BUILDING A FOUNDATION FOR INNOVATION
By Tayo Ibikunle, Tech Fellow and Head of Enterprise Architecture for Aladdin & Adam Schlesinger, Investments & Trading for Aladdin Engineering
Source: Institutional Investor's Tech Futures Survey 2024
ALADDIN INNOVATIONS Managing tech debt is an integral part of Aladdin® product and engineering lifecycles—enabling us to leverage emerging technology and, ultimately, derive even more value for clients and stay ahead of the continuous pace of change.
The Aladdin Value Engineering team was established in 2023 and acts as a partner for prospective and existing clients as they align corporate and tech strategy goals and tackle tech debt head on. As strategy veterans who believe in the power of harnessing opportunities for transformation—no matter how small—our goal is to help clients create “change alpha”: increased performance and operating leverage derived from digital transformations and tech-led change management events.
Also in 2023, we migrated the Aladdin® platform’s legacy core portfolio position data service to a high-scale, distributed architecture to deliver significant performance and scale gains, while easing maintenance and overhead. Similarly, we went live with our “Abacus” system for Investment Compliance to deliver meaningful performance improvements—while retiring associated legacy applications.
In 2023, we shifted eFront® Invest to a modern SaaS delivery model, in line with our Aladdin product suite. In 2024, all new client implementation will be in SaaS mode, as we also bring existing clients to the new model, enabling them to quickly access new features—allowing us to retire legacy versions.
For some business stakeholders, technical debt is a line item on a balance sheet: a single cost, or tax, for delivering business services using dated or suboptimal technology.
The reality, however, is far more complex.
Tech debt is a massive execution risk that can stymie an organization's capacity for supplying market-leading solutions today and in the future. In other words, if you’re not identifying, assessing, and monitoring your tech debt, you’re endangering your firm’s potential for transformation and success.
To be clear, every firm faces this challenge.
From building on top of legacy code and systems to pushing engineering work that falls short of industry standards and best practices, tech debt is anywhere and everywhere. No firm is immune to aging technological infrastructure in the face of fast-paced innovation.
But it does take discipline to assess the level of tech debt and develop and apply strategies to make sure it does not get out of control, which can result in adverse business outcomes—such as limiting an organization’s ability to innovate or increasing its reputational risk with clients who depend on the underlying tech capability.
The effective management of tech debt must consider a diverse range of priorities, assumptions, and risks. It affects every team’s ability to deliver client value. Across the financial services landscape, for example, firms must assess what’s most critical is maintaining their flexibility for integrating new tech (such as cloud and AI) and ensuring resilience against shifting factors like market swings and security threats.
When thinking about managing tech debt, it’s important to focus on four characteristics of software quality: security, reliability, efficiency, and maintainability. How does each line of code—really, each technology decision—impact the platform? From data storage and databases to APIs and business logic, thoughtfully making choices that can limit the rapid accumulation of tech debt is a first-class practice.
Choosing how to approach tech debt comes down to a series of tradeoffs: should a team use its constrained budget to add new features, address risks, or manage technical debt?
Continually maintaining and modernizing technology implies eliminating high operating risks and security vulnerabilities, retiring old systems, building loosely coupled systems. It’s also crucial to avoid the accumulation of tech debt before it becomes unmanageable and extremely expensive to pay off.
As firms continue to advance their practices of managing these challenges, an effective strategy for managing it helps avoid productivity loss—and enables them to position themselves as industry leaders.
Risk management
Data management
Portfolio management
