There are many reasons the hedge fund industry is gravitating towards cloud computing, and typically these reasons center around increased efficiencies, improved technology environment and cost savings.
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.
Finally, a cloud solution offers advantages around time to deployment since the timely element of a custom build-out is eliminated.
Through cloud services firms gain the opportunity to convert from Capex to Opex. While building out a comm room or data center requires capital expenditures, using an external cloud service that offers a pay-as-you-go service falls into ongoing operating expenditures. The transition to a cloud service provides many cost-savings beyond just eliminating the need to purchase and refresh equipment.
When weighing the costs associated with maintaining a server and other data center equipment in-house it is important to consider:
- Direct costs including power, real estate/floor space, storage, and IT staff to manage the resources
- Indirect costs including network and storage infrastructure and IT staff to manage the environment
- Overhead costs including procurement, accounting and IT
When added to the cost of an internal server, these factors significantly raise the monthly overall cost to host a server and make cloud services more attractive.
The cloud delivery model also offers many benefits around increasing operational efficiencies at hedge funds that translate into streamlined technology oversight and potential cost savings. These include:
- Eliminating server technology refreshes in-house while also ensuring a firm has the latest technology powering it
- Reducing IT overhead by using a third party, such as Eze Castle Integration, to handle all infrastructure maintenance, monitoring and management
- Decreasing the cost of designing and deploying new applications due to the standardized infrastructure that is fully managed