Five Common Technology Mistakes and How to Avoid Them
Thanks for coming back for part three of our four-part series on what you need to know about IT before launching your hedge fund. Last time, we examimed data protection, colocation and archiving and shared a pre-launch to-do list to help keep important tasks top of mind.
At this point in your launch process, you likely have a lot of information about what you should do. Knowing what you should not do is equally as important. As promised, part three of our series will cover several common technology mistakes that new funds make and how you can avoid them. If you find yourself stumbling down one of the following paths, GO BACK.
You want the perfect solution, and you will not rest until you find it. Your business life would certainly be easier if you could buy a solution that meets 100 percent if your technology requirements. Undoubtedly, you will run into a vendor or two who will promise you such a thing. However, unless your business has an extremely narrow focus, it is unlikely that these promises will materialize. The truth is, a successful approach to technology planning usually means negotiating, purchasing and deploying systems from multiple vendors and service providers. And you can expect that the more complicated your business, the more technology providers you will require to fully meet your needs. Be wary of the small, new firms offering all-in-one solutions. Will they be around in the years ahead to stand behind the promises they make today?
You are so focused on today's to-do list, you have not considered the future beyond your launch. Today, you have a new fund - a young company with what are perhaps modest needs. If you select your technology for the business you have today, you will likely find yourself remaking these decisions within three to five years. Before you commit to any technology solutions, envision how your practice will look in the long term. An important question to consider today is whether the decisions you make for your firm pre-launch will support your business as it grows.
You haven't fully considered the multiple roles technology play in your current work environment. In your current or previous working life, perhaps you had the luxury of an IT department or professional who made sure technology did all the jobs you needed it to. You didn't have to think about solutions in the way you do right now. Consider the work you do or did as an employee and take note of which systems supported that work. You will need email, phones, quote feeds and other technological support in your new hedge fund, and perhaps, additional systems you did not encounter in your previous situation.
You believe you can manage a new hedge fund AND all of its technology needs on your own. If professional tech support is not on your list of needs before launching your fund, add it now. Your new firm will require IT assistance to build servers, manage networks and handle day-to-day needs. If you prefer, you can outsource project-related work to consultants or contractors, and there are third-party providers with whom you could contract for ongoing maintenance. However, before selecting an outside option, consider hiring a full-time professional.
You're tempted to decline the training options on your IT systems. Most vendors offer some sort of training to accompany their products, and you should take them up on those offers. Once you've rolled out your new systems, you need to learn how to use them. Trust the vendors' professional services team to explain all the quirks in the products that were likely smoothed over by their sales staff. This training exists to enable you to maximize your investment. Additionally, ask vendors about user groups, which can be invaluable resources for easing frustration as you adopt multiple unfamiliar systems.
It’s often easier to avoid these pitfalls when you know they exist. You can also use this hedge fund technology checklist as a resource during your decision-making process.
Next article in our launch series! "The Hedge Fund Real Estate Landscape: What's right for your fund?" -- Read on. Or you can always contact our hedge fund launch experts to discuss your plans.