6 Common Cloud Mistakes and How to Avoid Them
We all make mistakes, but when it comes to technology and investment operations, mistakes aren’t an option. So, let’s look at six common cloud mistakes we see financial and investment management firms make and talk about how to avoid them.
Mistake #1: Not Sizing Bandwidth to Business Needs
Determining the right amount of bandwidth comes down to the types of services being delivered and user expectations. Nothing ruins a cloud - or really any computing experience - like sluggish application and Internet performance.
Beyond bandwidth, firms must also consider latency. While latency issues don’t impact all applications (i.e. email is relatively insensitive), for others it is a killer. Latency has little place in trading applications or voice over IP services. When moving to the cloud, have a realistic conversation with the cloud provider about the amount of bandwidth your firm really needs.
Mistake #2: Not Planning for Applications
Not all cloud platforms are equal, especially when it comes to supporting investment firm specific applications such as Order Management Systems or Portfolio Accounting Systems. While an investment management firm may not launch day one with one of these applications, there is a good chance they will require one in the future. To help mitigate future growing pains, a firm should plan for the future when evaluating cloud providers. Being shortsighted can result in future disruptions and integration pains.
Mistake #3: Not Having Cloud Service Level Agreements (SLAs) in Place
The Cloud Standards Customer Council defines cloud SLAs as written expectations for service between cloud consumers and providers. The Council advises companies to evaluate cloud SLAs using a number of steps including:
Understand roles and responsibilities
Understand service and deployment model differences
Evaluate security and privacy requirements
Evaluate disaster recovery plans
Understand the exit process
Mistake #4: Not Understanding Cloud Vendor Lock-in Costs
Following on understanding a cloud provider’s SLAs, firms must also fully review and understand vendor lock-in costs that may be included in a contract.
Techopedia explains “vendor lock-in as a service delivery technique that ensures customer dependence on the vendor services. This is achieved by developing IT solutions that are platform-dependent with proprietary software/application/hardware/equipment and that run exclusively or collaboratively with limited and third-party vendor partners. Moreover, these types of services dent high switching costs between competing vendors, making customers reluctant or even incapable of transitioning to different vendors.”
Be sure to discuss potential cloud lock-in costs with your selected cloud provider.
Mistake #5: Assuming Deep Security Safeguards Are in Place
Concerns around cybersecurity are top of mind across the financial and investment industry, and rightfully so. Beyond the SEC shining a spotlight on the topic, the risks of security breaches and incidents are real.
When evaluating a cloud provider, firms should inquire about the layers of security in place and ensure the cloud undergoes regular risk assessments. As we’ve said before, not all clouds are created equal, and security is one key area where differentiation occurs.
Mistake #6: Not Matching Backup/Archiving Requirements with Cloud Services
Don’t assume that the backup processes included with your cloud service will match industry regulatory requirements, especially when it comes to message archiving. In most cases hedge funds and registered investment firms will need to add a long-term archiving solution to their cloud package.
That wraps up our list of the six most common cloud mistakes and how to avoid them.
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