How should a SFO start a selection process for a software solution or platform?
It is tempting to choose software solutions or platforms based on recommendations. Who needs a formal and long-lasting selection process when you can get a recommendation from an experienced partner or another single-family office? Unfortunately, this is like buying new shoes. The foot must fit the shoe and vice versa. The software solutions and platforms are as diverse as the single-family offices. Thus, a process is required in which the right shoe is found for your foot.
Consequently, there is no shortcut in the selection process. Shortcuts in the process usually must be paid for bitterly in the later course of the project. This is often associated with greater effort, higher costs and/or leads to significant project delays. In some cases, it even leads to project abortion. Thus, the question that arises is what steps should be followed to ensure that the choice and subsequent implementation is a success.
There is no way around a Request for Proposal
Basically, there are three initial situations: 1) the SFO is being established, 2) an existing SFO that does not yet have a system, or 3) an SFO that has an existing system and wants to replace it for whichever reason.
Although the starting points are fundamentally different, there is no way around a formal requirements specification. If you are in the situation of starting a new SFO, it is certainly worth talking to some single-family offices and preparing a requirement specification based on their experience. In doing so, one should not forget one’s own needs and list them as well. If you already have your own single-family office and have so far chosen not to use specific software solutions for single-family offices, you at least already have processes and certainly some Excel sheets that can serve as a basis for creating the requirement specification.
If you have had your own single-family office for several years and are considering replacing the existing system, you are usually in the comfortable position of having existing processes, knowing the advantages and disadvantages of the current solution, and can therefore draw up requirement specifications with a reasonable amount of effort. Based on my personal experience, it is advisable to work out the specifications in a team and, if you already have existing departments, to include them in the preparation.
Once you have created the specifications, you can send the document to a number of vendors in the form of a Request for Proposal.
Here it is recommended to require the responses to be answered directly in the RfP and to insert corresponding response fields in the document for that. This allows a better comparison of the answers of the different providers once you received their feedback.
Selection process
The decision for a software solution or a platform is a decision of great consequence for a single-family office. It influences the efficiency, the quality, the cost structure and to a certain extent also the employee satisfaction. In addition, core
systems can often not be replaced overnight since the entire process landscape of the single-family office is geared to this. Consequently, it is worthwhile to take the necessary time during the selection process. It is recommended to visit the software vendor on site to get a feeling for the team and to better assess the company. Once a software solution has been chosen, most tend to rush into contract negotiations and start implementing the solution as quickly as possible. At this point, it is best to pause and first perform a detailed gap analysis.
Implementation
Throughout the preliminary project, it is important to involve the team in the process. At the latest during implementation, you must rely on their support. If you force a system on a team, this can often lead to major problems during implementation. These hurdles sometimes lead to project abortion, for example, because the team wants to stick with the existing system and/or is not convinced by the new system because they were not sufficiently involved in the selection process.
Even if you perform an accurate gap analysis, there is still a chance that you will encounter challenges that you missed or could not detect. Therefore, it is recommended to allow sufficient time for the project. In addition, it is important to keep in mind that in existing single-family offices, the day-to-day business of the project still needs to be managed. This double burden must be taken into account in the planning for implementation.
If you are also replacing an existing system as part of the implementation, you are inevitably faced with data migration. This project phase should be given due attention and sufficiently staffed.
Go-live
If you have an existing system in use, it is worthwhile to run it in parallel for a few weeks up to a maximum of three months. Again, the double workload for the personnel must be taken into account. Consequently, this should not be unnecessarily prolonged.
The provider often requires written acceptance of the solution. Here, too, one should wait at least a few weeks before releasing the provider from his obligation in the context of the implementation.
Cost
A system is a significant cost for any company. However, I am convinced that the additional costs are worth it for every single-family office. Continuous improvement, quality and efficiency increase are obvious advantages. Especially in the case of personnel changes, often only the former employee can operate the extensive Excel solutions. The new employee is then often faced with a shamble and must start again from scratch to build a new solution.
External support
Depending on the size of the single-family office and its internal experience, it may be worthwhile to call in external support for the selection process and, if necessary, also for project management. This inevitably leads to additional and direct costs. However, it can save you from unpleasant surprises if you have the experience of a proven specialist at your side.
Summary
Changing systems, or the process when choosing a solution for the first time, is not a simple undertaking for any company. Allow sufficient time for this process. Do not be rushed by the various vendors. You set the pace. Especially for the preliminary project - before you have signed the contract for the implementation
\- you should allow enough time. Experience shows that all projects take exactly the same amount of time. However, there is a significant difference on the cost side and in employee satisfaction.
In addition, include the team in the decisionmaking process. Afterwards, during implementation, the support of the team is indispensable and a key success factor for any project.
A system change or the initial implementation of a new solution is a herculean task and a certain tolerance for frustration is required from everyone. To accomplish this goal, it may be worthwhile to call in external support, as mentioned above.
All the best for your upcoming project!
