Part I of a guide to the cloud for investment managers

If you talk to any COO in the investment management sector about their IT strategy, it’s highly likely they will mention the cloud. Time and time again we hear that the cloud can save money and help managers run more efficiently and effectively. But how? And why is this the case?

This article is the first in an educational series which will outline the different cloud service options, how to decide what services are right your business, how they can improve operational efficiencies and where managers can use the cloud to achieve measurable value.

To design and implement a successful cloud strategy, it is important for managers to understand the different services available, and the benefits and drawbacks of each, to determine which will be right for their firm.

But first, managers need to determine their goals and understand how these can be realized with cloud services. Do you want increased flexibility? Improved cost efficiencies? Strengthened security? New, cloud-based applications? Automated workflows? Integrated systems? Higher levels of uptime?

Structure and Service

When undertaking any technology transformation project, it is important to understand the many different service options available, each differing in terms of architecture and service model. The success of any cloud project will depend on selecting the right service model to suit your specific needs, and by utilizing an experienced partner with the skills and experience to properly manage the migration.

To go right back to basics, there are some fundamental offerings, ranging from infrastructure to software solutions.

• Infrastructure as a Service (IaaS): Pay as you go servers, storage, networks from a third-party provider. Typically, in an IaaS arrangement, responsibility for applications still lies with the manager.
• Platform as a Service (PaaS): An on-demand application, interface and database development, storage, and testing environment. This allows managers to streamline the development, maintenance, deployment and support of their own custom web applications.
• Software as a Service (SaaS): Applications and data are delivered over the internet and do not have to be installed on users’ computers. The provider hosts and manages the software and infrastructure, and handles maintenance, such as software upgrades and security patching.

In addition, other cloud services have emerged which can bring real value to managers:

• Security as a Service (SecaaS): Integral to cloud services are security solutions such as firewalls, antivirus, user management and access control tools which ensure corporate data and systems are protected across all platforms.
• Communication as a Service (CaaS): Communication tools such as Voice over IP services, video conferencing and collaboration tools such as instant messaging are well used examples of cloud-based communications tools.
• Data Analytics as a Service (DAaaS): Cloud based tools that allow managers to effectively process and analyse vast amounts of data to aid decision making around investment strategies, make predictions and enable more effective marketing campaigns.

There are three types of cloud architecture:

• Private: Hardware and software is hosted on the company’s private network and used only by them. Private clouds can be managed by the manager or a third-party, on or off the manager’s premises. It can also be fully owned by the service provider where clients have a dedicated server and can interact with it directly. The two models for cloud services to be delivered in a private cloud are Iaas and Paas in addition to being a part of a hybrid cloud.
• Public: Everything is hosted by a third-party cloud provider over the internet. All infrastructure, hardware and software are provided by this service provider. They can be deployed faster than on-premise infrastructures and are extremely scalable. The public cloud is also more secure than on-premise data as the threat of a physical attack decreases.
• Hybrid: This combines elements of public and private clouds, with data and applications shared between them. Users enjoy flexibility by leveraging elements of both the public and private cloud.

All service models can be supported on any of the three architecture types. If looking at public cloud providers, the biggest names are Amazon Web Services (AWS), Microsoft Azure and Google Cloud, all of which offer a broad range of services, with ever-more impressive functionality and in the case of Microsoft Azure, the highest levels of security assurances.

Benefits

So why should you choose cloud services, rather than maintaining IT equipment onsite? The key benefits are summarized as follows:

• Cost: providing a pay-as-you go model, the cloud allows managers to replace a large up-front IT expenditure with a predictable, ongoing operational cost.
• Scalability: businesses benefit from the huge scale of service providers, drawing on it as needed. Managers don’t have to anticipate future demand and invest in advance but can instead add users and provision new services quickly and easily. Essential for the fast growth investment management sector.
• Flexibility and accessibility: the cloud is available on-demand, globally. Whether you’re hosting data, enabling communications or developing new software applications in the cloud, the services your users need are available when they need them, wherever they are located. Many cloud providers offer a broad range of services on demand, from collaborative working to data analytics.
• Security: The cloud allows managers to replicate systems and applications in a different location, for disaster recovery and business continuity purposes. With huge investments in cybersecurity and data governance, cloud providers can make assurances to managers that their critical systems and data are protected in line with regulatory requirements. Security patches are applied at the provider level, ensuring systems are kept up to date and secure.

The Great Migration

If you decide that the cloud is for you, the migration must be planned carefully. Will you move legacy systems, or could this be an opportunity to upgrade your trading, reporting, CRM and communication systems? You may conclude that some services would be better hosted on site, whilst others will clearly benefit from migration to the cloud. Careful planning and a phased approach, using a specialist partner, will minimize downtime and reduce disruption to your firm.

In addition, regulatory differences between jurisdictions can impact cloud strategies, and cloud applications may need to accommodate various compliance and due diligence regimes. This is where it is extremely helpful to utilize a service provider that is an investment management industry specialist. These specialists will be able to translate their expertise into customized plans that ensure managers’ systems run efficiently and securely whilst meeting their specific business goals.

What’s Next?

Tune into the rest of the series as we share guidance and information that will help you determine the most appropriate cloud service model and architecture and give you a better understanding of the different factors that should play into your cloud strategy.

Up next, we’ll explore How Cloud Strategy = Alpha Generation. Stay tuned!