Part 5 PLANNING FOR DATA MIGRATION

White Paper IMPLEMENTING FAMILY OFFICE TECHNOLOGY Implementing Family Office Technology White Paper Series Part 5 PLANNING FOR DATA MIGRATION Data is at the core of the service you provide to your clients. When implementing a new technology platform, transitioning that data to the new system and maintaining its integrity is critical. This is commonly referred to as data migration. This white paper highlights key considerations, pitfalls, and secrets for a successful data migration. 1

Preparing for Change Transitioning your data to a new system is kind of like moving to a new home. While you may be comfortable in your current home, over time your needs for space, amenities, and the overall fit with your life may change. You want a home that better meets your future needs. While there are things in your current home that you will bring with you, some pieces simply may not work in the new space. Ultimately, the benefits of upgrading to the new home far outweigh the loss of those things, but at first it may feel a bit unnerving to let them go. The same is true in moving your data. Chances are most of your data will transfer to your new system, but depending on the format and structure, some things simply won t migrate well. In those cases, you will need to weigh the importance of those data points against the upgraded features, functionality, and reporting capabilities of your new technology platform. If it truly is data you cannot live without (like that chair that s just SO comfortable), you can usually make modifications and manipulate the data to make it work. Your new provider should be able to help you prioritize and plan for the migration to ensure you have all necessary data. What Constitutes a Data Migration Project You have probably managed a data migration project without realizing it. Think about the last time you got a new computer. You had pictures, music, applications, and other programs on your old system. You had to make sure all off this data made it to the new computer. You may have even been part of a larger scale data migration project, such as a CRM database switch in your office. This larger data migration project probably helped you appreciate the complexity of managing many data points and ensuring the smooth transfer of as much data as possible. The Stats... 84% of Data Migration projects fail to meet expectations 67% run over schedule 37% run over budget Regardless of the scale of your migration, the most important thing is to remember that while challenges, problems, and frustrations will most likely present themselves, if you are prepared, you can proactively anticipate and handle any issues to ensure a smooth transition. In the end you will have a system that better manages the complex data you are recording and tracking for your high net worth clients. Why Data Migration Projects Fail According to Informatica, 84% of data migration projects fail to meet expectations, 37% experience budget overruns, and 67% are not delivered on time. While that sounds scary, those issues can be avoided with proper planning. Our experience with hundreds of data migration projects has helped to identify several key areas where problems can arise: 2

White Paper White Paper IMPLEMENTING FAMILY OFFICE TECHNOLOGY Selecting new technology solutions for your family office can be a time consuming and stressful undertaking. But, it doesn t have to be. By taking the time to perform a needs assessment before researching options or talking to providers, you can simplify shopping and ensure you end up with the product most appropriate for your situation. Identifying your needs early in the process will make interacting with providers more meaningful and more enjoyable. 1 IMPLEMENTING FAMILY OFFICE TECHNOLOGY Unrealistic Scope and Expectations See Part 3 of this series - Performing a Needs Analysis for more detail on how to evaluate and document your unique needs. IMPLEMENTING FAMILY OFFICE TECHNOLOGY Part 3 - Performing a Needs Analysis Many family offices presume that 100% of existing data will be migrated. You may want A, B, C, and D, but the provider may tell you that only A, B, and C can migrate over. When you begin the project, perform a Needs Analysis (see part 3 of this series, Performing a Needs Analysis ) to define exactly what the migration process must include. You can also help avoid disappointment by: Talking to your provider to learn what data will migrate to the new system. Keeping comprehensive records. Reviewing the scope with your staff so that all expectations are understood. Being realistic about the required timing. Setting manageable and achievable milestones based on current resources. Visit the Navigator Resource Center at www.finnav.com Communicating changes in resources with your provider so they can help find solutions to keep the project on schedule. Lack of Understanding of Legacy Systems Creating Your Data Migration Plan 1. Assign a project manager. 2. Facilitate an onsite provider visit for a complete download. 3. Know where ALL of your data is located. 4. Send a sample data file from each system to your provider. 5. Create and commit to your timeline. 6. Schedule regular progress updates with your provider. You may be moving to the latest technology, but if your data resides in a program built in the 1980 s (not as uncommon as you might think), the quality of data coming out may not be up to current standards. Technology is always evolving and changing. This means the inner workings of a system, the code, must change as well. Not every software application has the same structure to allow seamless data transfers. Lean on your provider to educate and advise you about what can and cannot be done. They know the best process for getting the data you need. Poorly Defined Budget Expectations Some projects fail early on because budget expectations are not accurately established. Both parties are likely at fault. The technology provider may give an expected spending range based on an initial understanding of the scope, but later find that the situation is more complicated, potentially as a result of information that was not provided by the firm. To be on the safe side, look at the provider s estimate as a starting point. Until the consultant actually gets to dig in to your data and see firsthand what they are dealing with, they cannot accurately calculate all of the time required to deliver the project. Complete disclosure of all pertinent information prior to the start of a data migration project will help minimize the discrepancies here. Incompatible Data Storage The location of your data can sometimes pose a problem for your technology provider. In family offices, data is often stored in Quicken, Quickbooks (or another general ledger program), Excel, or a portfolio management system like Advent. Family office managers often ask, Can you bring all of that data together? I don t want to lose any of my history. Due to the differences in the architecture of all these software platforms, the data cannot simply get consolidated and work. 3

For example, some systems are not true double entry accounting applications, while other advanced applications are. Other providers operate on a proprietary database that doesn t interface with others. The bottom line is that data storage varies from platform to platform. Data can be manipulated or re-entered, but some data is just not worth the trouble. Despite the need to forego some data elements, once the migration project is complete, the tracking, managing, and reporting capabilities of your new system will be well worth the sacrifice. Who is Leading the Charge? A dedicated project manager is critical to the success of any implementation project. Equally important is having the right person in that position. Evaluate your project manager s skill set and determine their strengths and weaknesses. Be sure to have a review and approval process in place with checks and balances in important decision making areas. Evaluate whether you want a junior staffer or senior member of your team guiding this project to completion. And be sure this person is comfortable with technology and has a good knowledge of the finances. This is the individual that will bring the project home for you. Lack of Buy-in and Consensus Many speed bumps in data migration projects are caused by internal resources fighting the process. If the people that work on the system on a daily basis are not included in the evaluation, Needs Analysis, and system selection, they are likely to resist the transition. Integrate your team members early on. Prepare them for the work ahead by fully explaining the benefits of the new system and painting a picture of its role in the firm s future success. Getting everyone on board will make working through the tough parts of the project that much easier. Planning your Data Migration Project Budgeting Break up your data migration project into logical parts by determining what s needed to push the project forward. Think broadly about the cost of your data migration project. Include in your projections staffing, coding, and outside consulting. Companies frequently underestimate the cost of hiring a developer/programmer to move data from one location to another. You may also need to hire a consultant to assist, or pay overtime for your staff. Factor all of this in to your budget to avoid unpleasant surprises later. Data Mapping Where is your data now? Do you know how it is stored and in what format? It may be located in individual files or tables. What data do you need? Which fields will be brought over? Tax lot information, asset, liability, expense, income, and equity accounts must be migrated. Vendor or payee/payor information should be brought over as well. Is there data that will be 4

lost? Are there limitations to what can be brought over? Work with your provider to find a solution to get all critical information into the new system. Data Volume How much data is there? Do you have five, 10, or 15 years of data sitting in your legacy system? How much of it do you need? Data Extraction What process will you be using to extract the data from your existing application into the new platform? Explore your current software and look for the available data export features. If there is no clear process, you will probably need to bring in a tech resource to devise the best plan for removing the data. The most common file formats are.xls (excel) or.csv (comma delimited, which many programs can process. Lean on your provider s experience with different platforms. Chances are they have seen it before. Data Loading How do you plan to import the data into the new system? Is there a bridge via an upload? Is there a spreadsheet? Are you using a third-party application to help with the migration? Will you need to develop custom code to read the data in order to move it from one location to another? Data Verification Once the data has been ported over and is in place, how do you plan to ensure its accuracy? You will need a reconciliation process that verifies and validates the information. Look at your old balance sheets, investment reports, and brokerage and bank statements to help you tie out the results from the migration. Your Approach to Data Migration Your data migration plan should include: Budget Data Mapping Data Volume Data Extraction Data Loading Data Verification When you undertake a complex data migration project, consider the following: Full Disclosure Tell your provider what applications you use for general ledger, portfolio management, and trust accounting,. Also discuss what data feeds you subscribe to, what online access you have or need, and your custodian, bank, and brokerage contacts for online or data access. This information is critical to ensuring a smooth transition. Phased Approach Talk to your provider about taking a phased approach to the whole process. Your provider can help determine what the appropriate phases are, how long each will take and what it entails. We recommend tackling your largest and most complex entities first. 5

Concurrent Systems You may also want to consider running your old system concurrently with your new one for 3-6 months. Why? To ensure that you are still getting the reports that you need for your clients, and for peace of mind. This will allow you to check reporting accuracy, ensure uninterrupted data flow, and verify that data output is consistent between the platforms. Testing Data It is critical that you take the time to test the data to verify that reports and financial statements are correct. Make sure the data feeds from your custodians are being ported into your system. Validate that investment reports have accurate tax lot information (e.g., cost basis, number of shares, and fair market value). Sample Data Migration Plan Use this outline as a guide in developing your data migration plan. Pre-Planning 1. Establish strategy and approach 2. Define scope 3. Determine schedule/timeline 4. Build resource plan 5. Define technical requirements 6. Detail your execution plan Analysis and Design 1. Develop migration routines 2. Validate requirements for historical data with provider 3. Conduct data analysis 4. Map your current data Perform Mock Migration 1. Conduct test of data from all data sources 2. Verify data feeds after setup Pilot Migration 1. Transition one system 2. Follow up with migration of one set of entities 3. Complete porting of one year or a group of years Post Migration Activities 1. Verify your data 2. Review complete migration 3. Shut down old system and establish process for maintaining old data 6

In Conclusion Plan for Successful Data Migration While the data migration process has many steps and can be complex, effective planning will help ensure your success. This is one of the most difficult parts of updating your systems. By understanding the intricacies and working closely with your provider you will enjoy a smooth transition. Carefully thinking through your data needs, asking questions, and maintaining open communications with your provider will put you well on your way to a new integrated system that you and your staff can be proud of. Implementing Family Office Technology White Paper Series There are 4 more useful white papers in this series: Part 1 - Selecting a Solution Provider Part 2 - Developing a Budget Part 3 - Performing a Needs Analysis Part 4 - Understanding the Implementation Process 7

About the Author George Szundi Managing Director of Product Development George is the senior product manager at Financial Navigator, Inc., where he is responsible for managing the technical services and product development team. With over 10 years of software development education and experience, his primary focus is to identify the needs of customers and develop solutions that meet those needs through technology and services. George has been primarily responsible for the creation and launch of Navigator versions 8.2 and 9.0, as well as the creation of Navigator Advanced Reports and ROI modules. Additionally, George provides consulting in the use of Navigator for complex financial situations. George Szundi Managing Director About Financial Navigator Financial Navigator is focused on providing software and services to family offices serving high net worth clients. The Navigator Suite of applications is an integrated general ledger accounting and portfolio management system that tracks, manages, and reports on investment and non-investment assets, allowing you to serve your clients with speed and accuracy. Financial Navigator, Inc. 883 N Shoreline Blvd. Suite D-100 Mountain View, CA 94043 USA www.finnav.com fn@finnav.com 800 468-3636 650 962-0300 8