As mentioned in Family Office Hot Topics, technology is becoming a huge part of the family office day-to-day routine. Reporting systems can give families and advisors access to real time data anywhere in the world and security concerns associated with cloud services are all but gone. Modernizing how your office does business is especially important as second and third generations start their own families; everyone knows how we millennials like our screens and instant gratification! Donny Shimamoto (Intraprise Technologies) gave us a good overview of how to integrate new technologies into the family office.
The first thing to consider is the architecture of your system. Your options down the road can be affected based on whether you have a cloud based system, purchase servers for an on premises system, or choose a hybrid of the two. There is no “correct” system as each office will have different demands. Donny suggests adopting a mission based strategic approach. That means think about what you need to do, what functionality you need, and then figure out how to make it work. A good way to start is by looking at your overall organization and seeing what areas need optimization. Then look at management needs like what information needs to be shared and with how many people. This mindset again falls into the conference track’s overarching theme of running your family office like a regular business.
Once you have an idea about the architecture you want to use you need to think about software vendors. Unless you hire an in-house developer you will likely need to rely on vendors to build your new systems (outsourcing is not a bad thing!). When evaluating different options it is important to consider an innovation strategy. With the rate at which technology changes it is important to know how you will transition in the future. This usually includes processes around backing up data and building in redundancies so that updates can be made in steps, not all at once. Other systems considerations according to Donny include; the type of date you have, any access needs, internal business process needs, and, most importantly for CPAs, how the systems handle financial transactions.
Vendors will usually either have a “single vendor” solution or a “best of breed” solution. A single vendor solution is just that, one vendor that can do everything for you. This will likely be the more cost effective way to go but could cause problems when new technologies come on market. Also these companies do everything well but might not be great at any one thing. The best of breed approach is when one company focuses on one particular thing and does it better than anyone else. This way you will need more than one vendor and it may cost more but it will usually be more adaptable. Think about one company needing to update four different products versus four companies being able to keep up-to-date with one product each. Again, there is no right or wrong here, the decision should be based on your unique needs. A similar decision needs to be made around customization. Your risk of problems is dependent upon how much customizing you do. If you stay within the options of a piece of software your risk is low, if you have extensive custom code written you open yourself up to more risk.Once you have your new or updated IT system in place you can start enjoying benefits like faster moving information enabling faster decision making, more personalized options for your principle(s) reducing phone calls, and better data to enable you to do your job more efficiently. Circling back to Kevin O’Leary’s Keynote, he says the first thing he does when acquiring a new company is to update all the technology.