Eighty-four percent of senior managers at fund companies and fund administrators are concerned that manual processes are affecting their ability to control errors, according to a study released today by software company Confluence. The survey had 115 respondents, 40% of them C-level executives."A large portion of fund back-office work is still being done manually and there's a lot of concern in the industry over data accuracy and scalability," says Kirk Botula, chief operating officer of Confluence. "When we looked at why people were pursuing technology, it was surprising that the principal driver seemed to be eliminating risk through manual error because conventionally, people think of automation as a cost-saving play."

Seventy-seven percent of respondents expressed concern that manual processes affect their ability to meet reporting deadlines. Spreadsheets were found to be very pervasive: 26% of respondents said they use spreadsheets for more than half their fund administration processes, another 25% say they rely on them for a quarter to half of their processes. "People want to reduce this, and this concern about data quality comports with a Coopers & Lybrand study that found that 90% of spreadsheets with more than 150 rows of data contained errors," Botula says.

On the topic of data consolidation, the survey found that 52% of respondents plan to centralize fund administration data in next 12 months. "That surprised us, the sense of urgency that implies," Botula says. Sixty-two percent of respondents selected "replace manual processes with technology" as their goal in the next year or two, the most-mentioned goal, to minimize risk, improve scalability and reduce operating costs.

While many firms automate certain functions, such as shareholder accounting, others, such as preparing financial statements; holdings, performance, and pricing reports; documentation to support post-trade compliance; benchmarking calculations; and investor marketing reports are often manual. "It's like taking a train but then being asked to jump off and pedal your way away from the station on a unicycle," Botula says.