Automation That Fails – and the Industry’s Dirty Secret

When “automation” actually means outsourcing with a prettier dashboard.

If you’ve been evaluating automation tools to ease the burden on your operations team, chances are you’ve been told the same story: 

“This platform will log into portals, grab the documents, extract all the key data, and feed it into your systems – completely automatically.”

It sounds like the answer to your prayers, but if you scratch the surface of many vendor solutions you’ll find something unsettling.

It’s not really automation; it’s manual labor disguised as technology. And in the high-stakes world of alternative investing, that’s not just misleading but also risky for business performance, data integrity, and data security.

The Decline of Outsourcing as a Solution

For years, many institutions turned to outsourcing to scale operations without growing headcount. Document collection and filing? Send it overseas. Large volumes of data extraction? Low-wage economies let is throw more people at it.

This model is faltering.

According to Fixing the Fundamentals, Fundamatic’s 2025 white paper, a range of pressures are converging:

• Wage inflation has eroded the cost advantages of business process outsourcing (BPO).
• Regulatory scrutiny and data privacy rules have tightened.
• Remote teams, especially in foreign jurisdictions, are hard to scale quickly and securely.

Even when outsourced work is relatively “simple,” like logging into portals and retrieving reports, it comes with inherent fragility. Any shift in document formats, naming conventions, or timing can throw the process off. Outsourced teams often lack a sense of task ownership, a quality-sapping factor exacerbated by different workplace cultures, and the inconveniences of different time-zones.

As several operations leaders told Fundamatic during interviews conducted for the white paper, the results are slow, inconsistent, and error-prone.

When Automation Isn’t Really Automation

The cracks don’t end with traditional BPO. As firms look to “smarter” solutions, they often encounter vendors selling what appears to be full automation, but in reality it’s just the same manual model fronted with software.

Here’s how it works:

• A slick interface hides the fact that humans are logging into portals.
• Data extraction happens, but only for certain asset classes or report formats.
• Reports sent via email are ignored or mishandled.
• Any anomaly requires a manual flag and a human fix.

“One vendor straight-up lied to us. They said their product could do all these things, when in reality, a bunch of people on the other side of the world were downloading our stuff. We ended up calling them out and said ‘look, we’ll never do business with you guys.’ It was that bad.”
- An operations leader, describing their software buying experience

That’s not automation, but it is a trust problem.

The Hidden Costs of Hidden Humans

When vendors insert human labor into what should be automated workflows, the problems compound:

• Processing delays, especially during volume spikes or holidays.
• Data inconsistency, since humans are more error-prone and introduce variability.
• Security and compliance exposure, as sensitive data flows through third parties.
• Lack of transparency, making audits and oversight harder.

Even more troubling is that some vendors include contractual terms that quietly give them rights to your data – even using it to train their AI systems, develop products, and infer your investment strategies. If you don’t dig into the fine print, your organization could be exposed.

This isn’t just an IT risk. It’s a strategic liability.

The Reality Gap: What Vendors Promise vs. What They Deliver

Fundamatic’s research highlights that even among institutions that have adopted genuine automation tools (no hidden people), many found the actual capabilities fell short of expectations:

• Some systems only worked on specific portal layouts.
• Others couldn't reconcile data across naming variations or taxonomies.
• Several struggled with multi-factor authentication (MFA), a security standard for most fund portals.

The results? Incomplete data. Missed reports. Investment managers flying blind.

“We looked at several vendors. The feedback on one was that it wasn’t as automated as they’d said. The feedback on another, which initially looked promising, was that it offered a lot on paper but not in execution. Crucially, it didn’t handle the full document intake process. Our view was that you can’t do data extraction unless you have all of the documents available, otherwise, it’s incomplete data.”

- Fundamatic client, describing their vendor testing experience

How to Avoid Getting Burned

If you’re in the market for automation, or currently using a vendor and suspect you’re not getting what you paid for, ask these five questions:

• Is every step of the workflow fully automated, including portal access, capture, extraction, and integration?

• How does your system handle MFA and irregular portal behaviors?

• Are humans involved in routine processing. If so, when, where and why?

• What are your data ownership terms? Can we review them?
• How do you ensure document completeness across all asset classes?

A trustworthy vendor should welcome these questions and offer full transparency.

There’s a Better Way: Tech-Only, End-to-End Automation

Fundamatic has taken a stand against “fauxtomation.” Its approach is radically simple and radically effective:

• Zero-touch portal access, including MFA
• Automated intake from both portals and email
• Best-in-class machine learning models for classification and extraction
• Real-time alerts when documents are missing or data is incomplete
• No hidden humans, ever

It’s 100 percent technology-driven automation, designed from the ground up for the unique challenges of alternative investment operations. It’s running in alts firms ranging from the biggest endowments to moderately-sized family offices, and has a track record of delivering 90 percent time savings in fund document processing.

Don’t Let the Wrong Tech Set You Back

When you’re responsible for operational accuracy, efficiency and scalability, you need automation that actually automates.