The pressure for asset managers to be ready for the next major business disruption is greater than ever. Not surprisingly, moving business-critical operations and software to a hosted and always-accessible platform continues to be a topic of discussion for investors, managers, and their vendors. ‘The cloud’ can be a rather nebulous term however, and to understand the services offered by different types of cloud providers, you need to ask the right questions.
With so many players to choose from in the cloud space, a good starting point is to compare public vs. private cloud providers. A public cloud is a type of computing in which a service provider makes resources available to the public via the internet1 . For asset managers, public cloud can be thought of as ‘infrastructure as a service’, where the core offering is simply servers managed by a third party. Private cloud is a computing model that offers a proprietary environment dedicated to a single business entity2 . Asset managers can think of private cloud in terms of ‘software as a service’, where applications are delivered through a custom-built cloud service designed to meet the specific needs of investment managers.
Understanding what each does well will help you align your firm’s unique needs to the capabilities of a public or private cloud provider.
Specialized environmental and application expertise
It’s Monday morning, 9:15am ET. The market opens in 15 minutes and you cannot access your order management system. You scramble to figure out which vendor to call first while simultaneously trying to avert a nuclear meltdown on your trading desk because they will not be able to process orders.
Installing cloud-delivered, connected applications supported by a specialized vendor would eliminate the need to contact multiple parties to right the ship. One call to your cloud provider is all that’s needed, ensuring a small problem doesn’t become an expensive one. Vendors that specialize in asset management cloud solutions should have both environmental and application expertise and be uniquely equipped to deal with these situations. When you can call one party to solve these challenges and connect with downstream third parties with ease, you can feel confident that troubleshooting won’t be an all-day affair.
Data Center Setup
Behind any cloud provider are servers that enable applications to run. Even if you’re not an expert on IT hardware, there are aspects of the data center you will want to understand:
- How secure is the solution? Be it a physical breach or virtual attack, understanding security protocols is especially important considering the growing number of threats we face daily. Both public infrastructure-focused and private software-focused providers tend to be better equipped and prepared than an asset management firm managing infrastructure on their own. While there is comfort in handing control to a brand-name public provider, a private cloud provider may be just as equipped to handle the unique and sensitive data needs of an investment manager. Be sure to have open conversations about security with your vendor and to request documentation detailing their procedures.
- Is it really a “data center”? In a crowded space of cloud vendors who do not necessarily own their own hardware, it’s important to understand if the provider leverages an actual building dedicated to housing a state of the art platform vs. a provider that uses a glorified IT closet. The setup of the data center could have a real impact on disaster recovery, support, and service reliability. Many vendors will allow you to visit the location to see for yourself.
- What kind of disaster recovery (DR) do they provide? Resiliency of the solution in the face of a natural disaster, wide-scale power outage, or other unforeseen event is of the utmost importance, so understanding the DR options available to your firm is critical. DR comes in a variety of flavors and will carry with it additional costs (explicit or baked-in) depending on the option chosen. A hot site will be ready to replace your production environment immediately or in a short period of time, while a cold site requires more time to get your data loaded and environment available. Warm DR options lie somewhere in between, but the key considerations for your firm should be Recovery Time Objective (RTO) (the vendor’s SLA for getting you up and running) and Recovery Point Objective (RPO) (allowable data loss). Depending on the applications being run, a hot or warm DR option (probably not cold) will make sense depending on the underlying workflows the environment supports for your firm. Most public or private cloud vendors are better suited to handle these challenges than a firm leveraging a local deployment of their environment.
When your firm grows by AUM or by employee size, the resources needed to power your environment should grow too. While a public provider specializing in server management will have the resources necessary to support a firm of any size, smaller vendors that provide white-glove platform services should be proactively anticipating your needs and maintaining your infrastructure in a less reactive fashion. Be sure to check that your vendor will perform proactive health checks on your environment and add resources like memory or servers to support the needs of your firm before a performance issue arises.
Choosing the Right Outsourcing Partner
In conclusion, deciding between public and private cloud providers is a good place to start when evaluating outsourcing providers for your asset management shop. With so many players in the space, it’s important to understand the differences, and to know what questions to ask to select the right partner for your firm.
To better understand how outsourcing can strengthen your business plan, contact SS&C Advent to explore outsourcing options with Advent Outsourcing Services.
- Citrix Application Delivery and Security: https://www.citrix.com/solutions/app-delivery-and-security/what-is-public-cloud.html
- Citrix Application Delivery and Security: https://www.citrix.com/solutions/app-delivery-and-security/what-is-private-cloud.html