Chris Grandi

Cloud Proving To Be Major Resource For Hedge Funds

Major Resource for Hedge Funds

As we near the end of Q1 2013, hedge fund managers continue to generate higher returns. Following several years of sub-par performances from global hedge funds, investment managers have turned to cloud computing and infrastructure-as-a-service providers to not only cut costs, but also boost productivity. Many of the concerns that managers once had about migrating to cloud-based IT solutions, such as security, privacy and application performance, have been alleviated, and the benefits, such as cost predictability, business continuity and scalability, are tangible.

Cost Predictability

As small- to medium-sized hedge funds look to do more with less in the face of today’s regulatory and investor pressures, they need to be able to anticipate and account for their expenses. These firms don’t typically have the budget to absorb surprises related to building and maintaining on-site data centers, which can bring major distraction, a budgeting nightmare and significant risk. A cloud services model offers an out-of-the-box functional infrastructure, deployment in days and drastically reduced start-up risk. Cloud providers own all the equipment and are already used by other funds, so the manager doesn’t need to write the big check up front or worry about any potential missed details.

Unpredictable expenses don’t stop once the data center is built. Equipment can break or simply need to be replaced, and firms face mandatory system upgrades, data corruption and hard drive failure, among other challenges. Adding or removing capacity can also result in hard-to-predict costs, and staff levels must be adjusted at certain thresholds — preferably before workloads reach critical levels. Cloud service providers hedge this risk in exchange for a predictable monthly subscription fee, where even the added or lowered costs of scaling the needed capacity is predictable, since the cost and required lead time for making that change are known ahead of time.

Business Continuity

Hedge funds are held to high standards when it comes to their business continuity plans. A technology failure can be disastrous for money managers, yet more firms than ever are entrusting cloud service providers to “disaster proof” their business. This is because dedicated cloud service providers benefit from economies of scale and can offer a product that is constantly validated by others using the same service. Relocating and replicating IT resources to off-site locations also protects businesses from disasters in primary offices. Funds can tailor solutions to their specific business needs, or outsource “a-la-carte,” moving all their IT resources off site, or outsourcing only key components.

Key man risk is also common in hedge funds with only one or two IT people that are qualified to trouble-shoot technology issues. If those individuals are unavailable at a time of emergency, the result can be disastrous for the business. Consultants can help in an emergency, but they still require time and money to gain familiarity with the IT environment. Having just a few key IT individuals also poses the risk of their own limited capacity; it’s not feasible for one person to monitor the health of an on-site data center 24/7 with very short response times. Conversely, cloud service providers employ teams of dedicated staff that monitor the network 24/7.

Scalability

Cloud providers offer the unique ability to quickly and cost-effectively meet changing business needs. Hedge funds no longer need to worry about how to expand their IT capacity, technical staff levels or server space, or fund new hardware and software resources to grow or enter new markets. Instead, managers can embrace an outsourced model that lets them focus on their core business rather than invest time and effort into solving IT problems. “Scaling down” can be as simple as a phone call, meaning fund managers no longer need to focus on staff layoffs, reselling hardware, or low data center use.

By using these services, hedge funds no longer have to spend the time and money required to build an in-house platform. Cloud service providers can offer an established infrastructure to get managers up and running within days instead of weeks or months. While some managers still perceive cloud computing as an emerging trend in the financial space, it has undoubtedly become an integral part of many hedge funds’ business strategies. It has become evident that IT outsourcing services run day-to-day operations more efficiently and offer managers the chance to scale more effectively, enabling firms to turn over the hassle of managing IT to a trusted partner and focus instead on their core business.

By Chris Grandi, CEO, Abacus Group

CloudTweaks

Established in 2009, CloudTweaks is recognized as one of the leading authorities in cloud connected technology information, resources and thought leadership services.

Contact us for a list of our leading programs.

Protect Against Network Failures

Five Things Organizations Can Do To Protect Against Network Failures

Protect Against Network Failures It is no surprise that whenever there is an outage in a public or private cloud, ...
My Fascination with Amazon Go

My Fascination with Amazon Go

Amazon Go Recently, Amazon unveiled the world’s first completely self-service, no checkout, grocery store — and it’s really captured the public’s imagination. Lines ...
Cloud Migration Strategies and Their Impact on Security and Governance

Cloud Migration Strategies and Their Impact on Security and Governance

Cloud Migration Strategies Public cloud migrations come in different shapes and sizes, but I see three major approaches. Each of ...
Business Intelligence And Analytics In The Cloud, 2017

Business Intelligence And Analytics In The Cloud, 2017

Business Intelligence In The Cloud, 2017 78% are planning to increase the use of cloud for BI and data management ...
Write Once, Run Anywhere: The IoT Machine Learning Shift From Proprietary Technology To Data

Write Once, Run Anywhere: The IoT Machine Learning Shift From Proprietary Technology To Data

The IoT Machine Learning Shift While early artificial intelligence (AI) programs were a one-trick pony, typically only able to excel ...
What the Dyn DDoS Attacks Taught Us About Cloud-Only EFSS

What the Dyn DDoS Attacks Taught Us About Cloud-Only EFSS

DDoS Attacks October 21st, 2016 went into the annals of Internet history for the large scale Distributed Denial of Service (DDoS) ...
Amazon, MLB add machine-learned stats to cloud deal

Amazon, MLB add machine-learned stats to cloud deal

SAN FRANCISCO (Reuters) - Amazon.com Inc will provide a new set of real-time statistics and graphics on live baseball games later this season, expanding its cloud computing deal with U.S. Major League Baseball, the two ...
Worldwide Spending on Blockchain Forecast to Reach $11.7 Billion in 2022, According to New IDC Spending Guide

Worldwide Spending on Blockchain Forecast to Reach $11.7 Billion in 2022, According to New IDC Spending Guide

FRAMINGHAM, Mass., July 19, 2018 – Worldwide spending on blockchain solutions is forecast to reach $11.7 billion in 2022, according to a new update to the Worldwide Semiannual Blockchain Spending Guide from International Data Corporation (IDC). IDC expects ...
Microsoft quarterly results beat as cloud revenue soars

Microsoft quarterly results beat as cloud revenue soars

(Reuters) - Microsoft Corp (MSFT.O) on Thursday posted quarterly profit and revenue that beat analysts’ estimates, as more businesses signed up for its Azure cloud computing services and Office 365 productivity suite. The company’s flagship ...