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Train of thought

One of the most common mistakes I come across when talking to adviser firms about their technology installations is the failure to properly provide for the cost of training when planning their project. Although software is often presented as being easy to use out of the box, just like any other consumer durable, the reality can be vastly different.

The vast majority of software users benefit from a tiny fraction of what the software they have at their disposal can do.

Imagine buying a car and then always driving in first gear because no one had shown you how to use the clutch. This is directly comparable to the way many firms use software.

Investment in training is one of the best ways to improve productivity within an adviser firm but all too often in my experience it is the first thing to get cut from a software budget when someone is looking to trim costs.

Training is not just important for new systems but also for when packages are updated. I got a personal reminder of this over a recent bank holiday when I wanted to spend some time reviewing a colleague’s document at home.

Although Microsoft may have released their new Vista operating system to the world earlier this year, experience has taught me that it can be imprudent to deploy a new Microsoft operating system to a business environment soon after it has been released.

Invariably, as soon as their products are released to millions of users, thousands of issues start to arise and Microsoft starts fixing them. Personally, I have been caught too many times before when Microsoft has changed something and the new version just does not work. Indeed, there is a strong argument that says you do not think about installing a new Microsoft system until the first “service pack”, the polite name they use for bug fixes, comes out.

Whilst we are not using Vista in our business at the moment, I do have a machine at home that has been upgraded to use it and also have Microsoft Office 2007 loaded.

The intention is to get a feel for what the new products have to offer in advance of the service pack coming along. Because of the licensing arrangement FTRC uses with Microsoft there is no direct additional cost for installing the new software, starting to use it in any detailed way, however, reinforced to me the indirect costs of software ownership.

Microsoft has a major challenge in persuading businesses to upgrade to the new Vista and Office ranges, not least because the predecessors were very good products. I think it has made its life a lot harder by radically changing the user interface for both the operating system and the Office applications.

On this occasion, I wanted to use the track changes function to review a PowerPoint document. The only problem was that the new look and feel of PowerPoint 2007 is so different from its predecessors that I spent about 20 minutes looking for this function before giving up and deciding to use the notes annotations instead.

This reinforced to me that before take a decision to deploy Office 2007 across my business, I need to clearly identify the full extent of the training and familiarisation that will be necessary across all the FTRC team and this is likely to represent a significant cost. How many days will be lost while the staff relearn applications that they are already familiar with?

Training is far from the only additional cost advisers need to be sure to allow for when planning any technology installation. Technical support, maintenance for hardware and software, reliable internet access, virus protection and firewalls, data back up and disaster recovery all need to be provided for. It is generally accepted that software licence cost will typically account for no more than about 10 per cent of the overall cost of implementing a system.

No discussion on the total cost of a system would be complete without raising the issue of data transfer. Where firms have had an existing system and want to move to an alternative supplier, in my experience, there is usually a trade-off that has to be made in terms of leaving some of the old information that the adviser has collected behind.

It is quite normal for the major adviser client management system providers to offer a free transfer of data from the old system to a new one but it is important to be realistic here. If, as an adviser, you are expecting a free service, are you going to get every last item of information migrated? If you really want everything, the chances are that you are probably going to have to pay something to get it moved.

Over the years, I have come across an awful lot of adviser businesses where they have one copy of a former system sitting on a single machine in the corner just in case they ever need it.

In adviser businesses, all too often implementing technology is perceived in terms of what it will cost rather than what it can deliver. Implemented well with the appropriate resources, and especially training, technology can transform an adviser business.

To take one simple example, most of the better client management systems today can deliver the ability to automatically reconcile commission payments from information delivered electronically by life companies and fund management providers. This can drastically reduce the amount of time spent on manual and inevitably error-prone processes, releasing staff for far more productive activity.

Because it will also deliver a more accurate picture of revenues, this can also considerably enhance the capital value of an adviser business. The clearer picture you can give a prospective purchaser of what the business is earning the more they are likely to be willing to pay for it.

Getting technology effectively implemented can transfer an adviser business but to do so effectively it is essential to understand both the full cost of doing so as well as identifying the benefits it will bring.


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