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Don't Go It Alone! Upgrading Vendors for Complex Securities

Don't Go It Alone! The inability to effectively manage complex securities is the primary cause of the global financial crisis. With few untouched by the crisis, addressing the challenges associated with complex securities is a top issue. At the same time, banks, brokerage firms, insurance companies, investment managers, hedge funds, as well as non-financial services organizations continue to participate in the complex securities marketplace as high margins associated with those securities are a big part of their revenue models. Over time, many organizations purchased vendor products to help trade, process, reconcile, risk manage, and value those securities. Now they need to upgrade in order to stay current with release schedules and realize needed functionality, expand product type and comply with current and forecasted regulatory requirements. As a result, the process of upgrading is drawing much attention as organizations look to acquire best practices learned from the experiences of others. The Challenges. Upgrading any vendor product is a significant undertaking and for those products supporting complex securities the degree of difficulty is much higher. Managing the risks, costs, timeline and overall impact to daily operations has been challenging for industry participants working with tight budgets and limited resources. Common challenges include: •Experienced resources needed for upgrades are not available within the organization. •A high degree of complexity that requires: •Seasoned program and project managers. •Knowledge of the industry that includes data feeds. •Experience in testing systems and interfaces. •Ability to integrate with non vendor systems. •Scheduling challenges to reduce impact on daily business operations. •Business case justification needs to take into consideration new thinking around total cost of ownership that may include: •Managed Hosting. •Outsourcing for applications support and testing. •New product support to improve enterprise risk reporting. An Opportunity to Examine Market Data Usage. Upgrading presents an opportunity to review the manner in which market data is used. •Are feeds being leveraged to their fullest? •Are their multiple versions of the truth that can be consolidated? •How does this upgrade fit with current or planned Business Intelligence efforts? •Can any overlaps be reconciled and optimized? Lesson Learned - Choose a Partner. The best approach is partnering with an organization having the needed industry& vendor expertise as well as key competencies in program/project methodology, systems integration, data migration, QA/Testing and anything else necessary to achieve success. After having found the right partner the next step is crafting an actionable plan. Actual timeframes for each phase depend on the nature and scope of the upgrade. Phase I Requirements. Develop functional requirements and impact analysis. Develop test plan and supporting test infrastructure requirements. Ascertain project plan strategy for future phases. Develop preliminary project plan. Provide support for the upgrade. Phase II Remediation. Develop modifications for product/workflow gaps. Develop reports/data marts. Develop modifications for any up/downstream. application with hooks to/from the vendor. Develop test cases. Update project plan as necessary. Assist in upgrading QA environment. Phase III Test Execution. Execute test cases based on test plan. Review test results. Assist in data conversion dry runs and signoff on conversion strategy. Develop operations/database procedures. Finalize parallel strategy. Phase IV Parallel. Run the system in parallel with the current implementation. Support both environments during the parallel period. Key Benefits Include. •Business risk mitigation through highly disciplined program/project management. •Budget risk reduction through financial plan tracking. •Daily operations impact limited as tightly managed resources are freed up to perform daily tasks. All business locations identified and covered through the project plan. A properly planned and deployed upgrade, using a combination of internal and partner resources, will achieve these benefits.

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