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CONTACT: Andrea Obston
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(860) 653-2712 (home)
aobston@aomc.com

The Keys to Upgrading Your Investment Software Successfully

PORTLAND, OR, Jan. 16, 2009 -- Like it or not, May is coming and with it comes the yearly crop of new software upgrades. This annual "tradition" is something that no one, in either the business units or IT, looks forward to.

"There's a giant crevice between the IT people and business people when it comes to these upgrades and it opens up with every new release," points out Doug Sheehan, president of Investment Conversions & Consulting, Inc. (ICC). "The business people think, 'It's just like getting a new version of Word. It's not that big a deal.' But the IT people know it's a lot bigger than that. They understand that the company needs to do the upgrade. They also know that means testing the process and the reports it generates to make sure it all still works. There are hundreds of features and functions business people use every day and they expect to use those functions whether or not there's been an upgrade. If you've got a hundred billion of dollars at risk, you can't mess around with this. It could take you weeks to test the system and tie-up three to four people full-time. If you have a staff that is busy managing the day-to-day production of things, this puts a lot of pressure on them."

It is this limitation of resources that makes the upgrades particularly painful. LeeAnn Embry, an ICC systems analyst who handles testing upgrades for the company's clients knows just how frustrating and time-consuming the upgrade function can be. "The major pitfall to this annual event is that companies today only have a limited number of people in their IT and business departments and they are allotted to do daily functions. All companies are lean in today's environment and they can't spare anyone. There's nothing extra in these departments anymore."

Her clients will often ask her why it's not the vendor's jobs to make upgrades work. "When a vendor does an upgrade, they are trying to accommodate yearly FASB changes as well as addressing requests from their customers," she says. "Throughout the year, our clients will often need workarounds for problems they encounter. They'll let the vendor know and the vendor will send these through as fixes. Vendors try to address some of these issues in upgrades. The challenge is that the companies need to test to see if their issues have been successfully addressed. They also need to find out if the new coding has created other problems in the system. I can't tell you the number of times that vendors have made one coding change to address a problem and that change ended up blocking something what worked just fine before."

She also points out that getting an upgrade up and running properly is complicated by tight time-frames that are set in stone. "In investment accounting you are up against the deadline of year-end reporting. Upgrades come in mid-year - usually May or June, although I've had customers that didn't get their upgrades to test until late July. It would be nice if we had three to four months to live with an upgrade before doing year-ends but you don't. You've got to get the system up and running for the third and fourth quarters and then you hope there are no surprises. Release notices usually come just before the package does. As soon as that happens, a company has to pull together a group that can review the release notes to see what the new package contains. Then, they have to decide how much you want to test. It's impossible to test everything that comes out so you have to responsibly evaluate it and try to test as much as you can. You hope you can catch the major issues in that testing."

Are there ways to make these upgrades go smoother? LeeAnn offers these suggestions for taking some of the sting out of the yearly ritual:

The right team makes the difference. Well in advance of an upgrade's release, you'll need to build a team of people with both business and technological knowledge. These people will be responsible for making sure that there will be no surprises in the new release, and that nothing that worked before is broken now. This team will select test cases and run them and review the results. They are the people who need to be able to say, "We can roll this out to the company and it won't be affected negatively."
Team members must be able to devote a substantial amount of their time to the upgrade. "To be effective, members of the team have to be able to devote a least 80 to 100 percent of their time to testing. You can anticipate that this process will last from July to December," says LeeAnn. During one of her recent assignments, she was working on an upgrade for a large international insurance company. They brought in a couple of people to work with me who came from other areas of the company," she recalls. "They worked with the team I was running for five weeks. But then they got pulled back to her regular jobs. That meant all of their test cases had to be redistributed to others on the team. In another case, we had a group of people that was able to devote 100 percent of their time for a few weeks. But once we got into other phases of testing, they were only available 50 percent of the time. You can't make the deadlines with that kind of spotty commitment of resources. Some part of the process is going to suffer."
Give the team authority to cross organization bounds. The natural organization of companies encourages walls between functions and departments. These inevitably hamper the upgrading process. "Organizations have Chinese Walls that they are required to have for audit, control and organization purposes. Unfortunately these walls get in the way of progress," points out Doug Sheehan. "To make the team as efficient as possible you need to give them the ability to cross these walls. The testing of the software requires it. They'll need to confront a variety of issues. Sometimes these will be technical. Sometimes they will relate to business practices. Usually it's a combination of the two. If you can't find a way to cross the lines that separate these two areas, the team will not be effective."
Pinpoint test cases that will mimic the company's day-to-day operations. Use these test cases for regression testing every time you do an upgrade. "If you rely on a library of the same cases each time you upgrade your core processing will at least cover the basics," points out Sheehan. "Even if the vendor upgrades other things, at least you're assured that the system can do the basics that you need."
Remember that an upgrade affects more than the operations area. "You need the upgrade to work for all the people who touch the system in one way or another," points out Sheehan. "You need to involve all the areas of the company that view investments on the system. These could include investment management, investment accounting, trading and settlement, among others. Remember that systems changes have a globalized effect throughout the company. Everyone needs to be able to see the upgrade in action during the testing phase."
Look at the changes the upgrade includes. Vendors respond to customers' requests, but not all requests will make it into an upgrade. You need to determine if the upgrade addresses the changes you need or anticipated. Look at the long-range forecasts you made. Does the upgrade respond to these? Does it take into account the changes on your wish list? Does it include new products or functions you haven't used before? If so, you'll need to test those to make sure they address your needs and produce the reports your people need to see.
Understand that you can't test everything. There could be hundreds of changes in an upgrade package. You can't test 100 percent of them. So, evaluate what's critical for you as a business and test for that. In other words, start by asking "What has to work?" and test for that.
Draw on the testing you're done in the past. Ask yourself "what can I take from last year's testing?" Establish a library of test cases that you use with every upgrade. "You do not need to reinvent the wheel every time an upgrade comes in," says Sheehan.
Report problems to your vendor throughout the year for inclusion in the next update. Are there major items that your people come across throughout the year that routinely require work-arounds? Are there processes that just don't work the way you need them to? Have you added investment instruments that you can't handle under the current system? LeeAnn Embry advises you to pass that information on to your in-house data quality group. "They can look at the problem and decide whether it involves the vendor or if it can be handled in-house. If it's an issue the vendor needs to address, they'll pass it along to them, making next year's upgrade more useful to your business units."

After managing over a dozen upgrades, ICC Systems Analyst LeeAnn Embry has developed a very direct "mantra" that she keeps in mind for each upgrade: "You want to see what you have in the new version. You want to know what to expect from it and you don't want to break anything that works now in the process. I know that's simple to say, but those of us who are veterans of the process know it's not simple to do!"

About ICC

Investment Conversion and Consulting, Inc. (R) (ICC) helps institutional investors implement investment management back-office solutions. ICC has been called the financial industry's "merger veterans", having created and put into play many of the best practices used today in investment accounting systems integrations. Since 1993, they have integrated the investment systems in some of the most high profile mergers in the industry. The firm also offers systems' consulting services support for the investment accounting and operations functions of major insurance companies and other institutional investors. They provide business analysis, technical analysis, software solution recommendation, vendor selection, and improved processes for management and operations. The firm's proprietary software tool, IRDB(R), enhances management and operations related reports for clients. For more information see www.iccinc.com.

About Pendo Systems

Pendo Systems, Inc. is a premier provider of software solutions for global financial institutions. The firm was founded in 2006 to launch a comprehensive solution for the problems that arise with aging legacy-based accounting systems in the financial services sector.

Pendo Systems' core product, BasisPoint(R), is a global enterprise-grade investment accounting engine is rapidly becoming the new standard in Investment accounting system delivery. BasisPoint runs on the Microsoft technology platform including Windows 2003 Server and Microsoft SQL Server 2005 systems. Pendo Systems has offices in Montclair, New Jersey and Bellevue, Washington. For more information

visit www.pendosystems.com.

Media Contact

Andrea Obston (860) 243-1447 (office), (860) 803-1155 (cell),

(860) 653-2712 (home) aobston@aomc.com