01.31.2013

Managed Services in the Cloud Attract Capital Markets

01.31.2013
Terry Flanagan

Managed services delivered via the cloud are rapidly becoming the model of choice for financial firms that are anxious to shed layers of costs that have enveloped their in-house proprietary systems over the years.

It’s a dramatic change, for only a few years ago the idea of moving mission-critical systems to the cloud was only dimly perceived as having potential.

“Some of our biggest clients are in the process of moving from a deployed, clunky environment to our dedicated hosted environment,” said David Hagen, vice-president of global trading technologies at technology provider Linedata. “Four years ago, the idea of the cloud was foreign to them.”

Linedata delivers its entire front-to-back office solution as an integrated, hosted offering. Customers that use its hosted services run the gamut: hedge funds, mutual funds, third party administrators, pension funds, custodians and insurers.

Firms using Linedata Hosting are able to lower their cost of ownership and enhance their returns on investment with systems that are kept up to date, available and managed by Linedata’s industry experts.

Among the tangible benefits of a cloud-based model is the opportunity to stay up to date with the latest software.

“Inevitably, clients tend to be on older versions of a vendor’s software,” said Hagen. “With a hosted environment, it stays up to date because we control it.”

Hosted platforms, which range across cloud-based models including software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS), offer improved reliability, availability, scalability and security, in addition to cost savings.

PaaS, by providing a computing platform as a service, enables users to develop software using tools and/or libraries from the provider. The user also controls software deployment and configuration settings. The provider provides the networks, servers, storage and other services.

“Arguments can be made for marginal cost reductions in labor and capital expense but marginal they are and IT leaders can be no more bothered with single digit returns than can the portfolio managers they support,” said Ken Barnes, senior vice-president of corporate development at Options, a provider of private cloud services platform for the exchange, banking, trading and investment communities. “Availability is the real story here, and the industry is waking up to the fact that it is incredibly expensive to build real availability into a proprietary platform.”

Options offers three type of cloud services: Core, a set of basic IT services such as e-mail and telephony; Momentum, a managed hosting service for front, middle and back office applications; and Velocity, a direct market access service for low-latency trading application.

The shift toward the cloud “started a few years ago when we all realized how futile it was to invest in our own data centers, and that very same logic is simply being applied more holistically to the full IT stack”, Barnes said. “Servers, storage, networking, database administration, information security—they all look cheap enough to keep in house on sunny days, and a terribly bad idea when the storm clouds roll in,” he added.

Through its Momentum service, Options provides hosting for a variety of service providers such as Advent Software (portfolio management), Misys Sophis (risk management) and Eze Castle Software (order management system).

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