Traditionally, hedge funds and private equity firms have allocated significant capital budgets to build out their own sophisticated Communication (Comm.) Rooms, which can take months to provision and bring online. With servers to buy and install, software to license and configure, and voice/networks to deploy – not to mention recruiting, hiring, and managing expensive and hard-to-find IT talent – it’s no wonder cloud solutions have emerged as the dominant choice for computing infrastructures at investment firms large and small.
Not surprisingly, many investment management firms – including those with well-established in-house infrastructures – are making the move to the cloud for a number of compelling reasons, most notably these five:
1. Timing. Understanding when the right time to move to the cloud might be is a smart first step. There are three typical inflection points: when you’re adding new applications, moving or opening a new office, or in need of an IT refresh. But even if you’re not under any of those circumstances, there are a lot of motivating factors (keep reading).
2. Cost Containment. You may not always be able to reduce the cost of IT in the long-run with the cloud (depends on your firm’s size and scope), but you will have a predictable budget to work with, which means you can contain costs and create greater predictability and smoother, linear cash flows. As an added bonus, you can better allocate funds to other strategic projects and areas more directly relevant to the business mission. Even within the IT discipline, instead of spending time on mundane, daily operation of commodity IT resources, the firm can focus on proprietary application development, application integration, cyber security protections or other strategic initiatives.
3. Features & Value-Adds. Don’t underestimate the value of the features available on a cloud platform. From enhanced security layers to enterprise communications, the cloud can deliver a full-scale package of resources for your firm, at a fraction of what it would cost for you to procure them individually on your own. A la carte, functionality such as disaster recovery, collaboration tools, file sync/sharing and 24×7 help desk support may not only set you back a pretty penny, but it may also leave you managing multiple vendor relationships instead of realizing the benefits of a single managed service platform.
4. Staffing & Utilisation. If you want to scale back on your staff or re-allocate how they spend their time, take a look at the cloud. CTOs and IT directors today have strategic areas to focus on, and moving the daily responsibility of IT over to a cloud services provider can benefit your utilisation in the long run. For smaller operations, leveraging the cloud to avoid the overhead of hiring and training an experienced technology staff altogether is a real option.
5. Security. And lastly, the cloud is becoming a vital option for investment managers looking to fortify their security environment. With regulators and investors both increasing expectations on the security front (cyber and otherwise), it’s imperative for firms to employ robust technology that can easily scale and meet growing demands. And to implement these various security protections onsite – everything from intrusion detection/prevention to next-generation firewalls to vulnerability assessments – can often be cost-prohibitive and resource-prohibitive.
