Building a technology infrastructure for alternative investment management

eFront Software Solutions2012 and earlier News Press ReleasesBuilding a technology infrastructure for alternative investment management

Nov

15

November 15 , 2012 | Posted by eFront Solutions |

Building a technology infrastructure for alternative investment management

By Thomas Nokin, eFront CTO

Part 2: Working with technology providers

This is the second of two articles that explore the process of choosing and implementing technology solutions for alternative investment firms. Here, I conclude with advice for working with technology partners.

Regardless of their chosen implementation model, firms will need to work with one or more technology providers. The relationship with the vendor is as critical to the success of the project as the functionality and capability of the chosen systems. The ideal relationship is a collaborative one that sets and works towards common goals with the ultimate aim of solving specific business problems. This is an often overlooked but critical factor; the history of failed technology projects is littered with confrontational relationships based on a divisive ‘us and them’ mentality.

SLAs and contracts

From the start, the right service level agreements (SLAs) need to be established to set expectations for, among others, issue resolution. Firms also need to understand and keep maintenance contracts up-to-date in order to receive periodic updates and fixes to the glitches that inevitably crop up in sophisticated technology solutions. The duration of the contract period should also be considered. Lengthy contracts are often beneficial, especially from a price negotiation perspective, but firms should be aware of what to expect when contract renewal approaches and must plan accordingly.

Company size considerations

The size of the investor or investment firm is also a factor. Because smaller firms have fewer in-house resources, they tend to become more dependent on their suppliers. The benefits of a partnership approach here are clear, but may be more challenging to secure because of diminished bargaining power. The solution will likely be found in a vendor who takes a partnership approach as standard, regardless of the size and resources of their client.

This does not excuse larger firms from conducting the due diligence required. With their dedicated resources, these firms have the advantage of being able to monitor technological advancements from both their current suppliers and from other vendors in the market. However, they almost certainly need to leverage the expertise and knowledge of their chosen vendor to customize the system. Once again, the partner approach offers significant advantages by enabling the firm’s own vision to be vetted prior to pursuing one path or another.

And on a related note, there are a few general but important best practices to keep in mind such as reference checking the vendors with whom you are considering partnering).

Conclusion

As I said in Part 1 of this two-part article, the financial services sector is fast-changing. New guidelines, directives, standards and expectations continually arise. The alternative investment sector is now party to this and there is nowhere to hide. Alternative investment firms and investor organizations must ensure that their ability to focus on their core business is not compromised in meeting these new demands with even newer technology. Firms that get their technology requirements in order now will be best-positioned to succeed in the transparent operating environment of today and tomorrow.

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Thomas Nokin: Chief Technology Officer, eFront

A graduate of Polytechnique (1989) and ENSTA (1992), Thomas Nokin started his career as consultant at NAT Systèmes before joining the product development center. He was then put in charge of the development of the objects broker of NAT Systèmes, then of the NatWeb tool which creates dynamic websites. From 1999 to 2004, he co-founded and became CTO of the American company PackOnline, which supplies health professionals with light client management software marketed on the Internet in ASP mode. In 2002 he joined eFront, where he is now CTO.