When it comes to cloud, security has traditionally been one of the main obstacles to its adoption or further use. Since cloud became the “go-to” technology, these concerns – data privacy, where is my data, is it safe – have topped the agenda of almost all cloud discussions. Of course cloud has evolved and matured, and as businesses have increased adoption and grown more comfortable with it, industries that were traditionally slow adopters, like financial services, are starting to see the benefits.
In fact, according to recent HFM Technology research there is a definite appetite for cloud adoption in the hedge fund space, with 27% of firms saying they used hybrid cloud, while 54% made use of private cloud.
These types of organisations operate within a very defined regulatory environment and it’s becoming clear that cloud can deliver benefits, whether that’s private, public or hybrid. But can this adoption of cloud help firms meet their two major objectives – compliance and maintaining customer trust?
The answer perhaps isn’t in the use of cloud, but in the choice of service provider.
Hedge funds don’t just run the risk of being hacked, breached and having valuable data stolen. They also face availability or distributed denial of service (DDoS) attacks, core infrastructure attacks and system failures, which all have the power to disrupt operations and ultimately both reputation and the bottom line are likely to suffer.
Cloud service providers and data centre operators have the expertise, technology and compliance to better protect a hedge fund’s data and mitigate the types of risk they face. This is their core business and, as a result, have made the investments required to make sure their data centre sites, offices and networks are protected both physically (24/7 security, access control, resilience and encryption) and independently (certifications such as ISO 27001). These qualifications and resources can effectively augment the security plans and measures that hedge fund companies already have in place.
In the hybrid IT environment, for example, hedge funds can leverage those greater levels of security because of the investment cloud providers have made in securing their infrastructure – much more cost-effective than a single hedge fund hosting in-house.
So while there is a slow realisation of the benefits that cloud can bring to hedge funds (cost reduction, agility, freeing up resources, scalability – just as a reminder) why aren’t more firms making the move? It seems there are more concerns than just security. The HFM Technology research also identified cost and performance as issues that were hindering adoption. And again, those particular worries can be allayed by the right service provider.
For organisations like hedge funds with such specific compliance and performance requirements, the right cloud solution isn’t going to be one bought off the internet. Rather, it will be a combination of services, hybrid if you like, that address these specific requirements and are delivered by a provider with the right levels of technology assurance.