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The Hedge Fund CFO's IT Checklist: Questions to ask about the Cloud

By Dina Ferriero | Thursday, February 21st, 2013

Here on the Hedge IT blog, we love to talk about the cloud. However, most of our discussions focus on the technology and operational considerations for investment firms. This week, we’re taking a different approach and looking at the cloud from a business perspective. On Tuesday we explored the business case for moving to the cloud. Today, we’re taking the CFO’s point of view.
You’re a hedge fund CFO. Your CTO has proposed moving the organization’s IT infrastructure to the cloud using a third party service provider. What questions should you ask to gain a better understanding of the impact this change could have on your team and the firm at large?
Q: Is it cost effective?
A: Moving to the cloud gives the firm the opportunity to move from a CapEx model to OpEx. IT overhead costs are reduced, as capital expenditures on building out and managing an in-house data center or comm room are no longer necessary. The need for costly technology refreshes that are typically required every three years is eliminated. Instead, the firm moves to a potentially more cost-effective pay-as-you-go service model. From a finance standpoint, this means resources that have previously been bogged down in IT expenses can be reallocated to more value-add projects for the firm.
Q: How will it affect budgeting and forecasting?
A: Transitioning from CapEx to OpEx means that IT costs will become more predictable, as most models are based on a per-user format. This will make forecasting and budgeting for IT easier and predictable than ever, since costs only increase when the firm adds employees. Also, you won’t have to worry about unexpected expenses such as a power or heating failure in the comm room anymore.
Q: What if our firm grows rapidly, or opens a new office?
A: With a cloud-based infrastructure, the firm can seamlessly add computing resources on an as-needed basis. In the event the fund decides to open a new office in a different geographic location, the cloud provider can easily deliver all of the necessities to ensure users across both offices work together seamlessly, including infrastructure, bandwidth and network resiliency. Employees at the new location will have to access all systems and applications in real time while enjoying the same computing experience as those in the primary office. Scalability is a major benefit of cloud computing, and time to deployment of new resources is typically minimal as compared to traditional IT infrastructures.
Q: What about our employees who work remotely or travel frequently?
A: When all critical systems and applications are in the cloud, users have the ability to access them from anywhere, provided they have access to a computer, tablet or mobile device and an Internet connection. This enables employees to be more efficient when working from home or traveling for business.
Q: Will we have compliance issues with the SEC or other organizations?
A: Most top tier hedge fund clouds include all of the tools necessary to ensure the firm is compliant with all pertinent regulations. Services such as data archiving and retention, disaster recovery, data protection and backup are all crucial to meeting the stringent requirements of the SEC and other governing bodies – and they’re all part of a complete hedge fund cloud solution.
Q: Will this make us more vulnerable to hackers?
A: Quality private cloud solutions incorporate robust security systems which proactively scan the network for potential vulnerabilities or threats. Services such as eSentire’s real-time threat intelligence and mitigation solution are tailored to meet the unique security needs of investment management firms, and are included to help protect the firm’s IT infrastructure (well, in the case of the Eze Private Cloud at least).

Q: How will the cloud make my job easier?
A: A hedge fund cloud provider serves as the firm’s “one-stop-shop” for all IT needs. This means there are fewer vendors to manage, and therefore fewer contracts to review. As a CFO, you’ll simply work directly with your cloud provider to ensure all business IT needs are being met to your standards, and your contract with the provider is the only one you’ll need to worry about. Leave the rest to them and you’ll be able to spend your valuable time and attention operating the business itself instead of time-consuming administrative tasks.

To learn more about how cloud computing could result in greater operational and financial efficiencies at your hedge fund or investment firm, navigate over to our Cloud Starter Kit.


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