Order Management Systems (OMS) play a significant role in successful investment middle office operations. OMS providers have expanded their capabilities to support more post-trade activities meaning the choice of front office technology can substantially affect middle office workflows and access to quality, timely investment data.

It’s important to consider the trade-offs between the two OMS strategies:

• Multiple OMS platforms can give investment teams optionality and specialization but also drive middle office cost and complexity. This can lead to duplicative platforms and functions, creating disparate workflows and data sources.
• Single OMS platform offers simplicity and connectivity. The key is to identify the platform that’s most able to support required asset classes, transactions and lifecycle events for current and future needs.

“When it comes to transforming middle office services, the right fit makes all the difference. End-to-end alignment across people, process and technology is often a key determinant of success,” said Scott Bevier, Global Head of Investment Operations Solutions and Co-Head of Americas Securities Services Sales.

The decision to use an in-house or outsourced service model takes many factors into account but either path remains complex to execute.

Insourcing gives the asset manager more control over efficiency levels and operational performance, but requires ongoing technology maintenance, client and partner integrations and adjustments as markets evolve. Despite setting up operations in high value, low-cost locations, many have discovered limited upside in the face of organizational complexity and management overhead. 

It's no wonder then, that outsourcing is becoming more attractive to investment firms. In 2022, nearly one-third of investment firms looked into outsourcing their middle office — up from 17% in 2017⁴. When a service provider has the global scale to handle essential investment operations functions, the manager can focus on their own strategic priorities. The investment firms further benefit from managed technology, shared risk and the ability to shift to a variable cost business model. 

Since the outsourcing model has moved beyond the traditional copy and paste approach, asset managers are ultimately choosing between the types of platform solutions in the marketplace.

• A software provider solution is an emerging option that leverages the OMS investment by using a platform vendor that offers technical resources and expertise in addition to their core software licensing.
• The service provider solution is more mature and prevalent among institutions using multiple OMSs or preferring to diversify across providers. The asset manager accesses the providers’ infrastructure for the technology, market connectivity and operational expertise needed to support their business.