Buy vs. Build for Institutional Allocators

There are both advantages and disadvantages to custom building systems for cross-portfolio asset management vs. buying an existing off-the-shelf vendor solution. Is there a happy medium?

First, some thoughts on the advantages and disadvantages on either end of the spectrum:

Advantages of an In-House Build

  • One of a kind technology
  • Custom-built to unique needs
  • If done right, can scale according to future business evolutions

Disadvantages of an In-House Build

  • A prohibitive cost of system upkeep, hardware, systems, and staff
  • The high cost of design and build
  • Key man risk: creates reliance on the System Architect to avoid orphaning the system

Advantages of an "Off the Shelf" Vendor Solution

  • Lower cost of ownership
  • Readily available 
  • Faster implementation

Advantages of an "Off the Shelf" Vendor Solution:

  • Often means settling for "one size fits all"
  • Limited to the functionality offered by the system 
  • Often difficult to integrate into existing systems
  • Expansion and improvements dependent upon a generic product roadmap

For small investment portfolios and modest teams, the off-the-shelf build may be a practical solution. For the large conglomerate already equipped with data servers and infrastructure, a custom build not only makes more sense, it is a necessity. For those somewhere in between, where an off the shelf solution falls short of offering features and integrations crucial to de-risking asset allocation, and a completely custom build seems costly and overwhelming, we propose the consideration of a hybrid approach. A hybrid approach accommodates the varying demands of cross-portfolio asset management, through current strains and future evolutions while keeping implementation costs reasonable.

Find a consultant with an expert ear willing to first discover what your process needs are, then craft a scalable, bespoke system that improves upon your existing operational workflows and addresses the cross-portfolio asset management concerns that are most important to you now. 

Drawing upon our own experience and a diverse range of clients serviced, we are able to reduce the cost, delays, and frustrations inherent to new software builds by implementing many of the service modules, analytics and applications already developed by Vidrio and in service to clients across the globe who are managing $100B+ alternatives investments on the Vidrio platform. 

When we say Investment Management Solutions built by investors for investors, we aren't talking old-school or new-school investors but the cumulative experience of over 25-years of industry evolutions where Vidrio has navigated the increasing demand on investment technology and systems, for security, visibility, automation and more. Let us leverage our experience in streamlining the ideal solutions for your investment firm that will carry it successfully into the next decade. 

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Vidrio Team
Written by

Vidrio Team

The Vidrio team is uniquely positioned to help allocators and LPs to navigate portfolio risks in today’s complex, interconnected world.

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