makes achieving digital unity all the more difficult and time-consuming. There are major organizations today that are just now implementing technologies that were invented decades ago — it’s simply a long and complex process to perform. Also, the risk parameters and downside of larger organizations operating in a highly regulated industry make these changes even more challenging and expensive.

I think that speaks to the challenges of larger operating models — there’s just more inherent complexity there, which only becomes more complex due to legacy software. 

The other challenge you have with a larger organization is it just takes longer for everybody to align with the cloud-native perspective. Getting that alignment and execution to fall in place takes a while, and it can take even longer to achieve 100% commitment to technological change across an entire organization.

This lack of organization-wide commitment can be the biggest challenge across all resources, whether it’s technology or business operations. When you pair this with the time needed to execute without interrupting critical business functions, it becomes really hard to build new systems efficiently.  

These large companies know these things, they see these challenges, but the path and the journey they have to go on is much more complicated compared to smaller businesses. We certainly appreciate that and consider that in everything we do at FundGuard with what we’re building and how we approach it, because that transition is what this is all about. 

That’s the hard part of this, right? 

It’s hard to build this software. It’s harder for large organizations to commit, engage, and execute on the transformation. So, there’s a lot of organizational DNA in need of change, and a lot of organizational commitment is needed at the leadership level. That organizational boldness and leadership commitment will ultimately prove to be the key components to technological success.  

Take the Critical First Step with FundGuard

Meaningful technological change takes an evolution of not just your systems but your mindset. 

At FundGuard, we start at cloud-native and build from there. Our technologies and platform are designed to provide you with streaming, dynamic investment accounting data that translates into real-time insights across your back, middle and front-office teams. With FundGuard, you can connect to an entire ecosystem of partners, technological tools, and customizable features.

Speak with FundGuard today to learn more.