Expert Panelists Profile - Bob Guilbert, Managing Director, Eze Castle Integration

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Expert Panelist Profiles
13 Sep, 2012

COO: What are the benefits of cloud computing to hedge funds and how can it help their businesses?

Guilbert: Earlier this year (2012), we conducted a survey on cloud adoption in the investment management industry. The survey included responses from 125 senior-level executives and found that more than eight out of 10 hedge funds and investment firms use or are deploying the cloud for IT infrastructure or application services.

The top three benefits, and reasons, hedge funds are adopting cloud services include the ability to realise IT cost savings, speed of technology deployment and simplify IT operations.

From a cost savings perspective, the opportunity to transfer upfront, costly capital expenditures (CapEx) to longer term, recurring operational expenditures (OpEx) is clearly appealing to the hedge fund industry.

Looking at speed of deployment, the cloud is particularly appealing to startup firms seeking to launch quickly. Traditional, on-premise infrastructure solutions can take six to 10 weeks to design and implement. Cloud solutions, on the other hand, can take a fraction of that time, with some smaller implementations requiring only days for deployment.

Finally, the ability to simplify IT management and support is very attractive to hedge funds. While some firms like the ability to control IT in-house and manage the infrastructure from within, the appeal of outsourcing day-to-day functions and support to a third-party cloud provider is a hard one to pass up. Particularly as roles and responsibilities change to increase operational efficiencies, professionals at many firms who were previously responsible for technology are juggling a variety of new tasks.

 

COO: What are the risks of using the cloud and how can these be mitigated?

Guilbert: While cloud computing does have many advantages, there are also some associated perceived risks. These include security (including data integrity, data confidentiality, and privacy.), data location, and regulatory and compliance requirements.

We recommend firms carry out a comprehensive due diligence and service provider selection process to help minimise these risks. By asking the right questions, and getting the right answers, firms can become comfortable with cloud computing solutions.

 

COO: Is cloud computing expensive and is the value proposition worthwhile?

Guilbert: Cost containment and cost-effectiveness are key benefits of cloud computing as firms can convert from Capex to Opex. While building out an on-premise IT environment requires capital expenditures, using an external cloud service that offers a pay-as-you-go service falls into ongoing operating expenditures. The transition to a cloud service provides many cost-savings beyond just eliminating the need to purchase and refresh equipment.

Additionally with the simple and recurring cost model available with cloud services, firms know from the start what the cost will be to add additional IT resources as they grow.

 

COO: Can the cloud be used for disaster recovery purposes and how?

Guilbert: Yes, private cloud solutions are ideally suited to meet a hedge fund’s requirements for backup storage and disaster recovery.

When it comes to backup file storage and DR planning, cloud solutions have an inherent advantage over on-premises systems, because mission-critical client and transaction data, as well as financial applications, are stored off site. If a firm’s office is damaged or inaccessible, day-to-day operations can continue from a remote location with minimal interruption.

Private cloud solutions offer other important DR advantages, including faster restoration of services. Instead of purchasing new equipment, reinstalling applications and reloading client data, a cloud provider can simply “turn on” its service at the firm’s secondary location.

 

COO: When investors look at cloud technology what do they want and why?

Guilbert: Investors want, and expect, hedge funds to follow industry best practices when running their operations. They want to see a well thought out IT and operations strategy that addresses common risk scenarios and has the appropriate level of safeguards in place. From a technology perspective, this means having solid IT infrastructure, 24x7 IT support and full disaster recovery capabilities.

 

If a hedge fund selects cloud services for its IT solutions, we have found that investors want to ensure the cloud provider is well-established, has a deep understanding of the investment industry and applications, and provides a highly available and secure computing environment.

 

 

What are the benefits of cloud computing to hedge funds and how can it help their businesses? 

Earlier this year (2012), we conducted a survey on cloud adoption in the investment management industry.  The survey included responses from 125 senior-level executives and found that more than eight out of 10 hedge funds and investment firms use or are deploying the cloud for IT infrastructure or application services. 

 

The top three benefits, and reasons, hedge funds are adopting cloud services include the ability to realise IT cost savings, speed of technology deployment and simplify IT operations.

 

From a cost savings perspective, the opportunity to transfer upfront, costly capital expenditures (CapEx) to longer term, recurring operational expenditures (OpEx) is clearly appealing to the hedge fund industry.

Looking at speed of deployment, the cloud is particularly appealing to startup firms seeking to launch quickly. Traditional, on-premise infrastructure solutions can take six to 10 weeks to design and implement. Cloud solutions, on the other hand, can take a fraction of that time, with some smaller implementations requiring only days for deployment.

Finally, the ability to simplify IT management and support is very attractive to hedge funds. While some firms like the ability to control IT in-house and manage the infrastructure from within, the appeal of outsourcing day-to-day functions and support to a third-party cloud provider is a hard one to pass up. Particularly as roles and responsibilities change to increase operational efficiencies, professionals at many firms who were previously responsible for technology are juggling a variety of new tasks.

 

What are the risks of using the cloud and how can these be mitigated? 

While cloud computing does have many advantages, there are also some associated perceived risks. These include security (including data integrity, data confidentiality, and privacy.), data location, and regulatory and compliance requirements.

 

We recommend firms carry out a comprehensive due diligence and service provider selection process to help minimise these risks.   By asking the right questions, and getting the right answers, firms can become comfortable with cloud computing solutions.

Is cloud computing expensive and is the value proposition worthwhile? 

Cost containment and cost-effectiveness are key benefits of cloud computing as firms can convert from Capex to Opex. While building out an on-premise IT environment requires capital expenditures, using an external cloud service that offers a pay-as-you-go service falls into ongoing operating expenditures. The transition to a cloud service provides many cost-savings beyond just eliminating the need to purchase and refresh equipment.

 

Additionally with the simple and recurring cost model available with cloud services, firms know from the start what the cost will be to add additional IT resources as they grow.

 

Can the cloud be used for disaster recovery purposes and how? 

Yes, private cloud solutions are ideally suited to meet a hedge fund’s requirements for backup storage and disaster recovery.

When it comes to backup file storage and DR planning, cloud solutions have an inherent advantage over on-premises systems, because mission-critical client and transaction data, as well as financial applications, are stored off site. If a firm’s office is damaged or inaccessible, day-to-day operations can continue from a remote location with minimal interruption.   

Private cloud solutions offer other important DR advantages, including faster restoration of services. Instead of purchasing new equipment, reinstalling applications and reloading client data, a cloud provider can simply “turn on” its service at the firm’s secondary location. 

 

When investors look at cloud technology what do they want and why? 

Investors want, and expect, hedge funds to follow industry best practices when running their operations.  They want to see a well thought out IT and operations strategy that addresses common risk scenarios and has the appropriate level of safeguards in place.  From a technology perspective, this means having solid IT infrastructure, 24x7 IT support and full disaster recovery capabilities.

 

If a hedge fund selects cloud services for its IT solutions, we have found that investors want to ensure the cloud provider is well-established, has a deep understanding of the investment industry and applications, and provides a highly available and secure computing environment.

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