It’s time to take another close look at the results of our 2016 Private Equity CTO Survey, this time with a careful eye on how private equity firms are leveraging outsourcing and cloud services.
Private equity outsourcing is growing in popularity – and we discussed many of the reasons why at length in a September webinar which you can listen to here. Our survey findings tell us that the average private equity firm is outsourcing about 30 percent of IT, with of course, some firms outsourcing less frequently and some outsourcing more.
On the whole, most firms are leveraging outsourced third party providers for between 20 and 40 percent of their IT functions. Firms managing less than $100M in assets are the most likely to outsource greater portions of their IT services, likely given their lack of internal staff and resources.
Overall, firms’ propensity to manage technology via in-house resources, outsourced providers or contract work is expected to stay consistent in 2017, as evidenced by the graph below.
As you probably recall, our 2016 Private Equity CTO Survey – which we released at the end of November – highlights key IT priorities and investment areas driving private equity firms in 2017. And while we shared some high-level findings at the outset, we’d like to take the opportunity to dig a little deeper into some of the survey results over the next two weeks. Since the survey itself covered four primary areas, our next four Hedge IT articles will examine each of these areas independently and highlight some of the most interesting and thought-provoking findings.
To kick us off, let’s start by taking a look at some critical business priorities for private equity firms in 2017.
Drivers for Private Equity IT Investments
We all know and appreciate how technology can impact our day-to-day operations. For private equity firms, advances in technology have enabled their businesses to become more efficient and drive growth across the entire organization.
When asked to identify the top drivers impacting IT spend in the next 12 months, survey respondents highlighted the need for increased protection against growing cybersecurity threats, a desire to improve the investor/client experience, and the goal of improving efficiencies by refreshing outdated or legacy technology.
As we predicted in our recent article on 2017 technology trends for financial firms, cybersecurity and protection of personal information remain key priorities in the new year. Ensuring that information is secured is becoming infinitely harder as hackers find more ways to access, expose and compromise data. Up-and-coming security scams such as “popcorn time” and “typosquatting” are just some examples of new ways hackers are exposing data. With this in mind, we’ve identified three IT security must dos you should employ in 2017 to protect yourself and your organization.
The best New Year resolutions are the ones you can stick with. So here are our three simple technology resolutions for 2017 which you can use in your personal and professional life.
Resolve to Change Your Passwords, Make them Unique
Passwords are the keys to your virtual kingdom so treat them as such. These days having a password is not enough. Users must have complex passwords that incorporate letters, numbers and symbols and that change often. Here are some other password tips:
Substitute letters for numbers and use phrases to remember and create unique passwords. For example, “I love Gmail” can become “!l0v@gm@!l” – something you’ll remember but is hard for someone to guess.
Avoid using personal information in your password that may be easy for someone to figure out. Things to avoid include your name, address, date of birth, pet’s name and children’s names.
Don’t use the same password for all your accounts – switch it up. For example, you can use the same word but change it up by capitalizing different letters or substituting letters for numbers.
Be sure to change your password often. We recommend changing a password every 30-90 days. Many of our clients already have automated procedures in place to enforce this policy.
Check Your Social Media Privacy Settings & Be Social Aware
The rise of social networking online has reduced privacy expectations across the globe. We must be more aware of the automaticity of our behaviors and tendency to trust sites while browsing the web. In this tug-of-war between security and connectivity, users can regain control of their personal information. Instead of dispensing reams of sensitive data, choose to keep what’s private, private. Adopting an alert awareness while interacting on social platforms and thinking twice before your next “like” could go a long way.
Happy New Year! Seeing how the calendar now reads January (we're still in denial, too) and there are a number of weather systems being monitored across the US, we thought it might be best to kick off the year here on Hedge IT with some helpful weather-related business continuity tips.
Here are eight to keep in mind as the next winter storm approaches.
1. Determine how/where your employees will work in the event of a winter weather scenario.
Some firms opt to identify a secondary work site, but in the event of a widespread or regional event, you may find that location is inaccessible also. You should also consider if transportation is/will be impacted by the weather. If road conditions are bad or public transportation is shut down, employees will have to remain home.
If your firm supports remote access capabilities, ensure employees are prepared with the necessary infrastructure, workload expectations and communication tools.
2017 is quickly approaching and so are a plethora of new financial technology and operations articles here on Hedge IT. As we wrap up 2016, let’s take a look back and share some of our readers’ favorite articles from this past year.
Tips for launching a hedge fund are always popular on Hedge IT, and 2016 was no different. Earlier this year, Eze hosted a webinar featuring speakers Paul Schultz from Wells Fargo, Michael Mavrides from Proskauer Rose LLP, and Bob Guilbert from Eze Castle Integration. A few key takeaways from the 1-hour event include:
Understand that investors will expect enterprise-grade technology built in from Day 1.
Remember the advantages of the cloud: a predictable cost, flexibility and scalability (“tech on demand”), enterprise security, and professional management and monitoring.
Compare both the benefits and disadvantages of a “master fund” versus a “side-by-side” structure (e.g. the master fund allows for one set of books and trades, while the side-by-side structure allows for more tax flexibility)
Show investors that you have a 3+ year budget for working capital without any performance fees.
The start of 2017 is just around the corner, and we expect there will be a lot to keep our eyes open for on the technology front. Here are some hot tech trends we think will be top of mind for firms in the coming year.
Hyper-converged infrastructure is a type of software-centric system that combines the server and storage components of a virtual machine into one appliance. Hyper-converged systems provide simplicity and savings by bringing all required functionality into one infrastructure. And unlike a merely “converged” infrastructure, hyper-converged systems are software-defined, meaning their hardware components cannot be separated and function independently.
Centralized Encryption Key Management
As companies decide to protect more data, they in turn have become more dependent on encryption keys. This means management and governance of those encryption keys is a major effort. Many firms are moving towards centralizing their encryption key management protocols, ensuring end users across the organization are following the same policies and protocols.
Categorized under: Trends We're Seeing
With the holidays around the corner, people are using their email more than ever to book flights, order gifts, check shipping statuses and more. But what do you do when your privacy and personal information is taken and exposed? Last week, Yahoo disclosed that a minimum of 1 billion accounts were hacked back in 2013 – and that the incident is separate from a similar hack in 2014 announced just three months ago.
The most recently announced attack exposed user information including names, telephone numbers, dates of birth, encrypted passwords, and unencrypted security questions. Since the breach became known, Yahoo has prompted all affected users to change their passwords and is invalidating unencrypted security questions.
Unfortunately, users are feeling pretty discouraged about the safety of their personal information amidst these seemingly frequent security breaches. In the last two years alone, this is the third security breach Yahoo has experienced. While the reality is that Yahoo is not the only target of Internet hackers, its users are understandably concerned about how the company is adapting to industry security standards. While we’ve yet to see if this latest breach will have an effect on Yahoo’s potential $4.85bn sale to Verizon, in the meantime, Yahoo users should be taking matters into their own hands. No, that doesn’t necessarily mean you need to close your Yahoo account. But it does mean that you need to practice smart IT security going into 2017.
When it comes to protecting your investment firm from serious cybersecurity threats, it's safe to say that less is definitely not more. In fact, it takes a pretty heavy arsenal of security measures to combat the ever-growing threats targeting your firm from both the inside and the outside.
But it may not be realistic for your firm to employ every cybersecurity technology/tool and develop and maintain a host of security policies - at least not from day one.
Luckily, we’ve developed a handy cheatsheet to help you assess some of the cybersecurity protections that should be on your list. You’ll notice we’ve divided them by tiers, because, well, you’ll need to decide how much of your time, budget and resources are spent protecting your firm’s assets.
Tier 0: This is the ‘must-have’ list. There is no getting around these security measures.
Tier 1: This tier incorporates a few enhanced features as well as a strong contingency of policies to support your cybersecurity program. Plus – and here’s the big one we keep talking about – employee security awareness training. Tier 1 is typically where most investment management firms fall today.
Tier 2: This can be considered an “advanced” tier, with the incorporation of progressive tools such as intrusion detection/prevention systems and next-generation firewalls. But this is quickly becoming the norm for mid-to-large asset managers, particularly as a means to demonstrate preparedness to institutional investors.
This year an estimated 2.8 million college graduates entered the workforce, most of whom are millennials. Millennials have now become the largest share of the US workforce, and as a result, are placing greater demands on firms that now need to adapt in order to attract new talent. What does this mean for IT? A greater focus on cloud adoption.
Millennials, by virtue of the fact they were born in the last thirty years or so, have spent their adult lives thus far exposed to and surrounded by technology. Being some of the first to adopt some of the newest technologies including social media, smartphones and mobile apps millennials have a lifelong reliance on technology and are used to having information at the tips of their fingers. They have grown up during the advent of the cloud and are not interested in relying on more traditional technology systems and infrastructures that are often more high cost and likely to become outdated. Up-to-date technology is a norm for millennials, and they expect it to be at their disposal.