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‘You can’t always get what you want’ (Out of budget season)

By Ryan Burns

Fall is in full swing, and while to most that might bring up images of autumn leaves and frost-colored mornings, some know it as a frenzy of meetings, presentations and charts about next year’s budget. What can seem like a dry exercise is one of the most important things a manager or executive does, because with financing comes the ability to make things happen.

But budget season is not only a time to make dreams come true. It is also the crucible in which hard compromises are made, where long-awaited projects face the axe and resources can be easily drawn away to something more pressing.

For experienced professionals this period presents an opportunity like no other during the year. While they cannot get everything they want, they know that passion, evidence and insightful arguments can help to secure funding for their more important projects.

Talking with my clients and colleagues in asset serving, I hear three common perspectives for projects in the year ahead. In this article I go over each of these and some arguments to make that may help swing executive management and finance teams.

Perspective 1: Human capital is key

Personnel resources area top source of conflict in the budget process. The expense of additional employees can stay with a department for years. The overall trend in fund services has been to reduce or at least keep headcount steady in the face of falling fees and rising regulatory costs.

But certain talent investments can bring real progress to the business and should be prioritized. When making the case for new hires, focus on what makes the new talent different from current staff. Today’s fund operations professionals need a mixture of technology and infrastructure expertise that may require new hires, or new training for current staff. Emphasize that talent will be focused on solving complex problems for clients as more tasks are automated. Humans will need to provide more value for comparatively fewer activities, and that requires a different talent set.

Perspective 2: Technology can bring savings

Infrastructure upgrades present thorny financial challenges. They can involve complicated and large upfront investments, including equipment purchases and hiring outside consultants and technical experts to implement new systems. These expenses are somewhat asymmetrical –most of the cost is upfront and the benefits are spread out over a lengthy period of time. Industry research can support your case, showing how infrastructure projects can save rising and fixed costs. Pointing out successful implementations at comparable companies is also helpful. Push consultants and sales people to provide measureable, specific case studies about what actually can be achieved. Show how the amortized costs will have a large benefit.

Perspective 3: A new space

One of the less defined yet increasingly common requests is to fund an innovation center or lab. These spaces move a select group of people – usually a mixture of experienced staff and people new to the organization –to a sub-division where they can experiment on ways to make processes faster, better or just more efficient than “business as usual.”

It’s important to challenge the notion that this is just a request for new furniture or nothing more than “innovation theater.” There is a reason why so many companies choose to eliminate barriers and relocate when attempting large-scale change: it works. We’ve started several labs at Northern Trust, including one focused on Fund Accounting Innovation. Part of the change was creating a space with a variety of white boards, an open layout, and a different style of furnishings. These physical changes supported an agile development process that quickly introduced more automation, new models of working and ultimately the ability to do more for clients.

This year we have worked on taking what was developed in the innovation lab and spreading it throughout the business. The renovation brought us new office space that remains in high demand, along with a number of fresh ideas that are being implemented more widely.

Ryan Burns is head of North America Global Fund Services relationship management at Northern Trust.


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