Performance Measurement: Controls, Workflows, and Technology

Mark Goodey, Director, Senior Principal of Investment Analytics, Eagle Investment Systems


Recently, I was fortunate enough to observe a number of thought-provoking presentations and panel discussions as chair of the FTF Performance Measurement Americas Forum in New York. In reflection of the event, I’ve highlighted some of the key themes I found most impactful.

Improved Controls
Performance teams are under increasing pressure from internal audit teams—and, more importantly, external regulatory bodies—to ensure their data is passed through comprehensive control processing. Once validated, the data is deemed reasonably bulletproof in the eyes of consumers. There’s an acceptance that the performance function acts as a safety net for clients and, therefore, needs to act as a data quality feedback loop to other teams across the business. There is a firm ‘quality control’ component to the performance measurement function, requiring significant oversight of data and robust workflows.

Much of the conversation I witnessed centred on the data management challenges for performance teams, as well as the role of manual ‘eyes-on’ processes versus automation. Based on the increase in the volume of data, the sources of data, and the frequency of reporting, it’s apparent that processes and workflows need to be streamlined and the ‘maker-checker-supervisor’ process must be systematised. Ultimately, this comes down to a combination of human and technology processes. It’s essential that exception-based reporting, like that provided by Eagle, replaces manual reconciliation. This solution increases the human operator’s responsibility to supervise and oversee the data by using tools and dashboards to ensure data accuracy and resolve issues as they occur. At Eagle, one of our key considerations, as part of our continual product enhancement, is to enable any number of “checkers” and “supervisors” in the process at any time in order to satisfy regulatory demands. Eagle’s next Performance software release will introduce the ability to have any number of ‘flags’ to evidence a sign off by a stakeholder as part of an approval workflow, this will be audit ready.

Enhanced Workflows
Going hand in hand with controls, workflow was also featured prominently on the agenda and continues to be a theme in the industry at large. Against the rising tide of demands placed on performance teams, improving process workflows that aid operational efficiency is key. Visual cues and ease of use—without nuances and complex user defined processes—is becoming ever more important. Those with unique elements within a proprietary or deployed system will experience the technology debt of user defined process, making both business as usual tasks and upgrades cumbersome.

The foundation for a successful performance solution is consistently reliable data that has been validated and enriched. Management teams should take advantage of the opportunity to advocate for new workflows in order to leverage the efficiencies and new functionality enabled by technology.

However, it’s not about creating workflows for the sake of creating workflows. In fact, ‘dashboard overkill’ needs to be avoided. Instead, workflows should be designed to drive operational efficiencies, enable enhanced management information systems and client reporting. As a result, organisations will be better positioned to respond to new opportunities and demands—both internally and externally.

The Future of Technology
As you might expect, new and emerging technologies were prominently featured on the agenda. During one session, Eagle’s Chief Technology Officer, Steve Taylor, was part of a panel discussion entitled: “Will Big Disruptions Lead to Big Decisions?” The panelists discussed the implications of technology trends, such as artificial intelligence, machine learning, blockchain/distributed ledger, and robotic process automation for performance measurement.

As a performance measurement professional with more than twenty years of experience and now working within a technology company, I can assure you that the impact of technology will be profound and far-reaching. Automation has the potential to fundamentally redefine the role of the performance team. Rather than spending time on measurement and compiling reports, they will be able to focus more attention on analysis and providing new insights that could shape future investment decisions. As an example, at Eagle we are already demonstrating the use of natural language generation technology to generate client-ready commentary.

The speed technology is evolving is tremendous, and the potential for performance teams is huge. One panellist noted their eagerness to see practical examples of how artificial intelligence will be used in risk and performance; I suspect he won’t have to wait very long.

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