Last year, roughly 20 percent of all hedge funds closed shop. In the process, customer expectations radically changed, highlighting the need for better technology at just about all levels of business. All this occurred when the resources to build out new proprietary technologies had really dwindled.

So now a lot of firms face a decision to build, buy or outsource, notes FINalternatives. My sense is that decisions will vary at most firms. But for many, it will likely make sense to automate and outsource back-office and administrative functions to service providers. In some cases, this sort of outsourcing will make clients feel better. Other promising areas: Systems that tie together all prime broker relationships and anything that can aid in the compliance arena and risk management. 

For more:
- here's the FINalternatives article

Related Articles:
Navigating the Hedge Fund Maze - June 2009
More on hedge funds vs. mutual funds
Hedge funds change with the times
Is the worst over for hedge funds?