- Why Abacus?
By Tom Cole, Managing Director - UK & Europe at Abacus Group
I recently had the honour of being a panellist at the annual Bloomberg Hedge Fund Startup conference, discussing ‘The increasing importance of IT infrastructure.’ One of the hot topics discussed was: Why do new hedge funds or established managers need an IT integrator, and why can't managers do this themselves?
Technology is becoming increasingly accessible. With moderate tech know-how, you can get emails and basic file-sharing and collaboration tools working. It’s understandable why the IT integrator’s role has been challenged. The problem for hedge funds is that regardless of maturity and/or scale, enterprise expectations are set by investors and regulators. Here are some tangible benefits that IT integrators provide to meet those expectations.
Quality of deployment and best practice. Technology deployment and best practice is a perpetually moving target. Remaining relevant and hitting best practice expectations requires investment, focus and energy. IT integrators deploy teams to deliver this.
Return on investment to deploy and manage. Is focusing in-house energy on technology engineering a smart investment? Could cash and time be better invested elsewhere in the business?
Breadth and depth of talent. Delivering a comprehensive technology platform for a fund to operate from and providing proper service calls on various disciplines. IT integrators are equipped to meet the task. To emulate this would be very expensive and time consuming.
Perception. By partnering with a credible IT service provider, comfort is realized by business leaders and key stakeholders such as investors. Inherently, this displays a mindset to deploy a high calibre operational platform.
Immediate operational maturity. Reiterating the opening remark, whilst emerging managers are young by age, operational framework and processes are expected from Day 1. IT integrators have well-rehearsed processes in place that clients can enjoy immediately. This includes starters and leavers processes, a common ODD talking point.
Simplified IT spending. Whilst the Microsoft machine is a formidable part of any IT expenditure, there is and always will be miscellaneous subscriptions and variable IT costs. Most IT service providers will package costs on a per user per month basis. This simplifies technology spending and enables straightforward forecasting.
Client and community intelligence. Abacus, for example, serves over 600 alternative asset managers. Conversations with our clients occur daily, common or recurring issues are observed, and investor ODD focuses are witnessed. This ongoing intelligence is gained and relayed to our client base to help them navigate technological and non-technological trends.
24 x 7 service. It’s 10 pm on a Friday night and you need help completing an investor ODD. 24 x 7 service comes standard with most IT integrators. Funds don’t just work during market/business hours. Furthermore, the sector-focused service organization will be empathetic to this task and provide a rapid service to help.
Startup hedge funds are no different than any startup business. Costs need to be carefully managed. The lure of DIY technology is understandable. However, leaders of fund managers must consider the entire value proposition and the high expectations set by investors and regulators regarding technology from the start.
Next week I'll share another hot topic from the panel, so stay tuned! You can watch the Bloomberg Hedge Fund Startup conference on-demand here.