IT OUTSOURCING FOR SMALL & MEDIUM SIZED ORGANISATIONS IN THE FINANCIAL SERVICES SECTOR

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1 IT OUTSOURCING FOR SMALL & MEDIUM SIZED ORGANISATIONS IN THE FINANCIAL SERVICES SECTOR FundLab guide

2 This guide is intended for the following audiences: Regulated firms considering out-sourcing for the first time CTO s and COO s of regulated firms in the financial services sector Those wishing to develop a headline understanding of the pertinent issues in technology infrastructure

3 INTRODUCTION IT OUTSOURCING IN 2011 IT will continue to have a central role in helping SMEs gain a competitive edge and achieve their potential for growth. However, according to IT research company Gartner, there will be growing pressure in 2011 for IT investments to produce direct business results: IT will be expected to make a demonstrable and direct contribution to business growth in most organisations, both through increased competitiveness and the creation of new market opportunities. (Gartner, 2010) In 2011 the outsourcing of IT and system management services will continue to be a growing trend for SMEs, with Gartner predicting that 40% of IT infrastructure will be purchased as a service this year. Award-winning technology commentator Jason Hines agrees: I like to call this phenomenon Datacenter-as-a-Service and I strongly believe we are in the midst of a major shift to this model.

4 WHY OUTSOURCE? The reasons for the popularity of outsourcing are many and varied, although they boildown to the ability for SMEs to reduce costs and resulting risk, while improving competitiveness through the application of the latest IT best practice and appropriate new technology. To gain a competitive edge and prosper, SMEs in the financial services sector must effectively mobilise all the relevant skills and resources, which in IT means the selection of an appropriate outsource partner, comments Helena Quinn, Director of specialist outsourced IT and strategic support provider FundLab. Outsourcing allows SMEs to access enterprise level technology, cutting-edge strategic services, along with sophisticated and responsive support previously only available to major firms with large internal IT departments and multi-million pound IT budgets. Through the benefits of group purchasing and established supplier relationships, a good IT services provider can also save partners money on procurement. While outsourcing can significantly reduce labour costs and overheads, allowing firms to concentrate precious resources and time on core business activities. A responsive, time-critical support service, available around the clock and delivered by experienced engineers and technicians, helps regulated companies maintain business efficiency and reduces the risk of costly down-time due to technical problems. Despite being so important, SMEs cannot hope to provide the necessary support services internally without over-resourcing. Hardly surprising, then, that support and helpdesk provision are one of the most common outsourced IT services. Outsourcing IT services are particularly beneficial for new regulated companies setting up in business. An outsource partner will design and implement appropriate IT systems and technologies quickly and efficiently, saving valuable resources. Furthermore, by anticipating future demands, flexible, scale-able IT systems can be deployed that grow

5 with a company, negating the need for costly system changes as IT demands grow in the future. A start-up company can gain access to expert advice and support in areas such as regulatory compliance, disaster recovery planning and even recruitment. IT outsource partners will also be well versed in the complexities of the international regulatory environment, helping ensure full compliance with the relevant state, national and international regulations is incorporated into IT systems and procedures from the outset.

6 Key Outsourced IT Services IT Support and Helpdesk Often under-valued, time critical support is one of the most vital IT service requirements for small and medium sized regulated companies. Sophisticated and responsive enterprise level support and helpdesk services should be available around the clock, 365 days a year, from an outsource partner. Helpdesk staff should be technically competent and highly motivated, with an expert knowledge of all the relevant technology and an intimate understanding of your IT systems. Employees should possess recognised industry qualifications, such as Microsoft and Cisco certification. Cloud technology True cloud solutions can provide huge benefits to SMEs in the alternative asset management sector through the remote hosting of applications and data services. Behind the recent hype about the Cloud is an exciting paradigm shift which allows SMEs to unlock the benefits of enterprise-level technology, while reducing costs. It s a win, win situation, comments Justin Fielding, cloud technology expert at FundLab. A wholly-owned and managed cloud services provider will help improve the efficiency of IT infrastructure, while reducing capital investment on hardware and management costs. Further benefits include greater scale-ability, with a cloud-based system able to grow as your company does. Continuity Planning/ Disaster Recovery Improve a company s preparedness and resilience in the face of unexpected events and disasters through the creation of a comprehensive disaster management plan. Indeed, with Price Waterhouse Cooper estimating that over 95% of companies experiencing a server disaster without a recovery plan in place go out of business within 18 months, continuity planning should be of paramount concern.

7 In addition to drafting a disaster recovery plan, an IT outsource provider will also be able to provide a cost-effective, fully-managed disaster recovery solution tailored to a company s individual needs and including a combination of clustering, replication and cloud technologies. Regulatory Compliance Regulatory compliance affects all aspects of business operations in the alternative asset management sector. An outsourced IT partner will help ensure regulatory compliance and best practices are integrated into IT systems in a cost-effective and efficient way. They can also audit existing systems to ensure regulatory compliance. Security System security and data integrity are of critical importance to regulated firms in the financial sector. A comprehensive range of security services, delivered by experienced and certified security consultants, should be provided by your IT outsource partner. A security services offering will typically include security audits on current systems, the development of organisation-wide IT security strategies, the implementation of the latest SOX and FSA compliant network security solutions, and rapid response incident management in the event of a security breach or incident. Data security is an imperative, though the implementation of effective security systems and practices can also improve efficiency and competitiveness, rather than being a drain on resources, explains Andy Moore, head security officer at FundLab. Telecommunications & VOIP solutions To compete at an international scale smaller regulated companies require cutting-edge, cost-effective telecommunications solutions, which can keep them in touch wherever they are. Outsourced IT suppliers should create an appropriate package tailored specifically to a business s needs and including the latest voice, internet and mobile solutions.

8 They should also be able to integrate VOIP into a telecommunication system, harnessing the benefits of this powerful technology for improving the quality and reliability of a telephony system, while cutting costs. Virtualisation Using the latest virtualisation technologies available through an outsource partner can significantly boost the efficiency of a companies network operations. Virtual servers are inherently scale-able allowing additional server capacity to be deployed quickly and without major costs as a company s requirements grow. Less physical hardware means greater reliability and better business continuity and disaster recovery. More efficient server utilisation, with less unused server space at any given time, reduces energy use and carbon emissions, which is a growing concern for hedge fund managers and investors.

9 About FundLab FundLab is a privately owned firm established in 2010 as a Centre of Excellence for technology in financial services. FundLab is a division of ITLab, which has over 10 years experience of providing enterprise standard strategic support and IT services for small and medium sized companies across the UK. As an SME itself, FundLab understands the issues and pressures facing its clients. FundLab prides itself on its global outlook and its ability to deliver high-quality services worldwide through an international team of 40 employees, including 30 highly-trained, accredited engineers, based in our offices in London, Cape Town and Auckland. The firm is expanding its international presence with the opening of an office in New York in FundLab provides a fully outsourced IT department and strategic services to regulated businesses, hedge funds and private equity firms, with true round-the-clock-support, a wholly-owned cloud solution and an OFCOM-registered telecommunications facility. The company s service offering is specifically designed to help ambitious small and medium sized firms, typically with users, by advising on IT best practice, thereby allowing them to compete internationally at the highest level. FundLab gives its clients access to the latest cutting-edge, enterprise level technology and expert technical knowledge, previously only enjoyed by large firms with multi-million pound budgets and dedicated in-house IT departments. FundLab provides a sophisticated and responsive level of support at a reasonable cost, allowing SMEs with bold ambitions to get their IT right, first time. The firm has an in-depth knowledge of the financial sector and its competitive landscape. The team has also identified key issues, which are of paramount importance to SMEs today. These include disaster recovery & business continuity planning, regulatory compliance, cloud technology and virtualisation. The FundLab team is well-positioned to address IT issues across the financial services sector. They have a clear goal to ensure they employ the very best people in the industry;

10 and they can use their extensive recruitment experience to make sure their clients also find the right employees. Furthermore, clients can also benefit from key value-add services delivered through strategic partnerships with organisations across the sector, such as AIMA, Microsoft and Citrix.