Hedge IT Blog

Taking a page from the Cloud Forum (quite literally), today we look at the top three winning reasons hedge funds are gravitating towards the cloud.  Not surprisingly, these reasons center around increased efficiencies, improved technology environment and cost savings.

Scalable, Flexible and Available
The cloud offers firms the option of scalability without the serious financial commitments required for infrastructure purchase and maintenance. With cloud services there is no vendor lock-in or implied commitment beyond duration so firms have the flexibility to easily evolve their IT environment.

Another benefit is the ability to seamlessly add more users and/or computing resources to match the firm’s requirements. A hedge fund private cloud can deliver the infrastructure, bandwidth and network resiliency to accommodate business requirements for high speed access, storage and applications.

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The security threat landscape continues to evolve, and security through obscurity is no longer (and probably never was) an ideal approach to protecting the sensitive data of the hedge fund industry. A recent study by IBM found that cyber threats are expanding with 62% of managers believing that cyber threats are an increasingly serious risk to business.

The report found a 27% rise in cyber security vulnerabilities between 2009 and 2010 and noted that “early in 2011 officials at the International Monetary Fund revealed that it had been targeted by a sophisticated cyber attack – a threat that was considered so serious, the World Bank severed the computer ties through which the two organisations shared information.”

Another example cited was that “in June 2011 a black-hat hacker group known as LulzSec (or “Lulz Security”) targeted the website of the CIA in the US using a denial-of-service attack. This was the latest in a string of similar attacks against a range of government and public sector bodies.”

While these two examples occurred at large organizations, the risks facing smaller firms (read: hedge funds) are just as real. To that end, we recently had eSentire into our Boston office to speak with a group of hedge fund CTOs about the security landscape and their managed security technology. Feedback on eSentire’s offering and approach was positive and the spark for this tech spotlight article.

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On most days if you asked what I was doing on that exact day two years prior I wouldn’t be able to tell you, but today is different. Today is the second birthday for Hedge IT, our sweet, informative blog. So I know exactly what I was doing two years ago – I was writing and posting our first Hedge IT article, aptly titled “Welcome to Hedge IT.”

Sticking with the theme of ‘welcome to…’ and giving a node to our upcoming Hedge Fund Cloud Summit, today’s post is a welcome to the changing world of IT – now that the business world is going to the cloud.

Paradigm shifts are commonplace in the IT world. When talking to an IT veteran about cloud, he/she will likely reflect on the move from centralized computing (mainframes/mini-computers) to decentralized computing (Windows NT/Novell) and now back to centralized computing with the cloud.

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Opalesque TV recently sat down with Vinod Paul (of Eze Castle Integration!) to discuss how cloud computing is altering the technology landscape in the hedge fund industry. The conversation covered a lot of ground including:

• Public vs. Private vs. Hybrid Clouds
• The Migration from Traditional IT to the Cloud
• Impact of Reduced Costs in the Cloud
• Real-world Examples of Cloud Utilization
• Examining the Technology Environment for Startups
• Scalability with the Cloud
• Cloud Security Best Practices
• The Future of the Cloud

Watch the video now.

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Earlier this week – Tuesday, March 13 to be exact – sections of Boston lost power because of an electrical transformer fire that occurred behind the Back Bay Hilton Hotel. Approximately 21,000 people were without power Tuesday night and as of late Wednesday afternoon about 4,000 people were still without power including hundreds of Boston companies.

Companies whose power came back Wednesday morning experienced minor inconveniences, such as having employees who worked late Tuesday night have to travel down 46 flights of stairs since the elevators weren’t working. Other companies who were without power all day Wednesday weren’t so lucky. As of 3:00 p.m. today (Thursday) power is still out at Boston’s Prudential Center.

This unfortunate incident is precisely why disaster recovery and business continuity planning are so important. So important in fact that we are going to re-run an oldie but goodie from our interview last year with Lisa Smith, a Certified Business Continuity Planner at Eze Castle Integration.

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Are you tired of talking about the cloud yet? Good. Neither are we. In fact, we recently devoted our first webinar of the year to the topic. You can download the webcast replay of the event here. A summary of the key topics discussed during the webinar is below.

Increased Adoption of the Cloud

According to our managing director, Vinod Paul, over 80 percent of the new clients we brought on board last year are utilizing the cloud in some way, shape or form. As hedge funds continue to battle for institutional dollars, the smaller firms, in particular, are able to leverage the cloud for enterprise-level technology at an often reduced cost.

Speaking of cost, it’s one of the main drivers for firms moving to the cloud. Three to five years ago, hedge funds typically had to pay $300-500K dollars to set up an initial IT environment. In today’s rapidly changing landscape, firms are looking to pay less money out-of-pocket, as well as decrease their initial deployment times. With the cloud, resource deployment and allocation only take days or weeks instead of months.

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Before making the decision to move your IT infrastructure to a data center or colocation facility, there are a number of important criteria to evaluate. Let's review some of the most important.

Tiers – Data centers can occupy one room, one or more floors, or entire buildings. They are classified in terms of Tier Levels from Tier I to Tier IV, with Tier IV being the most advanced in terms of redundancy, security and availability.

Energy costs – As the cost of energy increases, analysts predict IT energy costs today are but a fraction of what future costs will be at current growth rates. Additionally, current trends indicate that server operating costs have the potential to equal their capital costs within three to five years.

Design innovation – Data center design is becoming increasingly important for improving operational efficiency. The foundation of data center design philosophy contains five core values: simplicity, flexibility, scalability, modularity and sanity.

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It's a big buzzword in the industry, but do you know how virtualization works? We're here to let you in on a little secret - it does more than you think!

Virtualization is more than just server consolidation and resource utilization. Yes, there is an inherent benefit in consolidating servers to reduce the instance of unused resources by allowing multiple operating systems and applications to run on one server.

But the business value of virtualization far exceeds simply reducing your firm’s physical footprint and the number of servers you maintain in your Comm. Room or data center.

Following are some key virtualization features that can allow your firm to operate on an enterprise level without the traditional enterprise investment.

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At the end of last year, we predicted that cloud computing would remain a hot technology trend in 2012 – particularly on the security front. As more and more firms move to this platform, we continue to see the technology and processes within the cloud evolve to support the growing needs of its users.

Following are five key cloud computing trends to look for in 2012:

1. Education will remain important.

The industry came a long way in 2011 in terms of learning about the cloud – what it is, how it works and more. But believe it or not, there is more to be learned. In 2012, we expect conversations to go to a deeper level and focus on topics such as cloud security, operational best practices within the cloud and cloud technology specifics.

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Happy New Year! We hope your 2012 is off to a great start. Whether you’re launching a new fund this year or ramping up your existing firm, you should (and probably do) know how important your firm’s technology is and will be to your success. More so than ever, technology plays a critical role for hedge funds and investment firms, allowing them to streamline processes and communication, get a leg up on competitors in the marketplace and provide investors with the utmost confidence. 

One of your first technology decisions of the year is your most important one: do you want your fund to operate on a traditional, on-premise technology infrastructure or utilize the cloud? This decision will affect many of your other technology choices, notably the type of office hardware and connectivity you will require, so we urge you to do your due diligence and select the option that best suits your firm’s needs.

Once you’ve made your infrastructure selection, there is a seemingly endless list of additional technology requirements for your firm. Luckily, I’ve whittled them down here to focus on some top technology priorities for you to focus on as you enter 2012.

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