How can you be sure your chosen software will meet your asset management firm’s needs?
Unless you’ve tested it, the reality is that you can’t.
All too often, a solution’s drawbacks and limitations only become apparent during the latter stages of a digital transformation project. So while, on paper, a vendor might tick all the right boxes, there’s still a risk things might not turn out as you’d hoped.
Needless to say, once you’ve invested a significant chunk of your resources into integrating new technology into your workflow, it’s difficult — and, sometimes, impossible — to course-correct, even if you realise the software isn’t actually a good fit. And this is why a proof of concept is such a critical part of the vendor selection process.
In this post, we’ll take a deep dive into proofs of concept — what they are and their key benefits — and show you how to use them to quickly understand whether a fintech vendor is truly a good fit for your requirements.
What’s a proof of concept?
A proof of concept is a small-scale deployment, typically with a limited set of features and for a simple, self-contained use case. Its goal is to see how the technology performs in a practical setting and, so, to find out whether it can effectively address the issues you’re looking to solve.
It’s useful to think of this as the digital transformation equivalent of a test drive.
Say you’re thinking of buying a Jaguar or a Tesla.
Your first step will probably be due diligence, including reading online reviews and speaking to family members or friends who own one.
But while any information you manage to glean will undoubtedly help you get a feel for whether the car is right for you, nothing compares to getting behind the wheel and taking it out for a spin.
Even if you just drive around the block, you’ll be able to experience first-hand how the car handles and performs, and make a better-informed decision.
Similarly, a proof of concept enables you to see how a piece of software behaves under controlled conditions.
This has three compelling benefits.
1. Evaluate feasibility before you’re in too deep
The importance of working with the right vendor seems obvious, but the wrong choice of software is one of the most common reasons digital transformation projects fail or fall short.
Does the software address your organisation’s pain points effectively?
And, if not, would tweaking the software be enough, or would it be more cost-effective to go with a different vendor altogether?
Answering these questions with a degree of certainty could save your firm huge amounts of money (and grief) down the line.
A proof of concept can also expose implementation issues you might come across during the project, so you can get in front of them and stay on track.
2. Strengthen your business case
While digital transformation remains a top priority for asset managers in 2023, the turbulent economic situation means there’s more pressure than ever to make every penny count.
Can the software really deliver a measurable return on investment? After how long? And how much time and effort will implementation require?
As Santander CIB’s former head of internal control Gonzalo Hurtado observes: ‘Unless people at all levels are convinced that change will be an improvement, a project is unlikely to succeed.’
A successful proof of concept leaves no doubt as to the value of the investment, and can help sway decision-makers who are still on the fence.
3. Increase end-user buy-in
The success or failure of a digital transformation project ultimately rests on end-users.
For starters, they’re typically the ones who will have to work with your vendor throughout the implementation process. Which means they have a critical role in seeing the project through: a role they need to fulfil alongside their already busy schedules.
More to the point, you’ll only get value out of the new software if your end-users actually use it. For this to happen, the software has to actually make their lives easier, not force them to work around its limitations.
From this perspective, a proof of concept is an opportunity to demonstrate what the new way of working will look like, and how it’ll be an improvement on the way things are currently done.
You’ll also get valuable feedback from end-users that will improve the odds of the project succeeding.
Setting the right parameters: Our 3 top tips for getting the most out of a proof of concept
While a proof of concept can be extremely beneficial, it needs to be planned properly and measured sensibly. Otherwise, it risks leaving you with more questions than answers.
Here’s how you can make the most of the process, plus some common pitfalls to avoid.
1. Define your outcomes ahead of time
The point of a proof of concept isn’t to show off the extent of the software’s capabilities, or to achieve gold standard implementation, but to get a feel for how it would slot into your organisation.
Will it be able to do what you need it to do efficiently and effectively?
And, more importantly, would using it to perform these tasks have measurable benefits for your firm, such as time-savings, cost-savings, and increased data accuracy?
With this in mind, it’s absolutely crucial to establish what success will look like before you kickstart the process. What will the proof of concept actually prove? And how does this proof help your firm?
At Fundipedia, we typically start by making a list of criteria we’ll use to evaluate success. Each criterion has an overarching goal, together with a checklist that helps measure to what extent we’ve hit that goal.
We also link each goal to one or more specific use cases. These show the practical ways in which the firm can implement the criteria we’ve proven.
Let’s say one of the success criteria is proving that the software can reach a certain standard of security. Here, the use case might be the ability to set different permission levels for staff members depending on seniority.
2. Put the right resources in place
A proof of concept isn’t a full-scale digital transformation project — nor is it intended to be one. But the vendor will still need your input for the exercise to be worthwhile.
Asif Abbasi, an experienced enterprise architect and big data consultant, observes that when proofs of concept fail, it often ‘cannot be attributed to any particular technology… [but it’s] a communication or planning problem.’
Put another way, unless you work with your vendor and make sure they have what they need at their disposal, you’re unlikely to achieve the results you were hoping for.
At Fundipedia, we recommend setting time aside for regular status updates so you can make sure everyone stays on the same page, track progress, and get in front of any issues before they put the project at risk.
It’s also a good idea to work out operational issues at the outset. In particular:
- Does the vendor need to go through security checks or other onboarding processes before the project start date?
- Are there any technical issues — poor quality data, for instance — that need to be addressed before the proof of concept can begin?
- Who on your team will be working with the vendor on the proof of concept? And do they have other responsibilities that might make them unavailable or unable to dedicate enough time to the project?
- Who will be taking ownership of the project, liaising between different departments, and helping your vendor troubleshoot issues?
3. Set a clear end point
At the end of the day, a proof of concept is an experiment, so giving it an end-date is critical.
Assuming things go as you’ve intended them to, the end-date will be the date on which you establish you’ve hit the goals you’ve set out to achieve.
But, just as important, you should have an exit strategy in case it becomes clear that the proof of concept isn’t going to work out. A set of clear, objective criteria that determine when you should call things off will save you, your staff, and the vendor time, effort, and unnecessary awkwardness.
Digital transformation is a huge investment. Don’t leave success to chance
With the average digital transformation project already taking around 36 months to complete — and that’s if there are no issues — it’s tempting to do away with a proof of concept.
But while it’s true that it can be a time-consuming, resource-heavy process in its own right, the benefits far outweigh the costs.
A proof of concept demonstrates whether the project has potential, gives you a deeper understanding of your vendor’s strengths and weaknesses, and, most significantly, helps you glean valuable insights you can use to give your project a better chance of success.
Why take a leap into the dark, when you can stack the deck in your favour?
At Fundipedia, we’ve built a powerful data management platform that helps you save time, work more efficiently, and ensure your data is always accurate (and your firm stays compliant).
Want to see it in action?