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Why Cloud Computing is Right for your Hedge Fund

By Eze Castle Integration | Monday, September 17th, 2018

There is little doubt that the movement to the cloud within the hedge fund industry is significant. For hedge fund startups, cloud adoption is becoming nearly universal. In addition to cloud adoption, the general trend toward outsourcing continues to grow, as investment firms realize that multiple aspects of their business can be outsourced (accounting, staffing, etc.)

What is Driving Hedge Fund Cloud Computing Adoption?

There are a number of factors responsible for driving the hedge fund cloud computing trend, including investor acceptance, the increased need for hedge fund disaster recovery, staffing considerations, and, of course, cost.

Years ago, hedge funds and investment firms had to spend a lot of capital building their own infrastructure. Post 2008 economic crisis, however, there is wide-scale acceptance of the  cloud, even from investors. Many investors actually prefer cloud technology and its inherent ability to easily and quickly deploy additional resources, memory, CPU, etc. 

Accordingly, the quality of hedge fund cloud offerings by service providers has increased to meet the growing demand. The added benefit of third-party expertise and experience often eases the minds of investors who may find discomfort in funds managing their own technology in-house.

 Both investors and new regulations are also driving the need for robust and redundant disaster recovery, business continuity and security plans, which are easily deployable via the cloud.

Staffing is also a consideration for firms thinking about moving to the hedge fund cloud. Especially for smaller startup funds who may have limited means and resources, the reality of hiring and training an internal IT staff is often impossible. Expertise in-house can be hard to find as well as costly.

Speaking of cost, it is also a significant driver in the move to the cloud. Again, for startup funds, in particular, who have limited capital to allocate to technology, the cloud offers an alternative that requires minimal to no upfront capital expenditures on day one.

Hedge Fund Cloud Technology Drivers

In the last five years, there has been a major shift in the investment industry toward new and evolving technologies. This transition can be attributed to three primary factors:

Cloud Cost

Virtualization and storage technology has evolved and can now be deployed at much lower costs. Hedge fund cloud solutions - both public and private - are based at redundant data centers, and the cost of dedicated connectivity to these facilities has also decreased. 

Cloud Risks

The investor due diligence process is more extensive than ever, and investors want to understand the associated risks that come with managing your own technology infrastructure in-house. Investors are learning to assess single points of failure not only within physical infrastructures, but also within technology staffs. If only one employee is qualified and capable of a given technology task and that person becomes unexpectedly unavailable, it creates a risky situation for the firm and the investor. The market has embraced outsourcing for this reason, as it can reduce risks significantly by utilizing organizations that can monitor production and disaster recovery infrastructure 24x7x365.

Hedge Fund Redundancy

Hedge funds (and their investors) want to see that their data exists in an environment that has physical redundancies, including multiple power grids, cooling units, access to many lines of connectivity, as well as an easy path to switch to disaster recovery. One of the greatest benefits to cloud computing is that with the right provider, a hedge fund can have their data and applications reside in a redundant environment and easily deploy their disaster recovery at another physical location in the event of a disruption.

What to Look for in a Hedge Fund Cloud Provider

While there is a significant adoption taking place relative to the cloud, it is important to be selective in picking a hedge fund managed cloud provider. There are considerations including:

  • Identifying and defining your firm’s key applications and data requirements. 
  • Understand where you cloud data will reside
  • Ensure your  cloud has a robust disaster recovery platform behind it.
  • Select a hedge fund cloud provider with a award-winning IT support team.

Learn More About Eze's Hedge Fund Cloud Solutions!

10 Myths about Moving to a Hedge Fund Cloud

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