When hedge funds shop for business-critical systems, the first step in mitigating selection risk should be to conduct a thorough evaluation of requirements: functionality, operational efficiency, ability to integrate with third-party applications, and ability to meet local reporting and regulatory obligations.
To help prepare for the system evaluation step, it’s best to assume that vendors often overpromise and under-deliver. In order to debunk their “we do everything” myth, requirements are best framed within an evaluation matrix, specifying desired systems components weighted by priority, and then considered in respect to what is supplied “out of the box.”
Naturally, the process must involve key stakeholders from across the business functions — representing technology, operations and accounting — all of whom will have their own set of priorities. Employing the services of a consultative third party can add value, providing an arbitrational and objective view that takes much of the emotion out of the process.