Whether you’re a small start-up or a hedge fund with offices reaching across the continent, the demand for seamless, efficient IT solutions is consistent. Perhaps more than in any other industry, financial firms rely on premier technology to manage their operations, including essential functions such as secure data storage and swift trade executions. With growing budget and environmental concerns, many financial firms are turning to cloud computing.
What is Cloud Computing?
Although cloud computing has become a buzz word in the IT industry, many businesses and financial firms aren’t entirely confident in what it is and how it can benefit them. In basic terms, cloud computing is the implementation of a third party to host a service or software application in a web-based repository. Through the use of a cloud, a firm no longer needs to purchase and maintain an exorbitant infrastructure.
I recently sat down with Matt Bretan, Director of Strategic Consulting at Eze Castle Integration, to further highlight how we are addressing our clients’ unique needs with cloud computing. Matt explained that with the cloud, we are able to level the playing field for smaller hedge funds and investment management firms by opening up otherwise costly IT solutions. The cloud also offers increased flexibility and grants rapid access to leading technology, updates and applications with minimal upfront costs. Traditionally, setting up a firm could take days. With the cloud, firms only need Internet access and can be set up in a matter of hours with seamless access to data and applications.
Eze Castle Integration helps make this possible through its Eze Managed Suite (*previously, Eze Virtual Office), which is a cloud hosted solution that bundles business applications with a high-performance infrastructure. With Eze Managed Suite, clients just pay for the services used.
Let’s take a closer look at why firms are using the cloud.
With a cloud, there is no need to purchase expensive infrastructure that will also require additional space. Cities like New York and San Francisco tack on massive costs with the aggressive price-per-square-foot of real estate. With a third-party host, there is no need to crowd multiple servers into Communications (Comm.) rooms. This is particularly attractive to start-up funds that lack the upfront capital to set up their own infrastructure and the staff to maintain the equipment.
By adopting the cloud, firms are only obligated to pay for the resources they will need. This benefit certainly trumps the traditional system of purchasing advanced storage devices and servers that are tied to fixed costs. By operating on a utility basis, firms are able to adopt a pay-as-go service which is flexible and scalable to their specific needs.
Furthermore, the cloud opens advanced mobility features to many firms. This allows employees to work remotely from home or while traveling, freeing them from their desks during business hours.
Another distinct advantage of cloud computing is virtualization. The demand for additional storage, RAM and space can be easily met. With a traditional infrastructure, there are middle men requiring quotes, equipment to be ordered/delivered, etc. Additionally, the cloud computing system supports multi-tenancy, which increases utilization and efficiency by allowing multiple users to share resources.
While traditional infrastructure models place the responsibility of managing IT needs to the firm, the cloud alleviates this by placing the responsibility on the shoulders of the third-party provider. Hardware installations, constant server updates and other computing issues are tasked off-site, allowing the firm to focus on business-critical matters. Beyond the savings on equipment, additional capital is no longer needed to train and hire IT staff. Matt noted that while this is extremely beneficial to smaller firms, larger companies are now adopting the cloud for similar cost-saving strategies. Beyond the relatively inexpensive structure, the cloud can grow with your business.
By implementing the Internet as a gateway to technology, a firm can significantly decrease their impact on the environment. Resources such as power and cooling for supply equipment can be astronomical to maintain at peak performance. By outsourcing with cloud computing, firms are able to save all-around by having the host-party consolidate and absorb the costs with custom data centers which are designed for better efficiency.
Addressing Concerns & Challenges
Regardless of the benefits, cloud computing is still being met with resistance from the financial industry. With apprehensions about security breaches, increased standards (ie. recently passed MA 201 CMR 17) and overall performance, firms tend to discount the cloud model. Matt addresses this by explaining that the cloud is a proven technology that is becoming more secure. The proof is in government agencies and larger companies like IBM beginning to adopt the cloud.
Given the sensitivity of data in financial firms, it is understandable that confidence in a virtual system may falter. However, third-party hosts are well equipped to meet the standards in:
Data protection measures;
Security checkpoints; and
Moreover, Gartner Inc. highlights the increase in spending on cloud computing, despite the overall decrease in IT spending reported in 2009. Gartner noted that the revenue is set to exceed $56 billion, which is a 21 percent increase from 2008 (Wall Street Journal, 10/21/09).
Is the Cloud Right For Your Firm?
Cloud computing is a proven-safe, environmentally friendly and cost-effective technology. Depending on whether your firm’s priorities lean towards cost, maintenance or efficiency, the cloud may or may not be the best option to host your technology. Firms should adopt the best system based on the resources they have available, including capital, space, staff size and other requirements.
Want to Learn More?
Visit our Cloud Computing Knowledge Center that has an eBook, Video and numerous other articles on this topic.
*Photo Credits: Blog Experiencia3 and D Sharon Pruitt