Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Editor’s Note: Cloud-based technology solutions have made tremendous inroads into the alternative investment management industry, and as they have matured, the nuances between private and public cloud products and service offerings have meshed to include a hybrid option. However, writes Eze Castle Integration’s Mark Coriaty in this contributed article, hedge funds, PE firms and other alternative managers seeking to establish and maintain a competitive advantage should carefully consider six key considerations when evaluating a hybrid cloud platform. 

Don’t Overlook These 6 Hybrid Cloud Concerns
By Mark Coriaty, Chief Strategy Officer, Eze Castle Integration 

Cloud is the future of technology – there’s no denying that fact. But the scope of cloud services and the platform delivery method for said services is evolving rapidly to meet user demands and stay on par with technology innovation. Thus, the former public vs. private cloud debate now includes a hybrid option, which marries many of the most appealing benefits of its rivals. As hedge funds, private equity firms and other alternatives look to gain and maintain a competitive advantage, transformative cloud platforms can have significant implications. 

As firms weigh their options – public, private or hybrid – it critical not to overlook the following aspects of cloud architectures and assess their importance as unique to individual firms.

1. Support & Service

With any technology infrastructure, the value and functionality firms will gain should be measured against an equally essential component – support. Technology is not infallible, and as such, it’s imperative for firms to entrust their IT management to a provider well-versed in the ins and outs of technology service and support.

Many financial firms find it’s essential to be able to rely on named, live individuals who can physically touch machines and, perhaps more importantly, understand a firm’s business workflow. Financial IT experts and investment-focused managed service providers (MSPs) know and appreciate these business models and investment goals, understand the applications and technology requirements needed to power operations, and ultimately are in the best position to address firms’ short- and long-term needs.

2. Availability & Uptime

For an alternative investment firm, availability is always a chief consideration. When crucial elements – or the entirety of a firm’s IT infrastructure – are hosted elsewhere, guaranteed uptime and predictable service levels are a must.

With a hybrid approach, firms can tap into multiple clouds and data centers, fortifying the necessary levels of availability required. Each cloud’s infrastructure is designed with redundant resources, network connections, storage and other vital components to offer a level of resiliency and durability, even in the face of faults and unplanned downtime.

In a hybrid environment, firms can rely on the more robust, premium-grade uptimes offered by private MSPs for production environments and critical functionality (e.g. file services and application hosting) while tapping public cloud infrastructures for potentially less critical variants such as application development and testing environments, email, and personal productivity applications.

3. Proximity

Like virtually no other industry, the success of an investment firm can rise or fall based on the speed of IT connectivity. Fractions of a second are vital, which means that the three most important words in data centers are “location, location, location.” That’s because network latency is a crucial factor in determining the performance of mission-critical applications. In many cases, public clouds can operate out of geographically remote data centers (where it’s less expensive to procure real estate) that are significantly removed from major urban hubs/exchanges and thus, away from businesses, creating needless delays that the firm cannot afford.

Depending on a firm’s strategy and trading/execution goals, it may require certain proximity to data centers supported by either a public or private cloud provider. Plus, it’s worth considering the quality of service (QoS) required as data travels across these networks. Many investment management firms prefer the comfort and security of private network connectivity, which many private/hybrid MSPs offer but few public clouds do.

4. Security

Given the sensitive nature of their data, investment firms must constantly monitor and secure their network endpoints, application data and corporate assets. From perimeter monitoring to antivirus protection, it’s critical to have watchful eyes on firm networks at all times. Public and private cloud providers have varying skills and capacities to perform this vital task. For compliance-driven businesses, there are still countless vulnerabilities and exposures that public clouds often fail to address. Advancing security features such as multi-factor authentication, targeted attack protection and managed phishing simulations are gaining traction among private/hybrid cloud users who benefit from their providers’ extensive managed security services.

5. Application Hosting

Financial firms rely heavily on mission-critical applications that support their daily trading operations – everything from order/execution management to portfolio accounting to investor relationship management. It’s essential that these firms don’t experience any unplanned downtime with these applications – or serious financial repercussions could result.

While flexible and, arguably, more cost-effective, public clouds aren’t necessarily the ideal total infrastructure for mission-critical application hosting – when availability/uptime is critical and network latency is equally vital. Also, if a firm relies on proprietary applications, beware: some public-cloud providers may be unable to support them, in which case partnering with a private/hybrid cloud MSP with specific financial industry experience may be more beneficial.

6. Cost

At first glance, public clouds can appear to present a cost-effective alternative to private (or hybrid) clouds. But firms should look for the numbers behind the upfront expenses for a truer picture of the total cost. For instance, per user/per month private/hybrid cloud fees likely include many additional security features (e.g. multi-factor authentication, file auditing applications, etc.). These services are typically offered ad hoc on a public cloud environment, which means the apples-to-apples cost comparison is not accurate. To incorporate advanced security features, mobile device management and market access to financial counterparties, the line item cost for the public cloud is not as far off as one might think.

And let’s be clear – cutting corners in any area of technology, but particularly on support and maintenance, can carry a significantly higher long-term cost for firms.

The hybrid cloud, in many ways, is the happy marriage between these two options – providing more flexibility and access to public cloud features and functionality, as well the support, security and monitoring of the environment by an experienced private cloud provider – at a more reasonable monthly price point.

In the alternative investment industry, personal productivity and storage needs aren’t nearly a sufficient solution. Companies also need the accompanying services, support, maintenance, and security they find in private clouds. Adding those in an incremental fashion alongside a public cloud can create hidden expenses that outweigh initial cost advantages.

How to Decide? 

For alternative investment firms, the ultimate strategic IT decision has long revolved around the question of whether to embrace the control and professional management of a private cloud vs. the open, affordable public cloud. However, new hybrid cloud infrastructures mean that firms don’t necessarily have to make an either/or commitment. 

By partnering with an experienced, industry service provider, savvy investment firms are increasingly deploying hybrid environments that provide many of the best features of public and private platforms – email and business applications coupled with industry-vertical support, service, availability/uptime, performance, security, regulatory compliance, and better overall control – with an appealing TCO profile that rivals the public cloud.


Mark Coriaty is responsible for product management, global business development, partnerships, and corporate strategy at Eze Castle Integration. He has nearly 20 years of management, client service and consulting experience within the financial services industry. 

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...