Two key points:
- Demand for information is growing exponentially;
- Those companies that can deliver information accurately and quickly will have a huge competitive advantage over those who can't. Over time, this advantage will become a bigger factor in achieving success.
Over the last 6 months, several major events have occurred that support and drive this:
- We were recently invited to meet with the country’s largest pension fund to discuss ways to streamline their current manual data collection process. They will soon be releasing an RFP to automate this process;
- Our last 3 Request clients (our business intelligence solution) plan on extending Request to their investors so that the investors can have direct, immediate, and easy access to information that will allow them to become self-sufficient on accessing their investment information (imagine being in a bake-off for investor capital and competing against a firm that offers direct and dynamic information access – I believe this falls under the category of gaining investor confidence and credibility);
- State Street Bank’s Private Edge Group’s clients have been clamoring for more visibility into their real estate holdings. In response to this, State Street recently licensed Request for the purpose of providing their pension fund clients with automated access into and across all of their real estate investments regardless of investment partner. The first pension fund to sign up for this offering is CalSTRS;
- At the most recent NCREIF conference in Seattle, 2 firms that help pension funds select which partners to invest in, made separate statements about how the speed in which an investment manager/partner delivers due diligence type information to them is becoming a large factor in rating that investment partner.
The information demanders want their data to be accurate, they want it at their fingertips, and they want to be able to do things with it…like analyze it, view trends, manage risk, and they want to do this over their entire portfolio, eliminating the borders between investments and investment partners.
Currently, collecting and disseminating information is manual, costly, time intensive, and non-scalable. As portfolios get bigger, returns seek their historic norm, real estate asset allocations increase, and investments become more distant (geographically and ownership), information demand will grow and the problem will get worse.
Delivering information in hard copy is inefficient. Posting PDFs on the web for clients to download is almost identical as delivering hard copy. It doesn’t allow the user to do anything with it. Many people think that collecting information through web forms is the solution, but it is not. Web forms mean double entry, and double entry means input errors. On the data receiver’s side, web forms translate into checking the inputs against the hard copy. Web forms also imply that the entity that holds the data does not have an electronic process for using it.
The solution is to pull the information directly out of the source systems that participate in the day to day operations and processes where that information resides. This is the only way that I can think of to keep the data up to date and accurate. Being current and accurate is critical because you will no longer have the luxury of time to create, update, and audit the reports, you will no longer have the time to call around the office to get the information you need. The information has to be in an electronic collectible format to be able to satisfy immediate information demand. Within a company, automated processes have to be in place whereby people use and see the data.
Get ready, because the day will soon be here when your investors will have as much visibility into their portfolio as you do.
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