While it’s not the sexiest aspect of a hedge fund’s operations, a firm’s technology infrastructure is critical to its success. But a major consideration lies in choosing what type of infrastructure to use, and accordingly, where to host it.
Earlier today, we picked the brain of our Vice President of Client Technology, Steve Schoener, and asked him to share his expertise on the key drivers for firms migrating to the cloud. He also shared two examples of clients who’ve successfully transitioned to the cloud for various reasons. Below is a short recap of Steve’s presentation.
Would you rather watch the full replay? Scroll down or click here.
The Right Time to Think About the Cloud
We find that there are typically three points in time when it makes sense for an investment firm to think about moving to the cloud.
If you’ve outgrown your office space or need to relocate for any reason, it may be a good time to evaluate your infrastructure. Firms can save money by eliminating the need to build out a new Comm. Room in a new office, as the price of real estate, power, cooling and other resources can be quite expensive to incur. Plus, think about how easy the moving process will be without having to worry about moving your complete infrastructure. There is inherently less work and less risk involved in moving to the cloud during this time of relocating offices.
There comes a time when your firm’s hardware will reach the end of its lifecycle, and it will be time to make a significant investment in new technology. Similar to relocating offices, the idea of transitioning from in-house hardware to the cloud offers promising results and less upfront expenses. The migration process is mostly painless and similar to upgrading to new hardware on an on-premise solution.
Adding a New Application
Your firm may also decide to reevaluate its infrastructure options when the time comes to add a new application to its suite. For example, adding an order management system, with the cloud, can take merely hours, and firms are no longer tasked with unpredictable costs as a result. In most cases, adding a new application to the cloud is non-disruptive and does not affect the user experience.
Inquiring Minds Want to Know
Here are Steve’s answers (paraphrased, of course) to some commonly asked questions we see from our clients about the cloud:
What are my peers doing? Nearly everyone is moving to the cloud; we’re seeing almost all new business clients choose a cloud solution, and many existing firms are migrating over as a result of many of the circumstances mentioned above.
What will investors think? While investors were previously skeptical of the cloud and asked endless questions during due diligence requests, nowadays investors are extremely comfortable with cloud solutions and are oftentimes asking firms why they AREN’T in the cloud. Not to mention, in a post-Sandy world, investors do not want to see firms with infrastructures located on-site.
What are the cost differences between the cloud and on-premise solutions? In many cases, the long term costs between the two solutions will not vary dramatically. The real savings from the cloud are realized upfront, as firms do not have to commit to capital expenditures of day one and, instead, utilize predictable, ongoing cost models.
What about security in the cloud? In my opinion, the cloud is more secure than many technology infrastructures managed in-house by investment firms. Eze Castle invests significantly in our cloud in an effort to make it the most secure environment for our clients.
Client Case Studies
We examined two client scenarios whereby firms made the move to the cloud for different reasons. Watch the replay below and listen to what Steve had to say about each of these circumstances and why it made sense for these clients to choose the cloud over an on-premise solution. (Jump to 17:32 for our first case study).
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