Outsourcing client reporting is not a decision investment management firms should make lightly. It involves ceding operational control of a client-facing process to an external provider, committing to a service agreement, and trusting that the provider’s platform and team will deliver to the standard your clients expect.
But the traditional alternative – building and maintaining reporting capability in-house – carries its own costs, risks and limitations.
There is also a third option. Rather than outsourcing the production of client reports, firms can outsource the reporting platform itself. Under a Reporting as a Service model, the investment manager retains control of the reporting process, commentary and client relationships, while a specialist provider is responsible for developing, maintaining and supporting the reporting system. This allows firms to benefit from specialist expertise, continuous platform improvements and economies of scale without giving up operational control.
The third option: Reporting as a Service
Many firms assume they must choose between building everything themselves or handing reporting to an outsourcing provider. In reality, there is a middle ground.
With Reporting as a Service (RaaS), the reporting platform is managed by specialists, while your team continues to own the reporting process. Your staff still produce reports, review content, add commentary and deliver your reports to your clients. What changes is who is responsible for maintaining the underlying technology.
This approach combines many of the advantages of outsourcing with the control of an in-house model:
- your reporting platform is maintained by specialists rather than internal IT resources
- enhancements are delivered continuously without requiring your own development or project teams
- integrations with your systems and your third parties are maintained by experts
- infrastructure, security and resilience are managed professionally
- costs are shared across multiple firms, allowing each client to benefit from economies of scale that would be difficult to achieve independently.
For many firms, this delivers a better balance between operational control and technological capability than either fully insourcing or fully outsourcing reporting production.
Signs that outsourcing makes sense
There are specific situations where outsourcing client reporting tends to deliver clear value.
Your current process does not scale. If producing 200 reports a quarter is already stressful, what happens at 500? Manual reporting processes scale with headcount, not with technology. If your growth ambitions outpace your willingness to hire more reporting staff, an outsourced service is worth serious consideration.
You have key-person risk. If the departure of one or two people would put your reporting capability at risk, the operational fragility of your current model is already a problem.
Your error rate is too high. If you are regularly sending corrections to clients, or if your review process catches a concerning number of errors before distribution, your current process is not working efficiently.
Reports are consistently late. Lateness is usually a symptom of a process problem – typically commentary bottlenecks, data quality issues, or manual processes existing in what should be a fully automated process. A modern reporting platform with a flexible production workflow addresses all three.
Regulatory requirements are straining your team. Keeping up with updates and changes to regulatory requirements is a significant burden for an in-house team that is primarily focused on production, not compliance monitoring.
Signs that keeping it in-house makes more sense
Outsourcing the reporting process is not always the answer due to the fact you lose an element of control while still retaining the responsibility for the reports. In-house report production is the better model as you retain direct control over the reporting process and the direct contact with your clients.
Modern, flexible, and scalable reporting systems, such as Opus Nebula’s Reporting as a Service SaaS solution, provide investment firms with the perfect solution: the technology platform and reporting system outsourced to a best-in-class provider, and retaining direct control over the report production and distribution process to your clients. The high level of automation within the system allows investment firms to generate huge production efficiencies and improve their reporting outputs.
The question firms usually forget to ask
Most firms focus on the direct cost comparison: what does outsourcing cost versus what does in-house cost? This is a reasonable starting point but it misses the full picture.
The complete comparison should include: the management time your senior team currently spends on reporting problems, the commercial cost of late or inaccurate reports reaching clients, the cost of maintaining and developing the technology required to bring your in-house capability up to the standard of a modern reporting system, and the risk cost of the current process – including key-person risk, operational risk and regulatory risk.
The Reporting as a Service model enables investment firms to reduce the total cost of ownership of their reporting capability by sharing the costs of platform development, infrastructure, maintenance and ongoing enhancement across multiple clients. This provides access to enterprise-grade reporting technology and specialist expertise at a significantly lower cost than building and supporting equivalent capabilities in-house.
A practical test
Here is a straightforward test. If you answer no to any of the following questions, outsourcing is likely worth at least a serious evaluation.
- Do your current reports exactly match your clients’ requirements, in all cases?
- Can your current system scale to produce the volumes of reports required now and in the future, within the required timescales?
- Can your existing reporting system extend and evolve to easily accommodate new requirements from external clients and internal teams?
- Is your reporting team able to fully manage and control the reporting process and tailor reports to individual client’s requirements?
- Are your reporting costs increasing, and is this acceptable to the business?
- Is your current reporting system sufficiently flexible that client specific requirements can be simply accommodated with the click of a mouse?
- Does your current reporting system get updated each 3 months to deliver the latest features and functions to all users?
What to look for in a provider
If you decide to evaluate outsourced reporting options, focus on four things:
- The provider’s track record with firms of your type and size, talk to their existing clients
- The quality and flexibility of their reporting platform, to support you now and in the future
- The strength of their data integration capability
- Their commitment to quality and client servicing
The real decision is: what to outsource?
The important question is not whether reporting should be outsourced at all, but which parts of the reporting process create value for your business.
Most investment firms want to retain ownership of client relationships, report content and quality assurance. Few want to dedicate internal resources to maintaining reporting software, managing integrations or continually updating technology. Due to the high levels of automation and the flexibility of a reporting system such as that provided by Opus Nebula, your reporting team would typically manage and produce more detailed reports, more sophisticated reports, and in greater volumes – without any increase in head count.
For many firms, Reporting as a Service provides the best of both approaches: your team continues to operate the reporting process, while specialists ensure the platform remains secure, modern and continually improving and evolving to accommodate all your current and future requirements.
Frequently asked questions
Can you outsource some of your reporting and keep other parts in-house?
Yes. Many firms start by outsourcing production of a specific report type – fund factsheets, for example – while retaining in-house production of other reports. This hybrid approach is a reasonable way to evaluate a provider without fully committing your entire reporting operation.
How do you maintain client confidentiality when outsourcing any parts of the reporting process?
Through data processing agreements and the provider’s information security framework. A reputable reporting provider will be able to demonstrate ISO 27001 certification or equivalent, and will have clear contractual obligations around security, privacy, data handling, storage and access controls. Review these carefully before signing any service agreement.
Does outsourcing reporting reduce your regulatory responsibility?
No. Regulatory responsibility for the content and accuracy of client communications remains with the authorised firm.