Investment is a numbers game, and the numbers involved have become increasingly complex. Managing the data analytics and real-time data flows necessary to generate optimal returns for hedge funds investors has long been beyond the capabilities of spreadsheets, however convoluted they are. The infrastructure required to support the computing needs of hedge funds has grown enormously, but IT budgets haven’t kept pace. According to recent report from Greenwich Associates, hedge funds could potentially save millions by adopting cloud technologies and making use of public cloud platforms.
In the early of days of cloud computing, there was justified hesitation on the part of hedge fund managers to entrust their data to the cloud, but increased regulatory certainty and a growing understanding that to remain competitive, a data-driven analytical approach is more effective than instinct-driven investment has removed some of the doubts. While many are still hesitant to fully embrace the cloud, the rising demand for computing power and stagnant IT budgets are pushing hedge funds to reconsider.
Data warehousing and portfolio management solutions have long been part of the hedge-fund landscape, particularly following the Dodd-Frank act that motivated hedge funds and other financial institutions to exert greater care over their data retention policies. Much warehoused data isn’t of immediate use. Building in-house infrastructure to hold it isn’t economically advantageous, but flexible cloud platforms that require minimal upfront investment and implement secure, redundant, reliable data storage venues can be much more cost effective.
“Given the potential savings, the contraction of Wall Street IT budgets, improved cloud offerings, and a market that requires more complex calculations to be completed in ever-shortening timeframes with ever-greater accuracy, Greenwich Associates believes the financial service industry needs to embrace cloud technology on a much expanded scale,” comments Kevin McPartland, Head of Research for Greenwich Associates Market Structure & Technology Practice.
While cloud resources themselves are more or less commoditized and available at lower prices than ever before, choosing the right vendors and products from a crowded marketplace can significantly increase the complexity, and hence the cost, of a move to the cloud.
To maximize the potential savings generated by a move from high CAPEX fixed infrastructure deployments to elastic compute and storage platforms, it’s necessary that hedge funds are able to properly assess the cloud marketplace. A cloud brokerage like ComputeNext allows hedge fund managers to more easily negotiate the cloud market and reduce IT management overhead by simplifying and centralizing access to cloud resources.