Technology strategy for fund managers

Is there a general well suited technology strategy available to fund managers? Could it be outsource, outsource, outsource? Could it be build a enterprise class technology platform assembled and built by technology rock stars? Or following the debate derivative from the above; build verses buy?

Every one has a different approach and a different view based on their objectives, skill and past experience. New fund managers, technology staff in existing businesses, vendors offering all manner of services into the space... everyone has a different view on the solution.

I read a number of articles recently touching this topic, one notably by Clare Levy, covering many of the issues and considerations. So I don't have to list them here, thanks Clare.

For me there is no common, clear strategy in the traditional sense. By the time you have finished evaluating all the relevant inputs, things have changed enough to make your strategy obsolete. These days there are very few constants, one of those is change. I remember as a young boy telling my father that I wanted to follow him into a career in electronics. His answer to me, "Son ... rather become an accountant, things change to fast in electronics!" So I did both.

The best I can think of in terms of a technology strategy is to implement some basic guidelines around its use. For most people technology is not a product but an enabler and should be treated as such. Firstly and very importantly the people responsible for technology roll-out should know and understand the business's primary goals whether it is ice cream manufacture or trading a global macro strategy. They should be intimate with the processes required to deliver these goals.

Different industries have varying heart beats. Some can be measured in thousands of years and some every several years e.g. soft drink bottling plants. For some hedge funds it's three to six months, do not engage in projects that will exceed a time period in which there is a high probability the requirements may change.

Your investment into technology should match you business's predictable cash flows. If you starting out with $50 mm US under management, with highly liquid investor terms, don't enter into 5 year technology agreements.

Select a base technology platform that is flexible and can scale with you long term business plan. Services with a high degree of lock in can severely stall or even break you business at some point.

These are some of the key guidelines, there may be a few more depending on your particular environment and situation. There will be many decisions you will have to make that will be influenced by these guidelines. What type of platform do we standardise on, do we make use of open source, how much and what do we outsource. The answers to these are more subjective in the greater scheme of things and is what make your environment unique.