What Happens to Your Firm's IT Team When You Go Cloud?
According to our 2019 Global Technology Survey, 64% of firms are currently using a of cloud platform, with an additional 26% of respondents planning on moving within the next two years.
As your firm evaluates moving to the cloud – as most firms today will inevitably do – your list of priorities will likely include:
Regulatory and investor impact
Migration plans and operational effects
Hardware disposal and infrastructure changes
But another critical business area your firm should put some thought into is the effect of the cloud movement on your internal IT department (assuming you have one). What exactly happens to a firm’s IT team once it moves operations into a cloud environment? Is there still value in maintaining an in-house staff?
The simple answer is ‘yes,’ but the day-to-day responsibilities for those staffers may not look quite the same post-cloud. Outsourcing to the cloud continues to grow in popularity among firms small and large. With a fully managed service provider, everyday management is typically taken care of – leaving internal resources with a lot more time on their hands. But that doesn’t mean there’s no longer a need for an IT department. And it certainly doesn’t mean IT managers should be left to twiddle their thumbs.
As the role of the CTO evolves, particularly in light of cloud adoption, many firms expect their CTOs/IT Directors to take on additional responsibilities, including:
Upgrading IT and data security to avoid cyber attacks (55%)
Improve the investor/client experience (45%)
Improve business agility in response to market changes (43%)
Support globalization and business expansion (20%)
These and other long-term projects are ideally suited for a full-time technology staff no longer bogged down by day-to-day cloud maintenance, time-consuming patch updates and frequent licensing upgrades. Take a closer look at some strategic projects your hedge fund or private equity firm's CTO can dedicate time to once on the cloud:
Cyber Risk Management. You’ve heard us say it before, but cybersecurity is (still) a hot topic in the investment industry. With SEC eyes looming and investors playing cautious with investments, it’s critical that firms take the time to assess their security practices and employ robust programs to meet growing demands. Even for firms that choose to leverage an outsourced cloud solution for their daily infrastructure (which may come with some inherent security features), any physical infrastructure that still resides on-premise at the firm would need to be protected. Beyond management of on-premise technology, investment firm IT staffs should also be forward-thinking and address large-scale cybersecurity initiatives and ensure the entire organization is involved in mitigating security issues.
Regulatory Compliance. Outside of the SEC’s recent focus on cybersecurity, there are other regulatory issues firms should be sure to comply with. As part of a fund’s overall technology program, IT staffs should work with internal or external compliance experts to address any gaps the firm may have and ensure operations are in sync with existing regulatory requirements on state, federal and international (if applicable) levels.
Due Diligence. Investor expectations are higher than ever, and technology has become one of the most critical components of the due diligence process. As technology service providers, we assist our asset management clients with DDQs on a regular basis and have seen an immense uptick in both the quantity of requests as well as their complexity. Investors are no longer satisfied with ‘checking the box’ responses. Internal CTOs and IT staffs can assist this process enormously and often work directly with investors in providing the necessary information to secure allocations.
Application Integration. Hedge funds and private equity firms who employ custom or proprietary applications may look to keep IT staff on-site to manage not only integration, but development of the application set being used.
Organizational Support. To some, technology may seem like just another department within a business, but the fact is, IT is inherently linked to every aspect of an organization. As such, many firms continue to leverage internal staff to support operations and provide peace of mind to other employees within the office setting.
Despite the shift we are seeing firms make to the cloud, many funds today still look to leverage in-house technology experts and rely on them to assist with the aforementioned efforts and more. Moving infrastructure to the cloud is not a death sentence for an IT staff – merely an opportunity for firms to reevaluate priorities and reallocate resources to areas of the business most critical to the firm's success.
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Editor's Note: This article has been updated and was originally published in June 2019.