Quick access. Self-service. Resource pooling. Scalability and elasticity. Cost reduction. Agility.
Sounds like the perfect package—and for many companies it is. The concept of data-as-a-service—providing on-demand access to data from a variety of sources—has spread like wildfire and made it a no brainer to leverage the cloud for improved efficiencies.
However, for investment management firms, it’s not always this simple. Data control and compliance time and again has come up as the top concern for firms considering the cloud. And since solutions delivered via the cloud, with the goals of increases efficiencies for all, isn’t going to let up anytime soon, it will become an imperative for firms to get on board.
With this in mind, I thought I’d tap into insight from our own Nilang Patel, whose expertise on the cloud make him the perfect person for this last post of the data series. He’ll provide you with some final pieces of information regarding data management, and hopefully diffuse any concerns that may have crossed your mind about its association with the cloud.
Kendall: Should investment management firms invest in a locally deployed data management system or a hosted solution? We talk a lot about the benefits of moving to the cloud, but with regard to data which is a better option?
Nilang: Cloud-based solutions are becoming increasingly popular in our industry because of the intrinsic benefits to their infrastructure – quick access, singular connectivity to multiple sources, automation of data collection and deployment, reduction of costs and deficiencies associated with locally-installed software, and more. The cloud also reduces the risk of workplace disasters and allows for greater scalability and flexibility, all of which can translate into better client service. There’s an upward trend of data integration vendors and warehouses converting their capabilities to the cloud or developing new solutions in the cloud for firms looking to dramatically improve their current in-house operations. This model greatly reduces costs and improves data access for firms. For example, if a market data provider adds new data sources or enhanced reporting tools, cloud service providers need only make one update through a shared services in contrast to multiple manual updates needed for a locally-installed solution – which becomes costly and inefficient for both service providers and clients
The cloud also allows firms to scale quickly and meet investor’s demands in a timelier manner. In the process, it eliminates the necessity for IT teams to engineer systems to handle peak loads. The cloud frees up time and money for better resource allocation across firms, cuts down on time-to-market, and offers mobile access.
Lastly, I’d say that cloud solutions offer one single connection to multiple data sources, which eliminates much complexity. Without the cloud, many firm employees find themselves navigating through a maze of connections to multiple data sources, all with their own unique interfaces. Cloud solutions can also simplify business operations by providing a two-way workflow so that investment firms can better communicate with data providers, custodians, counterparties and most importantly clients. They reduce costs associated with on-site installation of data management systems by eliminating overhead needed to maintain them.
Kendall: So how secure is the cloud for the investment community?
Nilang: I get this question a lot. As a starting point, everybody should recognize that no system can be 100% invulnerable from a breach whether locally installed or cloud deployed. That said, security standards that govern the cloud are rapidly evolving given the fact that this technology model sits at the center of almost every industry. Think about it–99% of your interaction with technology is through a web-based solution in both your personal and business life. However, given the special considerations surrounding investment information, firms should be diligent about understanding what providers are doing to ensure their data is secure.
Providers are continually working to develop and test protections. Meanwhile, cloud data centers have implemented a number of measures, including surveillance cameras, background checks, strict authentication of staff, and others, to ensure they can detect and stave off cyber security risks should they arise. When choosing a solution, firms should make sure the cloud provider obtains a security and controls assessment to oversee the movement of their data as well.
Kendall: So do you see investment management firms jumping at the opportunity to move to the cloud? What do you think is the comfort level with the cloud across the financial industry?
Nilang: Investment managers, traders, and IT departments really like the on-demand, real-time aspect of the cloud. They can work on projects and not worry about the data getting lost. Risk analytics, meeting compliance requirements, performance attribution of investment strategies, you name it, are all ongoing projects that involve robust amounts of data, and the cloud is effective for this. However, teams accustomed to legacy systems and often operationally intensive processes may not see the same advantages to the cloud right off the bat.
Data control comes up a lot in conversation. It can be a bit daunting for firms to transfer all core systems and data to the cloud. It’s completely understandable given the importance of these systems and the data they contain. So we see firms taking a phased approach to leverage cloud-based solutions. Smaller firms are more quickly adopting these technologies given the efficiency gains offered, but larger firms take a phased approach—moving some operations to the cloud, not core ones, and then evaluating their performance. However, as the decision to move to the cloud plays out, it’s important for firms to have done their research about security and compliance, and what type of cloud infrastructure is most suitable enterprise-wide.
For more information security in the cloud, check out A Clearer View: Security, compliance and the cloud.