ExaminingCloudComputingin theInvestmentIndustry

AnEzeCastleIntegrationeBook

TableofContents
I.WhatisCloudComputing?
i.WhyUsetheCloud? ii.CostSavings iii.Flexibility/Scalability iv.Maintenance v.GreenBenefits vi.ConcernsandChallengesofCloudComputing vii.Oversubscription&ITSupport

II.UnderstandingPublic,PrivateandHybridCloudInfrastructures III.HostedBusinessApplications:WhatHedgeFundsMustConsider
i.HostedAppsforBusiness:AnOverview ii.KeyConsiderations iii.UnderstandingofBusinessRequirements iv.SecurityofData v.Migration/FutureGrowthConcerns vi.OtherConsiderations vii.FinalThoughtonHostedApps

IV.ARefresheronDataCenterTiers V.EzeCastleIntegration

WithITbudgetstightenedoverthepastyear,manyhedgefundsandinvestmentfirmshavehadtomakechanges totheirbusinesses.Personnelchanges,budgetadjustments,andothertoughdecisionshadtobemadealongthe way.Bothstaffandsystemswereoftenbeingcloselyevaluated.Beyondexistingfirms,newstartupsareentering aninvestormarketthatexpectsthemtohavesophisticatedprocessesandoperationsdayone. Morethananyotherindustry,investmentfirmsrelyonpremiertechnologyforswifttradeexecution,securedata protectionandmuchmore.IfitisdeterminedthattheITbudgetneedstobereduced,thequestionishow?What is the best way for an investment firm to save on IT costs but without sacrificing efficiency and performance? Alternatively,howcanahedgefundstartuphaveenterpriseleveltechnologydayonewithasmallfirmoperating budget? Theansweriscloudcomputing,andbelieveitornot,costisnttheonlyreasonfirmsaremakingtheswitch.

WhatisCloudComputing?
Althoughcloudcomputinghasbecomepopularinrecentyears,manybusinessesandfinancialfirmsstilldonot understandwhatitisandhowitworks.Cloudcomputingiswhenaserviceorsoftwareapplicationishostedina webbasedrepositoryknownasthecloud.Theserviceishostedbyathirdpartyproviderwhothenprovides access to that service to users on an ondemand basis. In essence, a firms data and applications are hosted, alleviatingthatfirmfromhavingtopurchaseandmaintaincostlyinfrastructureinhouse.

WhyUsetheCloud?
Cloud computing can support front, middle and backoffice functions everything from business applications andclientrelationshipmanagementsystemstodatamanagementsolutionsandaccountingsystems. Thereareanumberofadvantagestousingthismodel,notably: Lowinfrastructureinvestment Increasedflexibility Lessmaintenance Positiveenvironmentalcontributions

CostSavings
Thereisnoquestionthatmigratingtoacloudcomputingmodel can render significant costsavings for an investment firm. Rather than purchasing costly infrastructure and relying on multiple servers in a crowded Communications room(comm.room),firmscanoutsourcethatinfrastructuretoathirdpartyandmanagealloftheirdataand applicationsfromasimplewebaddressontheInternet.Thissystemisparticularlybeneficialtostartupfirms whomaynothavetheupfrontcapitaltoinvestintheirowninfrastructureorthestafftomaintainandmonitor acomm.room.

Flexibility/Scalability
Oneofthemostbeneficialaspectsofcloudcomputingisthatfirmsareonlyrequiredtopayfortheresourcesand capabilitiestheyneed.Withtraditionalinfrastructuremodels,firmsmustinvestinadvancedserversandstorage devicesthatgenerallycomeatfixedcosts.Cloudcomputingisuniquelyflexibleandscalable,operatingonautility basisallowingfirmstopayastheygoandonlyfortheresourcestheywilluse. Inmanycases,firmscantakeadvantageofadvancedmobilityfeaturesthroughwhichtheycanaccesstheirhosted applicationsanddatafromanywhereatanytime,freeingemployeesfromhavingtoremainattheirdesksduring normalbusinesshours. Becausethecloudcomputingsolutionisvirtualized,thereareotherdistinctadvantagesnotofferedbytraditional infrastructuremodels.Space,storage,andRAMarequickandeasytoadd.Thereisnoneedtowaitforquotestobe drafted 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 multitenancywhichallowsforincreasedutilizationandefficiency.

LessMaintenance
Unlike traditional infrastructure models where the firm is solely responsible for its own IT needs, the cloud computing model puts all of the responsibility on the thirdparty provider. Firms are no longer tasked with managingconstantserverupdates,hardwareinstallsandothercomputingissues.Thisallowsthefirmsinternal IT staffs to focus on more businesscritical matters and spend less time on mundane and timeconsuming maintenanceissues.OrinthecaseofmanysmallerfirmswithoutinternalITstaffs,itsavesthemfromhavingto hireandtrainadditionalemployees.
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GreenBenefits
The idea of using the Internet as a gateway to technology has significant environmental benefits. The resources and energy needed to maintain and manageadedicatedcomm.roomcanbeastronomical.Power,cooling,andbasic energysupplyequipmentmustbeatpeakperformanceatalltimesinorderto facilitatemaximumuptimeforinvestmentfirms.Inthecaseofcloudcomputing, however, firms dont need to host internal equipment, thereby saving on all aroundenergycosts. Thereductionofoverallenergyconsumptionisalsomultipliedwiththirdparty providers utilizing custom data centers specificallydesigned for better energy efficiency. Additionally, many new computers are now optimized for virtualization, adding another layer of efficiencyandusingsignificantlylesspowerforoperation.

ConcernsandChallengesofCloudComputing
Despite 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 are reluctanttomigratetovirtualizedplatformsbecausetheydontfullyunderstandthesystemanditsbenefits.

Privacyandsecurityconcernsarecommonamongfinancialfirmsgiventhesensitivityoftheirdata.Theideaof hostingthissensitiveinformationontheInternetisnotalwaysacomfortableone.Thirdpartiesthatprovidecloud 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 traditionalinfrastructuremodels.Performanceconcerns,aswell,seemtobeeasilythwartedbythirdparties,who insistcloudcomputingisjustasefficientandeffectiveasnonwebhostedsystems. 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 costeffectiveness of cloudcomputinghasproventobeoneofitsstrongestmotivators.TechnologyanalystfirmGartnerInc.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 increaseof21percentfrom2008(WallStreetJournal,10/21/09). Whenconsideringcloudcomputing,afirmmustrelyonitsownneedsandresourcesinordertodeterminewhich technologiesarebestforthem.Thereareanumberoffactorstobeconsidered:cost,efficiency,maintenance,etc. Firmsshouldassesstheirindividualneedsanddeterminethebeststrategybasedontheircurrentresourcesand requirements. Inthefollowingchapterwewilllookatthedifferencesbetweenpublic,privateandhybridclouds.

UnderstandPublic,PrivateandHybridCloudInfrastructures
Aswehavediscussedinpreviouschapters,cloudcomputingoffersmanyadvantagesforinvestmentfirms.Cloud computingtechnologyenablesthesharingofresourcesinawaythatdramaticallysimplifiesinfrastructure planning.Inthissection,wewillexplorevarioustypesofcloudcomputingandthemethodsinwhichtheyare deployed. Withcloudcomputingtechnology,largepoolsofresourcescanbeconnectedviaprivateorpublicnetworks,to providedynamicallyscalableinfrastructureforapplication,data,andfilestorage.Additionally,thecostsof computation,applicationhosting,contentstorage,anddeliverycanbesignificantlyreduced.Firmscanchooseto deployapplicationsonPublic,Private,orHybridclouds. Whatarethedifferencesbetweenthesethreemodels,andhowcanyoudeterminetherightcloudpathforyour organization?Herearesomefundamentalsofeachtohelpwiththedecisionmakingprocess.

PublicClouds
Publiccloudsareownedandoperatedbythirdpartyserviceproviders.Customersbenefitfromeconomiesof scale,becauseinfrastructurecostsarespreadacrossallusers,thusallowingeachindividualclienttooperateona lowcost,payasyougomodel.Anotheradvantageofpubliccloudinfrastructuresisthattheyaretypicallylarger inscalethananinhouseenterprisecloud,whichprovidesclientswithseamlessly,ondemandscalability. Itisalsoimportanttonotethatallcustomersonpubliccloudssharethesameinfrastructurepoolwithlimited configuration,securityprotections,andavailabilityvariances,asthesefactorsarewhollymanagedandsupported bytheserviceprovider.
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PrivateClouds
Privatecloudsarethosethatarebuiltexclusivelyforanindividualenterprise.Theyallowthefirmtohost applicationsinthecloud,whileaddressingconcernsregardingdatasecurityandcontrol,whichisoftenlackingin apubliccloudenvironment.Therearetwovariationsofprivateclouds: 1.OnPremisePrivateCloud:Thisformat,alsoknownasanInternalCloud,ishostedwithinanorganizations owndatacenter.Itprovidesamorestandardizedprocessandprotection,butisoftenlimitedinsizeand scalability.Also,afirmsITdepartmentwouldincurthecapitalandoperationalcostsforthephysical resources.Thismodelisbestusedforapplicationsthatrequirecompletecontrolandconfigurabilityofthe infrastructureandsecurity. 2.ExternallyHostedPrivateCloud:Thisprivatecloudmodelishostedbyanexternalcloudcomputingprovider. Theserviceproviderfacilitatesanexclusivecloudenvironmentwithfullguaranteeofprivacy.Thisformatis recommendedfororganizationsthatprefernotto useapubliccloudinfrastructureduetotherisks associatedwiththesharingofphysicalresources.

HybridClouds
HybridCloudscombinetheadvantagesofboththepublicandprivatecloudmodels.Inahybridcloud,acompany canleveragethirdpartycloudprovidersineitherafullorpartialmanner.Thisincreasestheflexibilityof computing.Thehybridcloudenvironmentisalsocapableofprovidingondemand,externallyprovisioned scalability.Augmentingatraditionalprivatecloudwiththeresourcesofapubliccloudcanbeusedtomanage unexpectedsurgesinworkload. AtEzeCastleIntegration,wehavedeployedarobust,scalablecloudInfrastructureinmultipleTierIIIandIVdata centers.OurEzeCloudinfrastructureleveragesbestofbreedtechnologiestodelivercosteffectiveinfrastructure asaservicepoweredsolutionstotheinvestmentindustry. Nowletslookatapplicationhostinginthecloudandwhatfirmsshouldconsider.

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HostedBusinessApplications:WhatHedgeFundsMustConsider
As we discussed in the previous chapter, there are many reasons why a hedge fund should consider cloud computing.Nowwewilllookmorecloselyatoneaspectofcloudcomputingapplicationdelivery. Within the cloud model is Software as a Service (SaaS) software that is deployed over a hosted environment and accessedviatheInternet.Anondemandlicensingservice,SaaS enables the benefits of a comprehensively licensed application without the need to specifically equip multiple servers and infrastructureswithnecessaryapplications. 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 offeringtheirservicesatafractionofthepriceofmostthirdpartyITserviceproviders.Whilethesearelowcost, theyarenotnecessarilythebestchoicesforinvestmentfirms. Thefollowingsectionwilloutlinethekeyconsiderationsfirmsshouldlookatbeforeturningtheirbusinessesover to free or lowcost hosted services such as those offered by Google or Amazon. Before we introduce these considerations,letstakealookatthebusinessmodelsofthesehostedappsproviders,particularlyGoogle.

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HostedAppsforBusiness:AnOverview
Overthelasttwoyears,hostedapplicationshaveemergedasapowerfulandintriguingservice.Anumberoflarge companies,manynottraditionallyfocusedonITservices,havecomeoutofthewoodworklookingtoofferthese servicesontopoftheirbasebusinessmodels.EveryonefromCiscoandIBMtechnologyfocusedcompaniesto GoogleandAmazonhasstartedusingthecloud.GooglesBusinessAppsemergedasafrontrunnerearlyon,led bothbyanintriguingbusinessmodeland,ofcourse,thebiggestnamewithintheInternetbusiness. Among the key features Google advertises are proven costsavings, a 99.9% uptime guarantee, and 50% more storagethantheindustryaverage.Googleevenoffersmultipleeditionsoftheirappstailoredtospecificcustomer needs.InadditiontotheirStandardEdition,theyofferanEducationEditionforschools,colleges,anduniversities andaPremierEditionforbusinessesofallsizes.

KeyConsiderations
While Googles price point is likely the lowest a business will find, the level ofserviceoffered 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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UnderstandingofBusinessRequirements
While Google boasts that their various editions are tailored to meet the specific needs of businesses, this is not exactlyafairstatement.ThedescriptionoftheirPremierEditionliststheservicesasidealforbusinessesofall sizes.Butitisnotsolelyabusinesssizethatdeterminestheirspecificneeds.Forexample,asmallhomegrown businessinOklahomathatsellspersonalizedstationeryisnotgoingtohavethesamebusinessneedsorsupport requirementsasaninvestmentfirmoperatingonWallStreet.Thisiswherefinancialfirmsneedtobecarefulnot tojumpintoaservicebasedsolelyoncostalone. Afirmmustcarefullyconsidertheireverydaybusinessandsupportrequirementsbeforemigratingtoaservice likeGoogles.

ComplianceofData
Oneoftheforemostconcernswhenanybusinessputstheirdataandinfrastructureinthehandsofathirdpartyis security. Google lists security and compliance as one of the key features of their product, and did eventually bringonemailsecurityproviderPostinitoprovideadditionalsecurityservices.Theseservicesarebasic,though, offeringtoolstoeliminatespam,protectagainstinternalinformationleaks,and retain emails. These tools are sufficient for small mainstream businesses; however, investment firms require increased compliance measures, including emailarchivingandencryption,onadailybasis. Emailisabusinesscriticalapplicationformanyfirmsandbasicsecurityisnot enough.Aswemoveintoaneraofincreasedtransparencyandcallsforstrict complianceregulations,firmswillrequiresignificantsecurityandcompliance measurestokeeptheirdataprotected,encryptedorarchivedatalltimes.
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Migration/FutureGrowthConcerns
Anotherconsiderationtokeepinmindwhendeterminingifhostedapplicationsareagoodfitforyourfirmisyour potentialforfuturegrowth.WithGoogleApps,thereisnoeasywaytomigratedataifafirmdecidestomoveits data off of the hosted app service. As your business grows, you should keep in mind that with that growth will cometheneedforadditionalservicesandrequirements.ItishighlylikelythatyouwillneedtointegratewithIRM andCRMsystems,forinstance,whichisnotpossiblewhenusingaservicelikeGoogle.Intheeventyousuddenly requiretheseservices,migratingyourdataoffofaGooglelikeplatformisgoingtobecomplicatedandlikelytime consuming.

Oversubscription&ITSupport
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 oversubscribetheirserversandriskshoddyserviceasaresult. Withthisnumberofusers,speedofserviceislikelytobenegativelyimpacted.Itcouldtakesignificantlylongerto sendorreceiveanemailadelaythatthoseoperatingintheinvestmentindustrycannotafford.Ifafirmisrelying onemailfor business operations, particularly ina volatile market, wheneverydeal and everydollarcanhave a significantimpactonbusiness,thatfirmrequiresrealtimeservicesthatwillnotputbusinessatrisk.

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Inadditiontoconcernsabouttheserviceprovideroversubscribingservers,firmsmightalsowanttoconsiderthe possibilitythattheiremployeeswilllikelybespendingasignificantamountoftimelearninghowtouseahosted application service. For example, if a firm signs on to use Google Business Apps, they will need to train all employeestousethatserviceandlikelytraininternalITemployeestobecomewellversedontheserviceinthe eventofapplicationissues. ThoughGoogleboaststhatitoffers24x7customersupportforitsappsservice,itisfarfromatypicalhelpdesk. Customer support through an entity like Google is often challenging to navigate and timeconsuming to get anotherhumanbeingontheoppositeendofthephone.IntheeventofaseriousITissue,endusersemployees willneedtohaveanextensiveunderstandingofthehostedserviceinordertoprovideadequatesupport. Alternatively, if a firm does not have IT staff, other employeeswillneedtolearntosolveproblemsontheir own,whichcaninterruptthetimetheyarespendingon their daily business tasks. In a CNN Money article, FounderJonathanBlumofBlumsdayLLC,abusinessto business tech content company, wrote about how GoogleAppswasntworkingforhiscompany.Blumsaid he and his employees were spending too much time each day resolving issues. Youre paying people while they struggle through this cultural shift to Webbased applicationsandthatcanbeverycostly.

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OtherConsiderations
Blum also highlighted another issue he encountered when he relied on Google Apps for his business services: identity concerns. Because Google is entirely webbased 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 their accountloginsandpasswordsonsharedportals. Investmentfirmsshouldalsobethinkingaboutthekindofbestpracticestheyareemploying.Businesscontinuity anddisasterrecoveryplansarebecomingnearrequisitesformostinvestors.Massmarketedhostedapplications typically do not include such services. Firms would, therefore, have to work with two separate thirdparties to accommodatethisdesiredoutcome.

FinalThoughtonHostedApps
Hostedapplicationswillsurelycontinuetoimproveandadjusttothechangesinthebusinesslandscape,butwhile thereisvalueintheirservices,investmentfirmshaveveryspecificneedsandrequirementsandshouldworkwith technologyproviderswithfinancialexpertiseandexperience.ThesetraditionalthirdpartyITprovidersarebetter equippedtoservicetheneedsoffinancialfirmsandadapttothecontinuouschangeswithintheindustry. Our hosted IT solution, Eze Virtual Office, for example, offers hedge funds the capabilities of a fully managed infrastructureandkeybusinessapplicationsthatare24x7x365byITprofessionalsthatunderstandahedgefund's business. NowletsexplorewhatsbehindcloudcomputingDataCenters.
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ARefresheronDataCenterTiers
Inthepreviouschaptersweexaminedtheprosandconsofcloudcomputing.Inthissectionwellexplorewhats behindthecloudthedatacenterthatis.AtEzeCastleIntegrationweoftenreferencedatacentertiers(i.e.Tier III and Tier IV) in our written materials and assume readers will automatically understand the value of these distinctions.Insomecasesthismightbeasafeassumption,butyouknowwhattheysayaboutassuming. DatacentertiersTierItoIVrepresentastandardizedmethodtodefinetheuptimeofadatacenter.Thetiers areusefulinmeasuring: Datacenterperformance Investment Returnoninvestment(ROI) Thefourtiers,asclassifiedbyTheUptimeInstituteincludethefollowing: Tier 1: composed of a single path for power and cooling distribution, without redundant components, providing99.671%availability.Thisisthesimplestandtypicallyusedbysmallbusinesses. Tier II: composed of a single path for power and cooling distribution, with redundant components, providing99.741%availability. Tier III: composed of multiple active power and cooling distribution paths, but only one path active, has redundantcomponents,andisconcurrentlymaintainable,providing99.982%availability. TierIV:composedofmultipleactivepowerandcoolingdistributionpaths,hasredundantcomponents,and isfaulttolerant,providing99.995%availability.

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Data center tiers are becoming increasingly important as hedge fund and investment firms look to cloud computing infrastructures to increase agility, reduce operating costs, and simplify IT infrastructure and applicationmanagement.OurEzeCloudinfrastructureisbuiltacrossmultipleTierIIIdatacenterstodeliverthe availabilityandperformanceinvestmentfirmsrequire. Asahedgefundevaluatesitsdatacenteroptionsforcolocationorexploreswhycloudcomputingmayberightfor thehedgefunditisessentialtounderstandthedifferencesbetweeneachtiers.

ImageCredits:Greybar
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EzeCastleIntegration'sCloudComputing& HostingInfrastructureforHedgeFunds
EzeCastleIntegrationhasdeployedarobust,scalableCloudInfrastructureinmultipleTierIIIdatacenters.Our EzeCloudinfrastructureleveragesbestofbreedtechnologiesfromCisco,NetApp,andVMwareaswellasmonthly software leasing services from VMware, Microsoft, CA, and Citrix to deliver cost effective managed product offeringsandcustomsolutionstoourhedgefundclients. EzeCastlescloudofferingsallowourclientstodeploystateofthearttechnologiesthroughamonthlyrecurring cost model rather than facing the challenge of major capital expenditures and budgeting for hardware and softwareupgradelifecycles. AfewoftheprimarybenefitsoftheEzeCloudinfrastructureinclude: Redundancy SecureMultiTenancy ResourceProvisioning Expandability ProfessionalManagement FormoreinformationonourEzeCloudInfrastructure,pleasevisithttp://www.eci.com/solutions/infrastructure/ cloud.html.

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AboutEzeCastleIntegration
Founded Mission Headquarters AdditionalOffices Website&Blog CoreServices 1995 TobetheleadingproviderofITservicesandtechnologysolutionstothe investmentcommunityworldwide 1FederalStreet Boston,Massachusetts,02110 6172173000 NewYorkCity,Chicago,Dallas,Geneva,LosAngeles,Minneapolis,San Francisco,Singapore,StamfordandLondon. www.eci.com www.eci.com/blog

StrategicITConsulting OutsourcedITSolutions ProfessionalServices ManagedServices CloudComputing Startup&Relocation CommunicationsSolutions NetworkDesign&Management

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www.eci.comeci.marketing@eci.com8007521382

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