Navigant Consulting with Independent Franchise Partners There can't be many clients who take out ads in the Financial Times and the Wall Street Journal to thank the consultants they have worked with, but Independent Franchise Partners (IFP) did just that. Its bosses must have been pretty chuffed with the help they received in setting up the business.
To most people, the middle of a financial crisis would not seem the best moment to launch a new investment company. But to Hassan Elmasry, a fund manager at Morgan Stanley, April 2009 seemed the perfect time. With so many markets in turmoil, his strategy was highly specific: to invest only in franchise businesses with either a global or a US footprint. But he didn't want to get distracted by the administrative burden of setting up and running what he hoped would become a sizeable business.
Elmasry needed an infrastructure that could handle rapid growth but would not commit him to high fixed costs. While minimising bureaucracy, he also needed to be able to demonstrate to would-be clients that this was a solid and well-run business. And he had to achieve all of this quickly: success would depend on offering clients continuity, so their track record in investment success was not interrupted.
The brief to Navigant Consulting, which has a specialist investment management team, was simple: to help define IFP's business model, developing the specific requirements for it and implementing them. Navigant's plan was to develop an operating model that would allow IFP to focus on its primary business - managing money - from day one.
From initial discussions, it became evident that outsourcing non-core components of that model would be critical. Navigant had to move quickly to assess potential suppliers' appetite for such a deal and their capability to set up the operation within IFP's ambitious timescales. Although this design model looked to the longterm, IFP also needed help in the short term, putting in place systems and processes that would support the business when it launched in the mid-June.
Says chief operating officer John Kelly-Jones: 'Navigant helped us design our selection criteria, identify possible suppliers and then negotiate the terms with them. They established key performance indicators and service levels for the contract, and put in place the monitoring and control procedures, so that we have the appropriate oversight going forward.'
Navigant looked at four possible suppliers, holding intensive workshops with each. The consultants were virtually locked in a room with each supplier for a day, assessing the services they provide and their ability to take on Franchise Partners' business within the deadline. From there, they whittled the shortlist down to two preferred suppliers, eventually selecting Northern Trust. It's a process that typically takes months.
While putting together the long-term operating model for IFP, the Navigant team also provided an interim solution that involved not only the design of processes and oversight controls but also the development of a tactical front-office system solution.
In all, three consultants from Navigant worked on the project for more than five months. Once the core operating model was defined and the supplier relationship established, the Navigant team turned to preparing for implementation of the tactical solution, helping establish contingency plans and working towards a second-stage launch to add scalability and further automation.
The contract with Northern Trust began in June and has already proved its worth. In that month, IFP signed its first client, a large Australian bank, and now has six major clients and assets under management approaching $1bn.
'We started with a blank sheet of paper, and three months later had a full-fledged asset management business,' says Elmasry. 'We simply couldn't have done this without Navigant's help.
'With assets of seven clients under management, and a further seven whose business we hope to win in the next two months, Navigant's work has helped us to create a solid infrastructure and a platform for growth,' he adds.
'In particular, the deal with Northern Trust will allow us to expand without having to take on dozens of new people.'
Keen to get the investment ball rolling, IFP asked Navigant to build it an infrastructure that would allow fast growth without high cost commitments, and yet stand scrutiny as a solid enterprise to prospective clients from the start. Navigant's business model let IFP focus on money management while non-core functions were outsourced. After a brief but rigorous trawl, Navigant identified an outsourcing partner that left IFP free to progress to a full-fledged asset management business with a growing client list and close to $1bn under management.
- Don't reinvent the wheel - build flexible tools that work in a variety of circumstances.
- Use interim solutions for ultimate speed. When facing impossible deadlines, a temporary quick fix can buy time to build a better, long-term system.
- Don't be fazed - there's always a way forward if you look hard enough.