Institutional Investor's Alpha Magazine - March 2008 - (Page 57) Alpha Bytes Outsourcing Great Expectations Hedge funds, often peopled by investment bank veterans, are expecting more from their information technology providers. By Eugene Grygo “The days of having a Microsoft Excel and Access environment are further and further gone.” William Lavelle, chief operating officer, Credaris. London, March 12, 2008. S ome hedge fund managers run secret in-house trading technology and keep it fanatically under wraps. Others farm out everything, even the phones. William Lavelle sees a third way. Lavelle is chief operating officer of Credaris, a £1.4 billion ($2.2 billion) London-based hedge fund fi rm, and he says it would be completely counterintuitive for him to go to either extreme, given that Credaris’s specialty is generating alpha from the vagaries of the credit market. Those who successfully navigate the tangled world of credit derivatives rarely view the world in either/or terms. Photo by Adam Lawrence for Alpha So about two years ago, Lavelle approached technology providers with hopes of creating a more-symbiotic-thanusual relationship between vendor and client. The last thing he wanted was to work with an outsourcing company that would deliver profit-and-loss, trade-capture and risk management applications in an assembly-line fashion. Instead, he sought a collaborator. And he got what he wanted, even if it meant breaking the mold. Since February 2007, Lavelle has been in cahoots with Jon Hodges, one of his top systems-software developers, to forge a unique arrangement with iSoftStone Information Service Corp., an information technology outsourc- MARCH 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 57
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