Finding Agility & Focus by Hosting Your Hedge Fund Applications

Earlier this week, we hosted a webinar on the topic of application hosting in the cloud and featured our newest partner, Black Mountain Systems. Our speakers looked at the benefits firms can realize from hosting their hedge fund applications in the cloud as well as the future of cloud adoption. Let’s take a closer look at what was covered.

Here at Eze Castle Integration, we see the adoption of cloud computing continuing to grow in a significant way, particularly among new startup firms. Realizing the operational and financial benefits of a cloud infrastructure, nearly 95 percent of new startup funds are opting to utilize the cloud. Existing firms are also shifting in this direction (though at a much slower pace), and we’re seeing on-premise infrastructure deployments starting to decline.

Firms can reap significant operational benefits from hosting applications in the cloud. For one, the cloud provider (and not the hedge fund) is responsible for management and maintenance of the infrastructure as well as managing upgrades and software procurement. There is a quicker turnaround time when firms need to add users or resources, and adding an application to an existing cloud platform becomes a much simpler process than dedicating servers and on-premise equipment. Another operational benefit is that firms who have existing technology staff can reallocate those internal resources and refocus their attention on higher priority areas of the business.

From a financial perspective, there are no costs for the firm to incur relative to upgrades or maintenance, and in some cases with smaller firms, overall costs can be lowered as a result of application hosting or cloud adoption.

How Do I Choose a Cloud Service Provider?

Choosing who to work with to manage your firm’s cloud environment can be a daunting task. Here are a few key considerations to keep in mind as you go through the evaluation process.

Type of Cloud (Public vs. Private/Managed)

A public service provider provides the CPU, memory, and storage resources you need and gives you the control to build your application. But beyond that, you might not receive a whole lot from that relationship. A managed service provider (such as Eze Castle) delivers these essential building blocks but also provides staff and industry expertise to truly manage your firm’s infrastructure and resources.

Geography/Proximity

Consider where your firm’s offices are located and where you’d like to be in relation to “the cloud.” Firms engaged in high-frequency trading, for example, will benefit from low latency and therefore short distances to financial markets and stock exchanges. You should also consider the distance between your office(s) and cloud infrastructure and how the end user experience may be affected by said distance.

Quality of Data Center Facilities

Keep these factors in mind as you evaluate cloud providers:

• Level of Operations/Support (Who manages the facility?)

• Redundancy (Is it a N+1 configuration?)

• Power/Cooling Resources (Are multiple power grids utilized to protect uptime?)

• Certifications and Standards (Is it SSAE-16 certified?)

• Security (Are there physical and digital security standards in place?)

Data Transit Options

Some clouds charge firms every time data is sent in and out of the cloud. This charge is based on the size of the data. Other providers offer a subscription service which allows for an unlimited amount of data to be sent in and out at a fixed monthly price. Depending on your transmission levels, one of these options may make more sense for your firm than the other.

Backup & Disaster Recovery

When it comes to protecting your firm’s critical data and infrastructure, you can never be too careful. Be sure to ask if backup and DR are included and where your data is stored. Are there limitations on restored data if a disaster occurs? What is the time frame to restore data to a secondary location?

Documentation and Transparency

Ensure your cloud provider is open and honest with you about both the cloud infrastructure and the processes that support it. Are Service Level Agreements in place and do they align with your business requirements? Can SLAs be revised if and when your business changes? 

Trending to the Cloud

A recent report by CEB TowerGroup, expects the majority of applications will be delivered via the cloud in 2015 and “cloud adoption is potentially highest for post-trade activities, such as accounting, reporting and performance measurement.”

Here at Eze Castle, we see the movement to the cloud continuing, whether it be for hosting applications or full technology outsourcing. Either way, firms are shifting away from deploying costly infrastructure on-premise and leaning towards the operational and financial benefits the cloud offers.