We hosted a webinar earlier this week, App Hosting 101: Managing Your Essential Applications in the Cloud, in which Steve Schoener, Eze Castle Integration’s Vice President of Client Technology, and Martin Sreba, Senior Director at Advent Software, discussed topics such as industry trends in application hosting, key drivers of application solutions, common myths about the cloud, and the right time to put an application into effect. Continue reading for an overview of the webinar.
Industry Update: What’s Going On?
Increasing demands from hedge funds’ current and target investors are driving a variety of trends. Due diligence requirements are more advanced, as investors expect to see candid looks into a fund’s systems, disaster recovery capabilities and more. The increasing complexity of investments is also driving the need for more complex systems to handle these instruments.
Firms are starting smaller in today’s environment, with many starting with under $100mm in assets under management. Startup funds are looking for technology solutions to complement their size and give them the tools to efficiently run their businesses.
The Key Driver for Application Solutions? Managing Risk.
When it comes to implementing applications, there are many considerations to think about, some of which include addressing investor due diligence concerns, addressing regulatory requirements, and supporting client service demands. The most importance goal for many firms, however, is mitigating risk. There are three types of risk to manage:
Operational. A firm without a system already in place has most likely used Excel. It is important to transfer spreadsheets into an application because these systems are made to support the direct investment decision process, and therefore all data must be correct.
Counterparty. Firms need to be able to connect with a multitude of third parties, including fund administrators and prime brokers. Clients now want to be more operative, and therefore use multi-prime environments in which counter-parties have different specializations utilized by the firm. Many more firms now foster these counter-party relationships, and therefore need a system to bring everything together into one holistic setting.
Investment. Investment decision makers want to see accurate information. A research management system, for example, would allow a firm to track and save their investment research and choices for a possible audit.
Deploying Your Application: Top Considerations
When deploying an application, a firm must consider not only the up-front, short-term costs of supporting the application, but also the long-term costs. The firm must be sure that the overhead expense of the application is not too much of a burden on the business.
An application that is being deployed must be scalable. A firm may want to start with an application on a smaller scale, whose base can grow as the company does. The firm should be sure that the application being used will not force an arrangement that will limit its ability to scale up in the future.
Infrastructure Options: On-premise vs. Cloud
Deciding where to host your application is a major consideration. Many firms today are opting to host their apps in the cloud, an option that provides for more flexibility and cost-effectiveness. Beyond the on-premise vs. cloud debate is the decision about whether to utilize a public or private cloud.
Security continues to be the biggest concern in regards to the public cloud. Investors want to make sure that their data is as secure as possible because it is a fundamental part of the fund’s core. Access into private clouds is much more controlled, and there are fewer questions about the encryption of data at rest and the ability to access that data. A public cloud provider will make sure that its physical infrastructure is up and running, but will not necessarily be concerned about whether or not their clients’ applications are functional. Therefore, working with a smaller, niche provider may be better for many firms.
The Right Time to Implement an Application
Many more start-up funds are now bringing applications in on day one because they do not want to deal with the conversion and transfer of the data at a later date, and the cost is much more affordable from the get-go. However the firm philosophy also plays a part in the timing of an application’s implementation particularly depending on whether the firm is relying on outsourced application services or hosting their applications in-house. Budget may also play a large role here.
Application Provider Must-Haves
People. The application and/or hosting provider must have a structure that allows for them to be available when needed (whether through a help desk, etc.), and must be able to comfortably adapt to changes in its clients’ businesses.
Scalability. The provider must be able to be there for the long run, providing a system that handles the company’s growth without having to reinstall a new system and convert the data.
Strong Ecosystem Support. Firms can turn to the experts and create trusted partnerships with counterparties and consultants who have worked with similar client types (which will allow for them to understand the products being provided).
Ease of Use. This is not as important as the above three because most systems have the same functionality. A firm must survey the big picture when it comes to choosing a provider.
When it comes to evaluating which application vendor is right for your business, here are five key questions to ask:
Does your software work in hosted environment?
How is the application deployed? (e.g. via the Internet, Citrix, etc.)
Are there any limitations?
Do you have recommended hosting partners?
Will there be any changes to my Service Level Agreement?