Institutional asset managers depend on outside vendors to such a degree that managing vendor relationships is a full-time job in itself, say some technology executives.

“As a smaller firm, the partnerships we have with vendors are critical,” Ryan Bateman, head of technology at Virginia-based asset manager Sands Capital Management, said at during a panel discussion at Linedata Exchange in New York on Tuesday. “I have to take so many functions we do and leverage those vendors to get the job done, that choosing those vendors is one of the most important things I do. I focus on service above all else. If you find the right vendor partner that gives you the right level of service, those long-term relationships pay massive benefits instead of just shopping around and looking for the lowest-cost alternative.”

Jeff Scanelli, head of application development for State Street Global Markets’ Portfolio Solutions, said during the panel that “the less successful relationships fall away over time. The ones you end up with after five or ten years are the firms that have performed the best. It has to be mutually beneficial to both parties. If you look at any of our portfolios, the long-term relationships are very good, but anybody that is a ‘C’ or below has probably gone away over time.”

Scanelli, who has been leading software development efforts at State Street for 16 years, heads all software development for equities and fixed income trade and order management systems as well as related middle office, compliance and clearing functions.

“Managing the relationships with your vendors in such a way that it is a partnership is really important for certain key systems,” he said. “For something an OMS, it’s a mission-critical system and requires a long-term partnership.”

State Street has a large staff dedicated to corporate information security, noted Scanelli. “Security permeates everything we do,” he said. “The only way to be absolutely safe would be to unplug the network, and even then you would have to watch out for the janitorial staff. If you’re looking at the next big headline in financial services technology, it will be a breach.”