Operational Alpha: Moving beyond the spreadsheet to secure a competitive edge

In today’s markets, spreadsheets are holding investment firms back. Our insight explores how asset managers can unlock operational alpha by replacing manual, error-prone workflows with an integrated Portfolio and Order Management System (P/OMS). 

• Spreadsheets create operational drag — manual processes increase errors, limit scalability, and hinder real-time insight.
• Integrated P/OMS transforms operations — automating compliance and analytics eliminates risk and unlocks efficiency.
• LSEG’s ecosystem delivers true operational alpha — lowering total cost of ownership while enabling faster, smarter decisions.

In the pursuit of alpha, investment firms rightly focus on sophisticated strategies, rigorous research, and market insight. Yet, for a surprising number of asset managers, the most significant drag on performance is not found in the market, but within their own operational workflows. The source of this friction is often the ubiquitous spreadsheet, a tool that, while versatile, creates a ceiling on efficiency, scalability, and risk management when used as the backbone of institutional portfolio management.

This reliance on a patchwork of spreadsheets and manual processes introduces a persistent operational risk that can no longer be ignored. In an environment of increasing market complexity, regulatory scrutiny, and client demands, firms that fail to invest in a robust operational infrastructure are not just risking inefficiency; they are actively jeopardising their ability to compete and grow. The transition from these fragile, manual systems to an integrated Portfolio and Order Management System (P/OMS) is no longer a luxury, but a strategic imperative.

The appeal of the spreadsheet is its familiarity and flexibility. However, this flexibility comes at a steep price, creating hidden costs that manifest across the entire investment lifecycle. The most immediate of these is operational risk. A workflow dependent on manual data entry, complex formulas, and version control via email is inherently prone to human error. A miscalculated order size can lead to a compliance breach, while a position error can result in flawed investment decisions based on an inaccurate view of the portfolio.

Beyond the risk of error, this methodology creates a critical lack of real-time visibility. Portfolio managers are forced to make decisions based on data that may be hours, or even a day, out of date. Without a live, accurate view of positions, cash balances, and P&L, the ability to react swiftly to market opportunities or emerging risks is severely compromised. This information lag makes it impossible to answer the most fundamental question with certainty: "What is my true exposure right now?"

Furthermore, a spreadsheet-driven workflow imposes a hard ceiling on scalability. As assets under management grow, new clients are onboarded, or more complex strategies are introduced, the manual processes begin to break down. The operational burden on the team increases exponentially, leading to bottlenecks that stifle growth. For firms seeking to attract institutional capital, the lack of a robust, auditable, and scalable operational framework is a significant red flag during the due diligence process. Reconstructing a trade decision from a chain of emails and spreadsheet versions is a challenge for internal compliance and a serious concern for potential investors.

The solution lies in establishing a single, unified source of truth for all portfolio-related activity. An integrated P/OMS centralises every aspect of the investment process, from analytics and modelling to compliance and order generation, creating a seamless and resilient workflow. This consolidation immediately eliminates the reconciliation challenges and data integrity issues that plague manual systems.

A key benefit of this transition is the embedding of proactive, pre-trade compliance. Instead of relying on post-trade checks to catch errors, a modern P/OMS integrates the firm’s entire rulebook - including client mandates, internal limits, and regulatory constraints - directly into the pre-trade workflow. Any potential breach is flagged and prevented before an order is ever sent to the trading desk. This transforms compliance from a reactive, forensic function into a proactive, preventative safeguard that protects both the firm and its clients.

This integrated environment also serves as a powerful decision-support tool. Portfolio managers can model trades and rebalances with precision, instantly viewing the potential impact on the portfolio's composition, risk profile, and P&L. The ability to generate orders based on sophisticated criteria, such as a percentage of NAV, and see the real-time status of those orders through to execution provides a level of control and confidence that is simply unattainable with spreadsheets.