Software not asset managers` priority
South African asset management firms are not giving enough thought to software development and local graduates do not exhibit the required software discipline, says Tim Gebbie, head of quantitative equity research at Futuregrowth.
Gebbie made these remarks during his presentation at the Software Engineering Colloquium in Cape Town last week. The colloquium`s aim is to encourage coordination within the South African software development community to make it globally competitive.
He says the local financial services industry is not geared to stave off a disaster like that of US oil-trading firm Enron, which led to the largest bankruptcy in that country`s history and the demise of long-established accounting firm Arthur Andersen.
However, he says the chances of such a disaster actually happening in this country are slight, if not impossible.
Gebbie says that in Enron`s case, each of its divisions was encouraged to have its own IT department, which led to uncoordinated development and implementation. "In fact, the divisional IT departments were not encouraged to have much to do with each other."
According to Gebbie, software used in the financial services industry is a vital part of corporate governance, "as a fund manager must be able to prove that if he, or she, hits a certain button, a trader will execute a deal that falls in line with a certain investment model that has been approved by the client".
This means that often the fund managers, which administer investment funds, the financial analysts, who do the research on investments, and quantitative analysts, who develop the investment models using raw data, have to develop their own software to meet their own companies` needs.
"Outsourcing this development is not an option because once the specification has been drawn up and agreed to, the investment market situation has moved," Gebbie says.
He also says this is not the job of an asset manager`s in-house IT department, whose main role is to co-ordinate the testing and distribution of this software development.
"A large problem is that commerce and some science graduates often do not have the requisite software discipline or skills. For instance, we have had some graduates who think the GUI [graphic user interface] is the software," Gebbie says.
The pressure on asset managers` IT departments to roll-out software as soon as possible in order to meet return on investment needs also means that it is not tested, or scoped, properly.
The Software Engineering Colloquium`s next session will be held in Johannesburg tomorrow.