IT without borders

The pro-globalization crowd owes the technocrats a pat on the back. Technological breakthroughs have allowed the world to shrink down to the point that only a few mouse clicks separate a grad student in Mumbai from his peer in Boston. Yet if technology is responsible for shrinking the world, its failure can swell back to an insurmountable size.

Breakdowns in IT are a hazard for any global business, but private equity is particularly sensitive given the tendency to rely on small, highly collaborative teams responsible for surveying large geographies. The deal process is often a matter of phone calls, emails and electronically delivered due diligence materials that often need to be shared between remote locales. IT failures are more than an inconvenience to such a business, they're a threat. So how do these firms build a strong enough infrastructure around the world to guard against such threats? The short answer is ? they don't.

?The key part to such a centralized architecture is to constantly test the reliability of your network connections.?

Most firms with offices in far-flung geographies take a hub and spoke approach, with multiple offices remotely accessing a single server at headquarters. Sometimes these satellite offices contain only PCs and printers. Advances in remote access technology allow for a safe and remarkably stable link to a server that can sit on the other side of an ocean. Centralizing IT infrastructures allows a firm to service and safeguard systems in a timely and cost-efficient manner.

However, regardless of how centralized systems may be, most firms still collaborate with local service providers in some fashion; first in establishing offices and later in tackling the unexpected problems that can still happen. Properly managing these local vendors, even for minor mandates, can be the most challenging facet of a global IT system.

On the ground expertise
Sourcing local service providers can be one of the first hurdles for establishing IT in a new locale. ?Starting out, you've got to judge the talent pool of local IT resources,? says Manny Rodriguez, the chief technology office of Greenwich, Connecticut-based General Atlantic. The firm has launched offices in New York, Palo Alto, São Paulo, London, Düsseldorf, Mumbai and Hong Kong, and has addressed these questions frequently. Most IT chiefs begin their search for native IT talent by requesting referrals from what local sources they have.

San Francisco-based Paul Capital Partners often taps references from the building management where they lease office space. Paul Capital's IT staff moves in as soon as the rental agreement is signed. ?The great thing about them [the building management] is that any consultant they recommend will understand the quirks and layout of the space already, so they're ahead of the curve,? says Sergey Bushlyar, the executive director of IT for the firm. He's managed the firm's IT as it expanded into Europe and Asia.

Other firms turn to their fellow IT chiefs in private equity. ?I like to talk with my colleagues/peers in the industry and compare notes [on local service providers and suppliers],? says Harry Moseley, managing director and chief information officer of The Blackstone Group.

Before the launch
Several CIOs speak of the need to test the reliability of local circuits and public telecoms. Service providers with prior experience in that particular office space may very well have this intelligence in hand. This issue is particularly relevant in emerging markets.

Rodriguez also notes that before an IT system goes ?online? the tech staff should tackle three priorities in a new office: test that all communication capabilities are functional and ready to use, test all contingencies that are in place and finally, budget additional time and resources to train staff. ?Even if they're used to our systems, a new location is a change, and you've got to be ready to provide expedited service during that transition period,? he says.

Many IT personnel attempt to minimize that transition period as much as possible and have the means to do so through advances in remote access solutions. ?Our prior architecture, say three years ago, used to involve separate email, file and print servers at each office,? recalls Blackstone's Moseley. ?So we'd have to maintain all those individual servers, backups, patching, etc?which was quite burdensome relatively.? Instead, today's firms centralize all those servers at a single location, and allow users to access the exact same login screen wherever they are (see Best Practices, p. 11).

Terra Firma Capital Partners launched its first satellite office in Frankfurt, Germany with an ease indicative of recent advances. ?We essentially treated the Frankfurt office as an extension of our London base,? explains Peter Green, the firm's IT director. ?By using a Citrix thin-client model, our staff log in to their PCs as though they are sitting in our London office ? no data is stored there.? This centralization grants two benefits, he notes: ?Any member of staff can login into any PC, in any office and support costs are kept to a minimum.?

However, the firm differentiates between three levels of remote access: local thin client; a full remote client; and a remote ?light? client. Terra Firma's Frankfurt office is treated as a ?local? client as any other desk in London, with the ability to send scans directly from copiers or print anywhere in the London or Frankfurt offices seamlessly from any PC in any office.

The ?full remote? client will allow partners to use Terra Firma hardware, such as laptops, a PC at one of the portfolio businesses or a home PC. ?This option provides our executives with secure external access to our IT systems,? he says. The last type of remote access is the ?light? version which offers access from business centers and airport lounge internet stations in the same manner but without any local printing, though with the proliferation of Black- Berrys, this version is now used infrequently.

Green stressed that a single location for the server infrastructure in London requires no remote IT consultants. ?If the only thing left in Frankfurt is the hardware, that's the only thing we need to worry about,? says Green. ?We occasionally send staff [to Germany] to conduct upgrades when necessary, but for the most part 90-plus percent of our support is done remotely.?

Regional hubs
The UK-based 3i Group, with offices in 23 different locations across three continents, winnowed its email and data servers down to three centralized hubs; one for the Americas, one for Europe and a system for Asia. ?Back in 1998, we had individual servers in each office, which we then consolidated into seven geographic zones,? explains John Tracey, head of business and IT services at the firm. ?Five years ago, we were able to centralize everything into two servers – one in America and one in Europe,? Tracey explains. ?Since then we've launched an additional server and service capability in Asia, but that's primarily due to time zone issues.?

Tracey, like Terra Firma's Green, champions the security that a centralized approach affords. ?If you only have one or two servers, you can build a great deal of resiliency into that system,? he says. 3i established a disaster recovery system 100 miles away from its headquarters in London that would allow the system to be back online in 24 hours in the event of a worst case scenario.

?The key part to such a centralized architecture is to constantly test the reliability of your network connections,? says Tracey. In addition to frequent tests, 3i arranges dual links to the network so should one connection fail, there's back-up. ?However, sometimes the switchover between links can happen when there's only a temporary interruption of service so it's good to have someone locally be able to manually switch the lines,? he says.

Relying on these few hubs doesn't eradicate the need to deal with local vendors. ?You've got to be keen about sourcing suppliers native to the locale,? says Tracey. ?Setting up network links in emerging markets isn't always easy, so you've got to understand where you fit among a vendor's priorities.?

Tracey suggests finding a provider that's large enough to have the resources to properly service the account without being so large as to not need the firm's business. ?We like to be in the top twenty of their clients in terms of size, though our position as FTSE 100 company makes us valuable to a local vendor in terms of branding,? he explains. He also stresses that working with the account manager during the vetting process can reveal a great deal about their competence and reliability.

Blackstone, like 3i, manages its IT systems from regional hubs, one in New York, one in London and one will be in Hong Kong. Moseley explains that they are in daily contact with the global tech staff. ?We're a single team working together for a common goal. We stagger hours so that even with time zone differences, there's always a live person within Blackstone to pick up the phone if there's an issue,? says Moseley. He does employ some local consultants, but primarily to be the global group's hands in the event there is an issue that cannot be handled through remote support.

Not all firms are averse to local consultants. Paul Capital Partners maintains servers in New York and San Francisco, but collaborates closely with consultants in each locale for daily maintenance. ?We host our satellite offices on the main servers, but local consultants step in when hardware or internet connectivity goes down,? says Bushlyar. ?Local consultants will also set up home offices for the partners based in that geography, but all network-wide IT issues are managed from the New York and San Francisco offices.?

While many IT chiefs tout the cost savings and efficiencies of centralized IT systems, each stressed the need to take into account the IT challenges unique to a given locale. For example, internet connectivity might be a spotty in one location, or a local vendor may not be adequately responsive. ?You've got to do your best to fully engage in the experience of the overseas office. Understand, live, and feel the pain points for yourself,? says Rodriguez. The world may be flat these days, but that hardly means there's no difference in terrain.