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How to switch back-office suppliers smoothly

Changing back-office suppliers is not a simple task. Differences in database schemas, platforms, user interfaces and external links can present a number of challenges. I hope this article will help you address some of these issues and smooth the transition if you decide to make the move.

Manage the data transition

Unfortunately, there is no standard for back-office databases, although there are some common areas between suppliers.

What data are you able to extract from the old system, in what format and what tools or services are available to input that data into the new system?

Do not forget your documents too, as these are often stored separately from the database.

In a perfect world, something akin to platform re-registration would be available to move clients transparently from one system to another.

In practice, you should expect a data loss, only transferring a subset of your core data and picking up the difference at subsequent client reviews.

It is not unusual to retain a small number of licences on the old system after the move to access data that could not be brought over while the new system catches up. Dovetailing the transition will reduce your risk substantially.

Choose your platform

Systems are either offered online as a website where the supplier hosts the database and application or offline where you provide the hosting.

Each option presents different problems. Offline systems require you to put in place your own servers and system support, which is fine if you have existing IT support but more difficult if you are a smaller firm with limited technology experience.

Online systems include the hosting and systems support but you have less control over your data.

A third alternative is the hosted desktop where your entire desktop is moved online for all of your applications. It ticks more boxes and is much easier to manage for bigger organisations but tends to cost more.

Train your users

You will need to factor in the time and cost of retraining staff to use the new system, including the opportunity costs of taking them off the job. This may be exacerbated if your users are spread out geographically. Suppliers typically offer training courses at a centralised location. For bigger firms, train-the trainer may be more economical and effective.

Ensure you have the integrations you need

Different systems support different links to research tools, providers, portals, valuation and e-business services. Check the new system has the ones you need as there is quite a range in the services supported by the systems on offer.

Put effective user support in place

Check who will provide first-line support. If your old supplier did and the new one does not, you will need to factor in staff costs to support users. Do not assume your IT staff will be suitable, they may understand the technology in detail but not necessarily the advice process and that is often the type of enquiry you will get.

Assess the full lifecycle costs of the new system

Finally, remember to factor in all the costs of the move. These include the old system exit costs, transition costs, new system running costs, and do not forget the new system exit costs too, as you may want to move again at some point.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. There is an alternative online solution as supplied by Plum. We host thhe data on 2 servers in 2 separate locations, you have your own database and we send the encrypted backup to you each month so that you can have a complete backup history. As we do not charge for space, we also encourage you to scan all documents into the software so that you can see the less-paper office from any location including on your iPAD.

    As for down time, we have 3 ISPs and most IFAs have 2 options so I have never seen it as a problem. We also give advice on speed of broadband which is mainly necessary for scanning and printing.

  2. PLEASE MAY I CHANGE MY RESPONSE
    Good article Eddie but it ignores one crucial point – the need to check the costs and hassle associated with switching before you choose a back office system. If the back office provider can’t or won’t be transparent about what happens if you want to leave – you should reconsider the decision to go with them.
    IFAs need to be wary of hidden charges levied by some suppliers when they try to move systems. We recently started working with a firm of wealth managers who were being charged to extract their own client data in order to switch to Plum. We believe this to be unfair – and it is not something we practice.
    All back office systems have merits and downsides – but all should be transparent about what you’re getting, what you’re paying and what it will take (and cost!) to move system.
    Ann Dempster, MD, Plum Software

  3. Good article Eddie but it ignores one crucial point – the need to check the costs and hassle associated with switching before you choose a back office system. If the back office provider can’t or won’t be transparent about what happens if you want to leave, you should reconsider the decision to go with them.

    IFAs need to be wary of hidden charges levied by some suppliers when they try to move systems.
    We recently started working with a firm of wealth managers who were being charged to extract their own client data in order to switch to Plum. We believe this to be unfair – and it is not something we practice.

    All back office systems have merits and downsides – but all should be transparent about what you’re getting, what you’re paying and what it will take (and cost!) to move system.

  4. Hi Ann, I do mention the “new system exit costs” so yes Advisers must consider all associated costs throughout the lifetime of the system they are moving to.

    I’m glad to hear that you don’t charge for the data extract on exit, it does seem to vary between suppliers, but the norm on the Internet seems to be free and self-serve (Google docs, Salesforce, Mailchimp etc).

    However the greater issue is compatibility between the different systems so that even if you get your data extract for free, you may not be able to upload it all into the new system in a meaningful way that can be accessed from the user interface. This is unfortunately just a product of having so many systems that have evolved over time using different database schemas.

    The real question is do back office suppliers have an appetite and the resources to set a standard and make switching easier?

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