The technology treadmill is a tough place to be these days. Technology refresh cycles last only a mere three years, forcing firms to replace their infrastructures and make costly software and hardware upgrades on a too-frequent basis. And with hedge fund budgets tighter than ever, many firms cannot afford to stay on this path.
But the hedge fund technology treadmill is not a firm’s only option. Costly in-house, 'traditional' IT services have given way to more cost-effective outsourced IT and managed services that get firms off the treadmill and on a path to success.
Let’s have a look at some of the key reasons why hedge funds and other investment management firms are moving from on-premise technology infrastructures to cloud and managed services.
Keys factors driving hedge funds to managed services
Many firms are turning to managed IT services because it allows them to align their IT requirements with their business needs, including tighter control on budgets and staff. Moving to a managed service platform provided by a reputable outsourced IT provider not only makes it easier to deploy technologies, but also allows firms to benefit from platforms inherently designed to meet the constraints of limited IT resources and budgets.
Lower, more predictable costs
Moving to a managed service platform is one of the most effective methods for hedge funds and investment management firms to control IT costs while gaining access to innovative network technologies that can provide a competitive advantage. Firms avoid what was once a costly, upfront capital expenditure for hardware/software/etc. in favor of a scalable, predictable per user/per month fee that allows for greater transparency when it comes to technology budgeting and resource allocation.
Lower risk, more flexibility
Managed services also eliminate the risk that the company will endure if it needs to make a large capital expenditure to accommodate unplanned business changes. Scalability and flexibility within a cloud environment, for example, allow the firm to add or remove users on-demand and ensure infrastructure and resource allocation scales effectively to support the business operations.
Some other benefits include:
The ability to focus on core business competencies and save time
Increased levels of support and network availability, without the requirement of additional staff
Instant access to the latest technology solutions
Easier adaptation to changing business conditions
Hedge fund managed services can help firms to evolve in the midst of difficult economic conditions - or simply in the interest of maximising efficient operations – giving them access to cutting-edge technologies and management expertise – without the burden of ongoing investments and technology refreshes that slow down the technology treadmill.
Additonal Resources on Hedge Fund Technology:
Editor's Note: This article has been updated and was originally published in September 2011.