Alpha worked with a global Asset Manager to develop a product strategy for the business globally, looking at investment capabilities, mutual fund ranges and institutional products.

As with many geographically diverse asset managers, our client was faced with the challenge of excessive complexity and duplication as a result of organic growth and acquisition. Typical actions to consider in this situation include the pooling of small separate accounts, the merging of similar mutual funds and the rationalisation of investment capabilities.

This project addressed this complexity and duplication on a global level, tackling a number of unprofitable geographic units that are the result of overlapping fund management capabilities and significant numbers of sub-scale funds and mandates.

The project concluded with final recommendations to the project Steering Committee, which included the Global CEO and COO. Implementation of the findings for each of the project sub-streams then followed (focusing on capabilities, mutual funds and separate accounts).

Alpha worked with a European Asset Manager to identify strategic cost reduction opportunities across the whole business globally.

A structured approach was undertaken whereby specific issues across all the segments of the value chain were identified and analysed. These covered such areas as: proliferation of investment capabilities and products, the institutional client servicing model, the domiciliation of mutual fund groups, the geographical “footprint” of the organisation, and the number and location of operational centres.

As a result of the project, very significant cost reduction and margin improvement opportunities were identified and a number of targeted projects were kicked off to address these high priority opportunities.

On 14 May 2004 ABN AMRO Asset Management and State Street announced that they had signed a contract to outsource middle and back office operations for four major processing centres in Europe.

This deal represents the first pan-European asset management middle and back office outsourcing contract of its kind.

Project Omega was divided into 4 primary phases:

• Operating Strategy (February to May 2003)
• Request for Proposal and Provider Selection (June to November 2003)
• Due Diligence and Contract Negotiation (December 2003 to May 2004)
• Implementation (May 2004 – 2007)

ABN AMRO Asset Management – Project Omega – Operating Strategy

Project Omega was initiated to develop a European Operating Model for investment operations and fund accounting and to meet the business objectives of increasing efficiency and service, and reducing cost.

Alpha were involved from the outset of Omega and led the project team to analyse three major strategic routes:

• Centralising operations within Europe
• Moving the majority of operations offshore (e.g. to India)
• Outsourcing operations to a third party administrator

The operational centres under initial investigation were Amsterdam, London, Luxembourg and Stockholm, representing total Assets Under Administration of c.€75bn. The key in-scope activities were investment operations and fund accounting, but not custody, which would remain with the ABN AMRO Mellon joint venture.

Alpha played a key role in all of the major deliverables of the project, including financial business cases, a target IT infrastructure for each option, a location assessment for the centralisation route, and a draft implementation plan for each option. We worked closely and collaboratively with a Working Group comprising senior management. As part of Phase 1, we designed and executed an indicative proposal process to gauge the potential solutions and financials available from Europe’s leading Third Party Administrators. The phase ended with the unanimous decision by the Working Group and the Executive Committee to progress into Phase 2 and further investigate outsourcing.

Phase 2: Request for Proposal (RFP) and Provider Selection

Three potential outsource providers were engaged in an RFP process and Alpha led the process of definition, publication and response evaluation of the RFP.

The approach adopted was highly iterative and successive drafts of the RFP discussed with each provider before the issuance of the final version. Each provider was given extensive access to operations, IT and senior staff. A comprehensive set of business requirements, questions and a component based pricing model were developed throughout the phase, followed by a period of response evaluation.

At the end of the phase State Street was selected as the sole provider with whom to enter into Phase 3, which encompassed due diligence, detailed definition of an operating model and contract negotiation.

Phase 3: Due Diligence & Contract Negotiation

The key deliverable in Phase 3 was the target operating model and the final contract, with a focused team also working on due diligence.

Alpha assisted law firm Allen and Overy in the construction of the contract, and then played a leading role in the contract negotiations. This led to a successful conclusion culminating in the signing of the Contract in Amsterdam on 13 May 2004.

Alpha also played a key advisory role in the other Phase 3 deliverables, including due diligence, the financial modelling of the rate cards, and HR negotiations and communication.

Phase 4: Implementation

State Street will provide investment operations and fund accounting services for ABN AMRO Asset Management in the Netherlands, the United Kingdom, Luxemburg and Sweden. The services will be phased in over a two and a half year period commencing in the summer of 2004. As part of the mandate, State Street will expand its operations in Amsterdam and develop a fund servicing centre with approximately 110 ABN AMRO Asset Management staff there transferring to State Street.

Alpha was engaged by a European-based Global Asset Manager to assist in the development of a global IT strategy for application development, support and IT operations.

The business was entering a period of major change and reconfiguration, with ambitious new growth targets. IT was seen as a critical enabler for this growth.

Alpha helped define the strategy and present it to senior management. In addition Alpha led the communications effort, helped define a new governance structure and helped define a global budgeting process to assist the Head of Global IT oversee IT around the world.

Alpha programme managed the integration of the back office of a major European asset manager with an outsource provider following the asset manager’s acquisition by a UK based player.

The acquirer had a long-term outsourcing contract and thus merged the European asset manager’s back office onto the same platform. The acquisition more than doubled the assets under administration. To support the new business, the outsourcer developed new UK capabilities for client reporting and performance measurement as well expand its geographical scope to support US operations.

The Alpha team was responsible for overall project co-ordination and business case development and is also developing, with the outsourcer’s team, the new operating model which will support the new business requirements.

Alpha provided a manager to lead the business implementation workstream for a major UK asset manager undergoing post-merger integration, as a pre-cursor to a full investment operations outsourcing deal.

Several key aspects of the project required experience of similar integration and outsourcing deals, in particular:

• Development of an integrated investment operations platform delivering service according to defined SLAs;
• Maintenance of selected legacy operating procedures from both companies;
• Data conversion – including asset and account structure integration;
• Integration of new investment operations platform with all satellite systems and processes (themselves undergoing post-merger change)

For a medium sized asset manager, Alpha was engaged to manage the development of a clear Operations standard service offering within an "Operations Service Catalogue" and the development of a costing tool for non-standard service items. The aims of articulating the standard Operations service were twofold;

• to support the Distribution effort in securing profitable mandates within a commercial framework
• to strengthen the partnership relationship between Operations and Distribution

Alpha played a key role in leading the project, managing the information gathering, co-coordinating the development of the service descriptions, identifying non-standard service items and developing the costing tool.

Alpha also provided assistance in the implementation and training of staff to help embed the new processes.

Alpha was engaged by the Global Product Development division of a European-based Global Asset Manager to review their global product development process.

The main components of the project were:

• Mapping the Product Launch Process: Held structured interviews with over 40 individuals from within the business and produced a schematic representation of the product launch process that was recognised across the business
• Analysing historic Product Launches: Performed detailed historic analysis of over 20 historic fund launches in Europe and Asia. Pinpointed the key milestones for each launch to compare where the process had been improved and where there was further room for improvement
• Improving the Process: Made 32 detailed recommendations focusing on 7 critical areas of the process, a number of which were implemented before the project had delivered its report
• Communicating it to the Business: Helped to deliver the sensitive messages about the new process to key business units and advised on the implementation

The analysis covered all areas of the product development process from initial idea generation through development, approval, filing and registration.

Alpha was engaged by the Product Management division of a European Asset Manager to help develop an integrated plan for the forthcoming year.

Our client was faced with multiple initiatives, including product launches, fund mergers, fund redomiciliations and process improvements across multiple European locations.

Alpha worked with the Product Management team to develop a comprehensive plan encompassing all the upcoming initiatives that could be used by a wide range of stakeholders from senior management down to individual project team members.

The plan ensured that critical path items were clearly identified, senior management could focus their attention on key events and resources could be efficiently deployed. Alpha also organised project training and helped ensure that the planning process has become embedded in the business on an ongoing basis.

Alpha worked with a global Asset Manager to develop a product strategy for the business globally, looking at investment capabilities, mutual fund ranges and institutional products.

As with many geographically diverse asset managers, our client was faced with the challenge of excessive complexity and duplication as a result of organic growth and acquisition. Typical actions to consider in this situation include the pooling of small separate accounts, the merging of similar mutual funds and the rationalisation of investment capabilities.

This project addressed this complexity and duplication on a global level, tackling a number of unprofitable geographic units that are the result of overlapping fund management capabilities and significant numbers of sub-scale funds and mandates.

The project concluded with final recommendations to the project Steering Committee, which included the Global CEO and COO. Implementation of the findings for each of the project sub-streams then followed (focusing on capabilities, mutual funds and separate accounts).

Alpha were engaged to design and implement a single, global system to support the research process across a globally distributed asset manager. Alpha worked with a major market data provider to customize a standard offering.

The project had the ambitious objectives of:

• Encouraging communication between teams internationally
• Proving that the firm were leveraging their global expertise & utilising the in-house research capability
• Maximising the value of the research process in portfolio design
• Amplifying the input of other areas of the business – such as the Corporate Governance research team

And achieved these by providing:

• A new systematic approach to generating cross-border research - using standard templates, scoring methods and listings
• A globally accessible library of internal investment views – from asset allocation policy to stock-level research
• Support for international discussions on these views – inviting opinion and debate between experts
• Access to favoured broker research, consensus estimates, fundamental data, news and events
• A record of contact with companies and issuers around the world – what was said and what were our conclusions

Alpha were engaged by a boutique manager to review their existing operating environment and select an affordable front office system that will automate projected growth in assets with the intention to support this expansion while keeping overheads close to their current levels.

The system needed to support all of the value-adding esoteric practices of the manager without the need to fund expensive customised solutions.

It was important that the system and the vendor relationship could be adopted by a small internal IT department with limited experience of vendor solutions and implementations and that the solution was provided by a vendor who will work in partnership with the business as it develops.

A major objective was to ensure that operational risks were reduced and that the business would be left with a robust and safe operating environment.

Alpha worked with a global Asset Manager to develop a product strategy for the business globally, looking at investment capabilities, mutual fund ranges and institutional products.

As with many geographically diverse asset managers, our client was faced with the challenge of excessive complexity and duplication as a result of organic growth and acquisition. Typical actions to consider in this situation include the pooling of small separate accounts, the merging of similar mutual funds and the rationalisation of investment capabilities.

This project addressed this complexity and duplication on a global level, tackling a number of unprofitable geographic units that are the result of overlapping fund management capabilities and significant numbers of sub-scale funds and mandates.

The project concluded with final recommendations to the project Steering Committee, which included the Global CEO and COO. Implementation of the findings for each of the project sub-streams then followed (focusing on capabilities, mutual funds and separate accounts).

Alpha have run a number of successful RFI phases for asset managers investigating whether or not to outsource their investment operations. We were engaged by a large asset manager to run an RFI, which would investigate how outsourcing their investment operations compared to adopting an enhanced internal solution.

As part of the exercise, Alpha:

• Provided project management, structure, and template materials which were developed to suit the unique profile and circumstances of the asset manager
• Coordinated input from all affected business areas to define a final RFI
• Engaged a list of suitable candidate providers and managed the response/refinement procedures
• Collated all responses, and provided guidance and structure during the final evaluation process with the client

Having completed the RFI process, we worked with the client to identify the most attractive partner for an outsourced solution, and furthermore evaluated the outsourcing option against an alternative ‘internal scenario’ which was developed in parallel with the RFI.

In this particular instance, with both business cases developed to a high degree of confidence, the client decided not to outsource immediately, and proceed for the time being with an internal operations department.

For a medium sized asset manager, Alpha was engaged to manage the development of a clear Operations standard service offering within an "Operations Service Catalogue" and the development of a costing tool for non-standard service items. The aims of articulating the standard Operations service were twofold;

• to support the Distribution effort in securing profitable mandates within a commercial framework
• to strengthen the partnership relationship between Operations and Distribution

Alpha played a key role in leading the project, managing the information gathering, co-coordinating the development of the service descriptions, identifying non-standard service items and developing the costing tool.

Alpha also provided assistance in the implementation and training of staff to help embed the new processes.

A major European pension fund employed Alpha in an advisory, analytical and management role for a pre-RFI study to assess the case for outsourcing investment operations for both internally and externally managed assets.

As part of this study, Alpha:

• Provided a focussed assessment of the current outsource provider landscape and capabilities
• Conducted independent business case analysis on the likely financial implications of outsourcing, using a range of current market rates and data
• Developed and conducted a ‘mini-RFI’ with a single selected TPA to gain first-hand provider input into the assessment

Alpha played a leading role in guiding the information-gathering and decision-making process at steering committee level through to the conclusion of the study and the final decision on whether to proceed with a full RFI/RFP phase.

Following on from the Benchmarking Study, Alpha conducted an in-depth process analysis survey for a number of large outsourced investment managers. Results from the benchmarking had suggested that:

There may be some process duplication occurring between the asset manager and the outsource provider

There may be scope for process efficiencies within the retained organisation of the asset managers

Furthermore, asset managers wished to comparatively assess their approach to oversight of their outsource provider. A detailed study of the operations of each asset manager and their approach to oversight led to different results for each participant.

For one participant, no significant service duplications were identified above and beyond those already known. However, several internal process inefficiencies were identified and costed – although no immediate action was advised since changes were not supported by a positive business case, nor were they achievable in the context of other concurrent major projects. A number of recommendations were also made with respect to their oversight processes.

A second participant exhibited significant process duplication, which was quantified and analysed. Several key initiatives were suggested, from reviewing the retained internal architecture, to improvement of current processes, and a review of the contract and SLA regime – all of which were the subject of subsequent projects

Alpha supported a leading UK asset manager who were reviewing their transfer agency outsourcing arrangements by benchmarking costs and service levels for their current deal and by assessing the impact of market trends and provider positioning against future requirements

A large asset manager engaged Alpha to assist with an investment operations outsourcing project in progress. Whilst the project had achieved a number of milestones since its inception, it was encountering issues that threatened its successful completion.

After an initial period of review we suggested and then helped to develop:

• A revised project structure to achieve more effective joint control of the project by the asset manager and outsource provider
• A jointly-agreed project plan and associated approach documents, which provided the project and management teams with a firm basis on which to proceed with confidence through to completion

Furthermore, the operating model, and consequently the business case, had shifted as the final implementation solution became clearer. The asset manager therefore requested that Alpha undertake a review of the business case, which included a market-based comparison of the competitiveness of their deal.

We subsequently led the final contractual and financial negotiations with the outsource provider.

Alpha have run a number of successful RFI phases for asset managers investigating whether or not to outsource their investment operations. We were engaged by a large asset manager to run an RFI, which would investigate how outsourcing their investment operations compared to adopting an enhanced internal solution.

As part of the exercise, Alpha:

• Provided project management, structure, and template materials which were developed to suit the unique profile and circumstances of the asset manager
• Coordinated input from all affected business areas to define a final RFI
• Engaged a list of suitable candidate providers and managed the response/refinement procedures
• Collated all responses, and provided guidance and structure during the final evaluation process with the client

Having completed the RFI process, we worked with the client to identify the most attractive partner for an outsourced solution, and furthermore evaluated the outsourcing option against an alternative ‘internal scenario’ which was developed in parallel with the RFI.

In this particular instance, with both business cases developed to a high degree of confidence, the client decided not to outsource immediately, and proceed for the time being with an internal operations department.

Alpha have worked with a number of UK asset managers in the run-up to their contract renegotiations with their outsource providers.

Whilst not necessarily wishing to switch provider or initiate a competitive RFP process, clients in this situation have had to ensure that they enter negotiations with a full view of current contractual ‘best practice’, as well as an understanding of the economic value and service quality provided to them by their TPA by comparison to alternative market offerings.

Alpha are able to assist in contract renegotiations by:

• Providing an assessment of the current outsource provider landscape and capabilities
• Including the asset manager in our operational benchmarking study to assess comparative levels of cost efficiency and service quality provided by the TPA
• Reviewing the current outsourcing contract to identify aspects of contractual ‘best practice’ that might be included at the renegotiation stage, bringing to bear our leading role in recent contractual negotiations
• Assessing key areas for improvement in the current arrangement that may lead to service improvements and potential fee consolidations

Alpha were engaged to manage the IT change programme within Operations for a medium sized asset manager. In particular we were asked to improve the rigour of the project management, increase the programme momentum, install robust programme governance and drive through benefits delivery.

The half dozen projects within the programme ranged from small incremental change to large system redesign and implementation. Resource management covered internal employees, contractors and consultancy firms. The programme budget was £2m and encompassed over 40 resources at any one time.

Alpha helped a major UK asset manager develop a new organisation structure for its operations and IT functions.

The business had undergone a number of changes over recent years that had caused the organisation structure to become less well aligned with the business needs:

• The IT development needs had changed radically
• Part of the operations function was operating in practice in a way that was not aligned with the formal structure
• A number of functions had been outsourced independently with separate approaches being used for oversight
• Feedback from staff suggested that improvements could be made in a number of areas
• Process duplication had arisen in a number of areas

Working from organisation design best practice we developed a new organisation structure, roles and responsibilities together with the senior management team.

The new structure addressed the issues with the previous structure and created a new management process and measurement approach for both in-house and outsourced functions.

Alpha was engaged by a European-based Global Asset Manager to assist in the development of a global IT strategy for application development, support and IT operations.

The business was entering a period of major change and reconfiguration, with ambitious new growth targets. IT was seen as a critical enabler for this growth.

Alpha helped define the strategy and present it to senior management. In addition Alpha led the communications effort, helped define a new governance structure and helped define a global budgeting process to assist the Head of Global IT oversee IT around the world.