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Billion Dollar Club Goes Cloud


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An explanation as to why firms are moving to the cloud and the benefits from this movement

Published in: Economy & Finance
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Billion Dollar Club Goes Cloud

  1. 1. Why the Billion Dollar Club is Headed to the Cloud About Eze Castle Integration Eze Castle Integration is the leading provider of IT solutions and private cloud services to more than 650 alternative investment firms worldwide, including more than 100 firms with $1 billion or more in assets under management. The company’s products and services include Private Cloud Services, Technology Consulting, Outsourced IT Support, Project & Technology Management, Professional Services, Telecommunications, Business Continuity Planning and Disaster Recovery, Archiving, Storage, Colocation and Internet Service. Eze Castle Integration is headquartered in Boston and has offices in Chicago, Dallas, Hong Kong, London, Los Angeles, Minneapolis, New York, San Francisco, Singapore and Stamford. Visit us at The Rapidly Emerging Mandate for Cloud Computing
  2. 2. TABLE OF CONTENTS It’s More Than Managing Money………………………………………………………………………………………….3 The Business Case for the Cloud: Why Established Firms are Making the Move…………………...3 The Right Time: When Established Firms are Making the Move…………………………………………...5 The Cloud Advantage: Architecture, Access, Operations……………………………………………….……..6 The Cloud Advantage: The Converged Network…………………………………………………………………...7 The Cloud Advantage: Stronger Security, Lower Risk…………………………………………………………….7 Conclusion……………………………………………………………………………………………………………………………8 About Eze Castle Integration ……………………………………………………………..….…………………………….9 © 2014 Eze Castle Integration2
  3. 3. IT’S MORE THAN MANAGING MONEY There’s more competition in financial services than ever before. Every week, new and agile boutique firms sprout up, armed with proprietary models and the right technology foundation to compete – intensely – with the major players for billions of investment dollars. Firms of every size are competing to deliver broader ranges of increasingly exotic instruments, specialized funds, and high-performance investments that deliver competitive returns to investors whose demands and expectations continue to climb. But when it comes to performance and success in financial services, there’s more to evaluate than just the hard numbers. Returns alone aren’t enough. Today, savvy firms know they need to deliver more. In a post- Madoff, post-2008 world, the SEC and FINRA – and investors as well – are scrutinizing all corners of the operation. There’s an increased focus on how operational risk is managed and how firms respond to greater demands for transparency. That means it’s more important than ever for firms to deploy and maintain robust, scalable, and secure technology infrastructures. THE BUSINESS CASE FOR THE CLOUD: WHY ESTABLISHED FIRMS ARE MAKING THE MOVE Traditionally, investment firms have allocated significant capital budgets – millions of dollars – to build out their own sophisticated Communication (Comm.) Rooms, which can take months to provision and bring online. There are servers to buy and install, software to license and configure, and voice/networks to deploy. And these infrastructures also require firms to recruit and hire expensive IT talent to manage and operate. Increasingly, however, that model no longer makes good business sense for some firms. Today, cloud architectures are emerging as the dominant choice for computing infrastructures at investment firms of all sizes. With cloud computing, firms procure from a third party a scalable supply of computing, storage, and networking resources on a near-immediate basis without the upfront capital investments, delays, staffing requirements, or maintenance headaches. Funds can provision new servers in a few hours, scale up to meet short-term needs, and scale down when needs dictate. Best of all, that infrastructure is managed and protected 24x7 by dedicated professionals who focus solely on operating these services on a firm’s behalf. 3 © 2014 Eze Castle Integration
  4. 4. Not surprisingly, many firms – including those with well-established in-house infrastructures – are making the move to the cloud for a variety of compelling reasons: 1. Predictable and Favorable Economics – Cloud computing eliminates upfront capital investments and frees the financial services firm to allocate its capital to other areas more directly relevant to the business mission: talent development, research, marketing, and more. 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, and other strategic initiatives. What’s more, the conversion from capital expenditures to monthly operational costs creates greater predictability and smoother, linear cash flows. 2. Investor Transparency – Not surprisingly, investors want greater clarity about the firms they’re investing with. In most cases, they’re confident about their choices, but want the due diligence process to confirm and validate that the firm they’re working with can demonstrate appropriate levels of security, resiliency, scalability, business continuity, and more. 3. World-Class Capabilities – In the vast majority of cases (except perhaps, the largest global investment firms), an outsourced cloud provider can deliver an infrastructure that is superior to what the individual firm could create and maintain on its own. What’s more, it’s provisioned almost immediately, which means the firm can respond nimbly as market opportunities and threats emerge. 4 © 2014 Eze Castle Integration
  5. 5. THE RIGHT TIME: WHEN ESTABLISHED FIRMS ARE MAKING THE MOVE For newly emerging investment firms, the choice to adopt a cloud-based architecture is an easy one. Few firms have a business model where an in-house Comm. Room makes strategic or economic sense. But what about established firms that have been in business for several years and have invested millions of dollars in infrastructure? When is the right time to make a move? Opportunities and timing will vary, but generally speaking, the following three scenarios represent ideal inflection points for moving to the cloud: 1. Office Relocations – This is an ideal time to switch to the cloud. Many companies are understandably reluctant to take on the expense of moving a massive, expensive, and often outdated infrastructure to a new location – particularly if the company expects to phase out certain portions or components in the following 24-36 months. In such cases, migrating to the cloud before relocating offices can be a smart move. 2. New Applications – Larger firms with larger application portfolios often find that a transitional strategy is best. Abrupt migrations to the cloud can be disruptive. In those instances, financial firms find that new applications can start in the cloud – no subsequent migration needed. And those deployments are faster. While few IT portfolios will see 100 percent turnover in the short term, this strategy can simplify any migration of on-premise apps to the cloud by minimizing the work required when the company finally makes its move. 3. Technology Refresh – Similarly, many firms find that when the time comes to update infrastructure or upgrade applications, that inflection point represents an excellent opportunity to perform a cost-benefit analysis. In most cases, firms find that initiating a cloud migration for that particular component of the IT portfolio is the best choice. And since either choice introduces change, there’s no added burden to making that transition. What’s important to note is that, for an established firm, migrating to the cloud is not an “all or nothing” decision. The pace and scope of the transition to the cloud can be custom-fit to the firm’s business/strategic needs. 5 © 2014 Eze Castle Integration
  6. 6. THE CLOUD ADVANTAGE: ARCHITECTURE, ACCESS, OPERATIONS For most financial services firms, IT services and resources are managed at a data center, typically sited at a lower-cost location well outside of a typical high-rent office building. Many Manhattan firms leverage data centers based in New Jersey, for instance. The cloud uses a similar architecture, but the cloud services provider provides numerous advantages:  Rapid Provisioning – Since cloud providers serve numerous clients, they are constantly investing in component inventory and computing capacity, which enables them to quickly expand their resources and deploy the infrastructure firms need – in days, not months. Firms avoid the lengthy evaluation and procurement cycles, training on new hardware and software, and lengthy installation/implementation processes. The cloud vendor has already completed the learning curves and likely has far more extensive experience with the infrastructure components.  Consistent, Guaranteed Performance – Cloud vendors are in a good position to deliver the uncompromising performance that financial services firms require. In instances where performance concerns arise, Citrix gateways or other similar strategies can address the issue and eliminate any latency concerns. What’s more, continuous monitoring of the cloud environment helps the vendor anticipate and prevent potential performance slowdowns.  Professional Management and Operations – A cloud data center is staffed and managed by experts using best practices and governed by service level agreements. The financial services firm no longer needs to be responsible for tuning equipment, managing upgrades, applying security patches, creating data backups, performing routine maintenance, and other administrative headaches.  Complete Interoperability – Many providers are experienced in integrating leading applications and databases. Others can connect to other cloud infrastructures, specialized systems, and customized applications – such as low-latency, high-volume trading applications. 6 © 2014 Eze Castle Integration
  7. 7. THE CLOUD ADVANTAGE: THE CONVERGED NETWORK Financial services is, of course, a 24x7 global proposition. Even mid-sized firms need to rely on a worldwide network to support offices in other time zones, countries, and continents. That means connectivity to the cloud and to one another. That’s why the underlying network and network architecture supporting the cloud provider becomes an important factor in the migration. Companies demand resiliency, redundancy, scalability, professional monitoring, and ongoing investment to ensure it interconnects all of the vendor’s data centers and all of the client’s offices and locations. And, increasingly, that network must carry much more than data traffic. Cloud vendors can usually support voice and videoconferencing traffic, market data, inter-firm trade transactions, research, and more. Financial firms can leverage a more usable and valuable network with a lower total cost – without needing dedicated circuits or FIX connections. Only a private-cloud architecture can support this type of network convergence, which typically would require dedicated hardware. Public cloud solutions typically will not host a client’s private equipment in their data centers. THE CLOUD ADVANTAGE: STRONGER SECURITY, LOWER RISK One of the strongest advantages to cloud architectures also happens to be one of the most important considerations for financial services firms: risk mitigation – in particular, computer security. That’s crucial, given the increased emphasis that the U.S. Securities and Exchange Commission (SEC) is placing on security mechanisms. A world-class cloud provider can deploy a level of world-class security that only the largest financial firms in the world could afford to implement, operate, and maintain. From the careful implementation of the principle of least privilege to comprehensive auditing and logging, and shutting off USB ports, to enforcing strong authentication methods, rapid deprovisioning, 24x7 perimeter monitoring for intrusions, vulnerability testing, and strong physical site-security (with biometric access), and more – the cloud vendor raises and 7 © 2014 Eze Castle Integration
  8. 8. fortifies the security posture of the financial services firm to the levels that investors demand. When it comes to disaster recovery, the cloud also presents significant advantages. That’s because DR is an inherent design element of cloud computing. The cloud is predicated on multiple data centers, each deploying redundant servers and active-active network connections for transparent failover. This is managed by teams of highly trained professionals who should be testing that architecture regularly to virtually eliminate unplanned downtime. Geographic dispersion of the various data centers also means cloud vendors substantially reduce the risk of natural disasters or other catastrophic events with easy, transparent failover to active hot sites. CONCLUSION For hedge funds of every size and stripe, the trend is clear: The billion-dollar club is headed to the cloud, determined to take full advantage of the cost and agility benefits of this lower-cost computing paradigm. With more scrutiny on the security and reliability of their infrastructures, firms realize that a world-class cloud infrastructure provides a rapid, low-risk, low-capital solution that enables them to focus on what matters most. With cloud computing, they manage investments, not data centers, enabling them to compete more effectively and improve operational and financial performance. For more information, visit 8 © 2014 Eze Castle Integration
  9. 9. ABOUT EZE CASTLE INTEGRATION Eze Castle Integration is the leading provider of IT solutions and private cloud services to more than 650 alternative investment firms worldwide, including more than 100 firms with $1 billion or more in assets under management. We provide one global financial cloud platform that is complimented by exceptional service and operational excellence. Our Eze Private Cloud is built to deliver the high performance, applications and exceptional user experience demanded by the hedge fund and investment industry. To learn more about Eze Castle Integration, contact us at 800-752-1382 or visit 9 © 2014 Eze Castle Integration Complete Managed IT — Software as a Service Eze Managed Suite is a fully managed IT solution that provides flexibility and simplified IT operations. The hosted IT solution combines a robust, highly secure private infrastructure via the Eze Private Cloud with key business applications and professional IT management. Application Hosting — Infrastructure as a Service Eze Managed Infrastructure provides clients easy access to an enterprise-grade private environment with the latest hardware and software without capital expenditures, expensive upgrades or ongoing maintenance and monitoring. It is ideal for hosting applications used by hedge funds and investment firms. Disaster Recovery as a Service Eze Managed Data Availability delivers a full range of business resiliency services including Disaster Recovery, Online Backup and Message Archiving. Via the Eze Private Cloud, your critical data and applications will be available and protected 24x7x365.