THE ROLE OF HYBRID CLOUD — WHAT HEDGE FUND IT MANAGERS NEED TO KNOW

By Ben Bermingham, business development, at Pulsant

Technology exists to make lives easier — from business and travel, to social and medical. When it comes to specific technologies, such as cloud, organisations in industries with a strong focus on compliance, risk and security can really take advantage of its maturing, inherent potential and, indeed, the expertise from service providers to do just that; make their lives easier, streamline operations and ensure business needs are effectively met.

Of course the conversations around cloud have moved on from ‘why cloud’ to ‘how can we make the most of our investment and infrastructure’. The answer for many is hybrid cloud. Hybrid cloud ensures organisations can effectively get the best of all worlds, combining private cloud, public cloud, colocation and managed hosting models to get what works best for their specific needs and objectives.

But why is hybrid cloud ideal for hedge fund managers? And how does it make their lives easier?

In highly regulated industries — such as the hedge fund environment — the use of different cloud models is particularly beneficial because of the security and compliance considerations.

Overall, cloud brings business a number of benefits, including reduced costs, reducing CAPEX, increased speed of technology deployment, disaster recovery capabilities, and of course, flexibility and scalability. While all of these are important, a few stand out for hedge fund IT managers — such as simplified IT management, which essentially means that hedge funds need to worry less about running and managing their infrastructure because with cloud this falls to the service provider. As a result, they can focus on delivering to the business allowing them to meet customer needs.

What about cost?

Simply put, cloud technology reduces the need forhardware and, as a result, CAPEX. In addition, alternative cost models are used, such as pay-as-you-use — particularly in public cloud usage. While hosting data in a public cloud environment may not meet all the IT requirements of hedge funds, regarding sensitive client data, it does have its advantages related to cost and hyper-extensibility. Public cloud really shines for applications such as hosting testing and development infrastructure, as well as day-to-day applications, like email. The former is comparatively quick and easy to set up, and capacity can be extended or minimised as needed; and once it is no longer required, it is “turned off” and the business pays only the capacity that was needed. Using a private cloud environment for this type of application is more expensive and can be more difficult to provision quickly.

There’s always a question about security

Security has long played a role in cloud and it will remain a topic on the agenda simply because the risk landscape is changing so dramatically, with hackers and cyber criminals using more sophisticated means to breach defences. That said, hybrid cloud offers organisations certain assurances when it comes to security. Cloud service providers, be it the large public cloud operators like AWS or Azure, or mid-market providers, and datacentre operators have the expertise and technology to make sure data is protected both physically (24/7 security, access control) and virtually (certifications such as ISO 27001, encryption and resiliency). Their customers can therefore leverage those greater levels of security (and expertise in dealing with these issues) because cloud providers have usually made a large investment in securing their infrastructure — much more than a single hedge fund could afford if everything was hosted in-house.

Conclusion

As cloud has matured and hybrid cloud environments have become more popular, the next logical step is to ensure that organisations are optimising their use of the technology. While it is true that firms in heavily regulated industries — like hedge funds — have been slower and more cautious on cloud uptake, it is also true that they are beginning to fully realise the benefits. With particular benefits for start-up hedge funds in terms of versatility, speed, cost and functionality, established hedge funds can also take advantage. They may need to content with legacy infrastructure and the cost and risk of moving more towards cloud, but there is no denying the opportunity that hybrid cloud offers to this market.