Cloud Computing in the Investment Industry

8/4/2019 Cloud Computing in the Investment Industry

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Examining Cloud Computing in

the Investment IndustryAn Eze Castle Integration eBook


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Table of Contents

I. Benefits & Challenges of Cloud Computing

i. Why Use the Cloud?ii. Cost Savingsiii. Flexibility/Scalabilityiv. Maintenancev. Green Benefitsvi. Concerns and Challenges of Cloud Computingvii. Oversubscription & IT Support

II. Understanding Public, Private and Hybrid Cloud Infrastructures

III. Hosted Business Applications: What Financial Firms Must Consideri. Hosted Apps for Business: An Overviewii. Key Considerationsiii. Understanding of Business Requirementsiv. Security of Datav. Migration/Future Growth Concernsvi. Other Considerationsvii. Final Thought on Hosted Apps

IV.A Refresher on Data Center Tiers

V. Eze Castle Integration


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With IT budgets tightened over the past year, many investment firms have had to make changes to theirbusinesses. Personnel changes, budget adjustments, and other tough decisions had to be made along the way. Bothstaff and systems were often being closely evaluated. Beyond existing firms, new start ups are entering an investormarket that expects them to have sophisticated processes and operations day one.

More than any other industry, investment firms rely on premier technology for swift trade execution, secure dataprotection and much more. If it is determined that the IT budget needs to be reduced, the question is how? What

is the best way for an investment firm to save on IT costs but without sacrificing efficiency and performance?Alternatively, how can a investment start-up have enterprise-level technology day one with a small firm operatingbudget?

The answer is cloud computing, and believe it or not, cost isnt the only reason firms are making the switch.

Although cloud computing has become popular in recent years, many businesses and financial firms still do not

understand what it is and how it works. Cloud computing is when a service or software application is hosted in a

web-based repository known as the cloud. The service is hosted by a third -party provider who then provides

access to that service to users on an on-demand basis. In essence, a firms data and applications are hosted,

alleviating that firm from having to purchase and maintain costly infrastructure in-house.

What is Cloud Computing?


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Cloud computing can support front-, middle- and back-office functions everything from business applications

and client relationship management systems to data management solutions and accounting systems.

There are a number of advantages to using this model, notably:Low infrastructure investment

Increased flexibility

Less maintenance

Positive environmental contributions

Why Use the Cloud?

Cost Savings

There is no question that migrating to a cloud computing model

can render significant cost-savings for an investment firm.

Rather than purchasing costly infrastructure and relying on multiple servers in a crowded Communications

room (comm. room), firms can outsource that infrastructure to a third-party and manage all of their data and

applications from a simple web address on the Internet. This system is particularly beneficial to start-up firms

who may not have the upfront capital to invest in their own infrastructure or the staff to maintain and monitor

a comm. room.


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One of the most beneficial aspects of cloud computing is that firms are only required to pay for the resources and

capabilities they need. With traditional infrastructure models, firms must invest in advanced servers and storage

devices that generally come at fixed costs. Cloud computing is uniquely flexible and scalable, operating on a utility

basis - allowing firms to pay as they go and only for the resources they will use.

In many cases, firms can take advantage of advanced mobility features through which they can access their hosted

applications and data from anywhere at any time, freeing employees from having to remain at their desks during

normal business hours.

Because the cloud computing solution is virtualized, there are other distinct advantages not offered by traditional

infrastructure models. Space, storage, and RAM are quick and easy to add. There is no need to wait for quotes to bedrafted and equipment to be ordered and shipped. Instead of taking days, your firms needs are fulfilled in a

matter of hours. Cloud computing also supports a sharing of resources among multiple users also known as

multi-tenancy which allows for increased utilization and efficiency.

Flexibility/Scalability

Less Maintenance

Unlike traditional infrastructure models where the firm is solely responsible for its own IT needs, the cloudcomputing model puts all of the responsibility on the third-party provider. Firms are no longer tasked with

managing constant server updates, hardware installs and other computing issues. This allows the firms internal

IT staffs to focus on more business-critical matters and spend less time on mundane and time-consuming

maintenance issues. Or in the case of many smaller firms without internal IT staffs, it saves them from having to

hire and train additional employees.


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Green Benefits

The idea of using the Internet as a gateway to technology has significant

environmental benefits. The resources and energy needed to maintain and

manage a dedicated comm. room can be astronomical. Power, cooling, and basic

energy supply equipment must be at peak performance at all times in order tofacilitate maximum uptime for investment firms. In the case of cloud computing,

however, firms dont need to host internal equipment, thereby saving on all -

around energy costs.

The reduction of overall energy consumption is also multiplied with third-party

providers utilizing custom data centers specifically designed for better energy

efficiency. Additionally, many new computers are now optimized for virtualization, adding another layer ofefficiency and using significantly less power for operation.

Concerns and Challenges of Cloud ComputingDespite its clear advantages, the notion of cloud computing is still meeting a lot of resistance in the financial

services industry. Investment firms tend to be concerned with data security and performance. Many firms arereluctant to migrate to virtualized platforms because they dont fully understand the system and its benefits.


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Privacy and security concerns are common among financial firms given the sensitivity of their data. The idea of

hosting this sensitive information on the Internet is not always a comfortable one. Third-parties that provide cloud

computing services, however, are quick to point out that the system is just as secure as maintaining ones own

equipment, with comparable data protection measures, firewalls, security checkpoints and passwords as

traditional infrastructure models. Performance concerns, as well, seem to be easily thwarted by third-parties, who

insist cloud computing is just as efficient and effective as non-web hosted systems.

Despite concerns, over the last couple of years financial firms have become more comfortable with the idea of

cloud computing, particularly given its price point. With the economic climate as it is, the cost-effectiveness of

cloud computing has proven to be one of its strongest motivators. Technology analyst firm Gartner Inc. concluded

that spending on cloud computing and virtualization solutions has increased, despite a decrease in overall IT

spending in 2009. According to Gartner, cloud computing revenue is on pace to exceed $56 billion this year, an

increase of 21 percent from 2008 (Wall Street Journal, 10/21/09).

When considering cloud computing, a firm must rely on its own needs and resources in order to determine which

technologies are best for them. There are a number of factors to be considered: cost, efficiency, maintenance, etc.

Firms should assess their individual needs and determine the best strategy based on their current resources and

requirements.

In the following chapter we will look at the differences between public, private and hybrid clouds.


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As we have discussed in previous chapters, cloud computing offers many advantages for investment firms. Cloud

computing technology enables the sharing of resources in a way that dramatically simplifies infrastructure

planning. In this section, we will explore various types of cloud computing and the methods in which they aredeployed.

With cloud computing technology, large pools of resources can be connected via private or public networks, to

provide dynamically scalable infrastructure for application, data, and file storage. Additionally, the costs of

computation, application hosting, content storage, and delivery can be significantly reduced. Firms can choose to

deploy applications on Public, Private, or Hybrid clouds.

What are the differences between these three models, and how can you determine the right cloud path for your

organization? Here are some fundamentals of each to help with the decision-making process.

Understand Public, Private and Hybrid Cloud Infrastructures

Public Clouds

Public clouds are owned and operated by third party service providers. Customers benefit from economies of

scale, because infrastructure costs are spread across all users, thus allowing each individual client to operate on alow-cost, pay-as-you-go model. Another advantage of public cloud infrastructures is that they are typically larger

in scale than an in-house enterprise cloud, which provides clients with seamlessly, on demand scalability.

It is also important to note that all customers on public clouds share the same infrastructure pool with limited

configuration, security protections, and availability variances, as these factors are wholly managed and supported

by the service provider.


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Private clouds are those that are built exclusively for an individual enterprise. They allow the firm to host

applications in the cloud, while addressing concerns regarding data security and control, which is often lacking in

a public cloud environment. There are two variations of private clouds:

1. On-Premise Private Cloud: This format, also known as an Internal Cloud, is hosted within an organizations

own data center. It provides a more standardized process and protection, but is often limited in size and

scalability. Also, a firms IT department would incur the capital and operational costs for the physical

resources. This model is best used for applications that require complete control and configurability of the

infrastructure and security.

2. Externally Hosted Private Cloud: This private cloud model is hosted by an external cloud computing provider.The service provider facilitates an exclusive cloud environment with full guarantee of privacy. This format is

recommended for organizations that prefer not to

use a public cloud infrastructure due to the risks

associated with the sharing of physical resources.

Private Clouds


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Hybrid Clouds

Hybrid Clouds combine the advantages of both the public and private cloud models. In a hybrid cloud, a company

can leverage third party cloud providers in either a full or partial manner. This increases the flexibility of

computing. The hybrid cloud environment is also capable of providing on-demand, externally-provisioned

scalability. Augmenting a traditional private cloud with the resources of a public cloud can be used to manageunexpected surges in workload.

At Eze Castle Integration, we have deployed a robust, scalable cloud Infrastructure in multiple Tier III and IV data

centers. Our Eze Cloud infrastructure leverages best of breed technologies to deliver cost effective infrastructure

as a service powered solutions to the investment industry.

Now lets look at application hosting in the cloud and what firms should consider.


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As we discussed in the previous chapter, there are many reasons why a financial firm should consider cloud

computing. Now we will look more closely at one aspect of cloud computing application delivery.

Within the cloud model is Software as a Service (SaaS)

software that is deployed over a hosted environment and

accessed via the Internet. An on-demand licensing service, SaaS

enables the benefits of a comprehensively licensed application

without the need to specifically equip multiple servers and

infrastructures with necessary applications.

With increased focus on Web 2.0, cloud, and SaaS during the

current economic crisis, the emergence of hosted applications

has provided firms with an alternative to traditional onsite IT

infrastructures. Companies such as Google and Amazon have invaded the application hosting domain and are

offering their services at a fraction of the price of most third-party IT service providers. While these are low-cost,

they are not necessarily the best choices for investment firms.

The following section will outline the key considerations firms should look at before turning their businesses over

to free or low-cost hosted services such as those offered by Google or Amazon. Before we introduce these

considerations, lets take a look at the business models of these hosted apps providers, particularly Google.

Hosted Business Applications: What Financial Firms Must Consider


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Over the last two years, hosted applications have emerged as a powerful and intriguing service. A number of large

companies, many not traditionally focused on IT services, have come out of the woodwork looking to offer these

services on top of their base business models. Everyone from Cisco and IBM technology-focused companies to

Google and Amazon has started using the cloud. Googles Business Apps emerged as a front-runner early on, ledboth by an intriguing business model and, of course, the biggest name within the Internet business.

Among the key features Google advertises are proven cost-savings, a 99.9% uptime guarantee, and 50% more

storage than the industry average. Google even offers multiple editions of their apps tailored to specific customer

needs. In addition to their Standard Edition, they offer an Education Edition for schools, colleges, and universities

and a Premier Edition for businesses of all sizes.

Hosted Apps for Business: An Overview

Key Considerations

While Googles price point is likely the lowest a business

will find, the level of service offered at that price must be

thoroughly vetted before entering into an agreement,

particularly if you are an investment firm operating in

todays market. There are a number of specific

considerations that should be taken into account

beforehand.


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While Google boasts that their various editions are tailored to meet the specific needs of businesses, this is not

exactly a fair statement. The description of their Premier Edition lists the services as ideal for businesses of all

sizes. But it is not solely a business size that determines their specific needs. For example, a small home-grown

business in Oklahoma that sells personalized stationery is not going to have the same business needs or supportrequirements as an investment firm operating on Wall Street. This is where financial firms need to be careful not

to jump into a service based solely on cost alone.

A firm must carefully consider their every-day business and support requirements before migrating to a service

like Googles.

Understanding of Business Requirements

Compliance of DataOne of the foremost concerns when any business puts their data and infrastructure in the hands of a third-party issecurity. Google lists security and compliance as one of the key features of their product, and did eventually

bring on e-mail security provider Postini to provide additional security services. These services are basic, though,

offering tools to eliminate spam, protect against internal information leaks, and

retain emails. These tools are sufficient for small mainstream businesses;

however, investment firms require increased compliance measures, including

email archiving and encryption, on a daily basis.

E-mail is a business-critical application for many firms and basic security is not

enough. As we move into an era of increased transparency and calls for strict

compliance regulations, firms will require significant security and compliance

measures to keep their data protected, encrypted or archived at all times.


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Migration/Future Growth Concerns

Another consideration to keep in mind when determining if hosted applications are a good fit for your firm is your

potential for future growth. With Google Apps, there is no easy way to migrate data if a firm decides to move its

data off of the hosted app service. As your business grows, you should keep in mind that with that growth will

come the need for additional services and requirements. It is highly likely that you will need to integrate with IRMand CRM systems, for instance, which is not possible when using a service like Google. In the event you suddenly

require these services, migrating your data off of a Google-like platform is going to be complicated and likely time-

consuming.

Oversubscription & IT Support

A big concern that arises when giant enterprises such as Google offer paid services at a very low price point is

oversubscription. Because the service is offered at low cost and to virtually any size business, it is destined to

attract tens of thousands of customers, each vying for the maximum server space available. In an attempt to

provide these services to this many customers, it is a very real possibility that the service provider will

oversubscribe their servers and risk shoddy service as a result.

With this number of users, speed of service is likely to be negatively impacted. It could take significantly longer tosend or receive an email a delay that those operating in the investment industry cannot afford. If a firm is relying

on email for business operations, particularly in a volatile market, when every deal and every dollar can have a

significant impact on business, that firm requires real-time services that will not put business at risk.


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In addition to concerns about the service provider oversubscribing servers, firms might also want to consider the

possibility that their employees will likely be spending a significant amount of time learning how to use a hosted

application service. For example, if a firm signs on to use Google Business Apps, they will need to train all

employees to use that service and likely train internal IT employees to become well-versed on the service in the

event of application issues.

Though Google boasts that it offers 24x7 customer support for its apps service, it is far from a typical helpdesk.

Customer support through an entity like Google is often challenging to navigate and time-consuming to get

another human being on the opposite end of the phone. In the event of a serious IT issue, end- users employees

will need to have an extensive understanding of the hosted service in order to provide adequate support.

Alternatively, if a firm does not have IT staff, other

employees will need to learn to solve problems on theirown, which can interrupt the time they are spending on

their daily business tasks. In a CNN Money article,

Founder Jonathan Blum of Blumsday LLC, a business-to-

business tech content company, wrote about how

Google Apps wasnt working for his company. Blum said

he and his employees were spending too much time

each day resolving issues. Youre paying people while

they struggle through this cultural shift to Web-based

applications and that can be very costly.


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Blum also highlighted another issue he encountered when he relied on Google Apps for his business services:

identity concerns. Because Google is entirely web-based and allows for multiple email accounts through its

service, it can lead to identity confusion. There can be easy confusion between corporate and personal Gmail

accounts. Also, if employees share computers, they will need to be extra cautious and careful not to save theiraccount logins and passwords on shared portals.

Investment firms should also be thinking about the kind of best practices they are employing. Business continuity

and disaster recovery plans are becoming near-requisites for most investors. Mass-marketed hosted applications

typically do not include such services. Firms would, therefore, have to work with two separate third-parties to

accommodate this desired outcome.

Other Considerations

Final Thought on Hosted Apps

Hosted applications will surely continue to improve and adjust to the changes in the business landscape, but while

there is value in their services, investment firms have very specific needs and requirements and should work with

technology providers with financial expertise and experience. These traditional third-party IT providers are better

equipped to service the needs of financial firms and adapt to the continuous changes within the industry.

Our hosted IT solution, Eze Virtual Office, for example, offers financial firms the capabilities of a fully managed

infrastructure and key business applications that are 24x7x365 by IT professionals that understand a financial

firm's business.

Now lets explore whats behind cloud computing Data Centers.


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In the previous chapters we examined the pros and cons of cloud computing. In this section well explore whats

behind the cloud the data center that is. At Eze Castle Integration we often reference data center tiers (i.e. TierIII and Tier IV) in our written materials and assume readers will automatically understand the value of these

distinctions. In some cases this might be a safe assumption, but you know what they say about assuming.

Data center tiers Tier I to IV represent a standardized method to define the uptime of a data center. The tiers

are useful in measuring:

Data center performance

Investment

Return on investment (ROI)

The four tiers, as classified by The Uptime Instituteinclude the following:

Tier 1: composed of a single path for power and cooling distribution, without redundant components,

providing 99.671% availability. This is the simplest and typically used by small businesses.

Tier II: composed of a single path for power and cooling distribution, with redundant components,

providing 99.741% availability.

Tier III: composed of multiple active power and cooling distribution paths, but only one path active, hasredundant components, and is concurrently maintainable, providing 99.982% availability.

Tier IV: composed of multiple active power and cooling distribution paths, has redundant components, and

is fault tolerant, providing 99.995% availability.

A Refresher on Data Center Tiers
http://www.uptimeinstitute.org/http://www.uptimeinstitute.org/http://www.uptimeinstitute.org/


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Eze Castle Integration's Cloud Computing &Hosting Infrastructure for Financial Firms

Eze Castle Integration has deployed a robust, scalable Cloud Infrastructure in multiple Tier III-class data centers.Our Eze Cloud infrastructure leverages best of breed technologies from Cisco, NetApp, and VMware as well asmonthly software leasing services from VMware, Microsoft, CA, and Citrix to deliver cost effective managedproduct offerings and custom solutions to our financial firm clients.

Eze Castles cloud offerings allow our clients to deploy state-of-the-art technologies through a monthly recurringcost model rather than facing the challenge of major capital expenditures and budgeting for hardware and

software upgrade lifecycles.

A few of the primary benefits of the Eze Cloud infrastructure include:RedundancySecure Multi-TenancyResource ProvisioningExpandabilityProfessional Management

For more information on our Eze Cloud Infrastructure, please visithttp://www.eci.com/solutions/infrastructure/cloud.html.
http://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.htmlhttp://www.eci.com/solutions/infrastructure/cloud.html


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About Eze Castle Integration

Founded 1995

Mission To be the leading provider of IT services and technology solutions to theinvestment community worldwide

Headquarters

Additional Offices

260 Franklin StreetBoston, Massachusetts, 02110617-217-3000

New York City, Chicago, Dallas, Geneva, Los Angeles, Minneapolis, SanFrancisco, Singapore, Stamford and London.

Website & Blog www.eci.comwww.eci.com/blog

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Cloud Computing in the Investment Industry

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