2013 Cloud Usage Survey Report

8/12/2019 2013 Cloud Usage Survey Report

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Examining Cloud Usage within theInvestment Management Industry

Presented by Eze Castle Integration


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Tb f CIntroduction ..... 3

Survey Methodology & Respondent Proile ......... 4

Current Cloud Usage ...... 5

Cloud Deployment Models: Public vs. Private vs. Hybrid. 6

Business Needs Driving Cloud Deployment .... 8

Current Satisfaction Levels of Cloud Users .. 9

Concerns About Cloud Deployment ... 10

Security in the Cloud 11

Interoperability of Multiple Clouds 12

Cloud Usage: Forecasting & Budgeting . 13

Outcomes Firms Expect to Realize from the Cloud 13

Conclusion .. 15

About Eze Castle Integration .. 16

2013 Eze Castle Integration

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INTRODUCTION

Just ive short years ago, the idea of cloud services was a new and daring one an infrastructure option that fewirms knew about and even fewer were adopting. Hedge funds and investment irms were still leveragingtraditional on-premise IT infrastructures or colocation services of third-party technology providers. Hardwaremanagement and ownership was still a critical component of any irms day-to-day operations, and frequentrefresh cycles caused irms to suffer through costly and labor-intensive infrastructure upgrades.

Fast forward to today and the inancial services industry has widely adopted the use of cloud services. In a 2012survey of the investment industry, Eze Castle Integration found that nearly eight out of 10 investment irms wereeither using or planning to use cloud services in the near future. One year later, those numbers continue toincrease, and our 2013 survey report will show that 87 percent of irms are currently using some form of cloudcomputing services. Beyond that, the majority of investment irms report that they are satisied with the currentcloud deployments.

Whether a new or experienced investment irm, the pull towards cloud services is signiicant. As our 2013 surveyresults show, irms of all sizes can leverage the inherent beneits of the cloud, including increased eficiencies,simpliied technology management and cost containment and predictability. Based on the results, we expectconversations will continue to revolve around the cloud for years to come.

Following is a full report of the indings from the 2013 Eze Castle Integration Survey: Examining Cloud Usagewithin the Investment Management Industry.


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SURVEY METHODOLOGY & RESPONDENT PROFILE

Field work for the survey was completed by IDG Research Services between August 5 and August 15, 2013. A total

of 101 respondents were surveyed via online questionnaire or phone interview. The audience was qualiied basedon several criteria. Respondents had to work at either a hedge fund, investment management irm, fund of fund orprivate equity irm. Organizations also had to either currently use cloud services or plan to use cloud serviceswithin the next three years.

Respondents who completed the survey were ofthe following irm types: investment managementirms (61%), hedge funds (21%), private equityirms (13%) or fund of funds (5%) [Figure 1]. Thelargest percentage of respondents (38%) camefrom irms with assets of less than $100 million.Twenty percent (20%) of irms reported assets

between $100 million and $499.99 million.Nineteen percent (19%) had assets undermanagement between $500 million and $999.99million, and 20 percent reported AUMs of over $1billion [Figure 2].

Titles of individual respondents covered a widerange, with the majority reporting from theinancial or operations side of the business. Thelarger irms who completed the survey were morefrequently represented by technology-related individuals.There was also a signiicant Other category,

indicating the responsibility of IT is changinghands and may fall under many differentdepartments. Following is a complete breakdownby title:

Chief Financial Oficer: 16%

Managing Director/Partner: 13%

Chief Operating Ofice: 10%

VP/Director of Operations: 10%

IT Manager: 7%

VP/Director of IT: 6%

Chief Compliance Oficer: 4%

Other: 35%


Figure 1

Figure 2

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CURRENT CLOUD USAGE

In our 2012 survey, Eze Castle took an initial pulse of the market to determine what percentage of investmentmanagement irms were using or planning to use cloud computing services. Last years results showed that nearly

8 in 10 irms (79%) were using or had plans to use the cloud within the near future. The beneits of cloudcomputing continue to permeate throughout the industry, and as a result we found that 87 percent of this yearssurvey respondents are using cloud services tomeet some kind of business need today. Theadditional 13 percent indicated they had plans toutilize cloud services within the next three years[Figure 3].

Of current cloud users, 64 percent said they arecurrently using the cloud to meet their basicbusiness needs, including email, ile services,storage solutions and disaster recovery services

[Figure 4]. Firms with less than $1 billion in assetsunder management tend to rely on the cloud forthese basic ofice functionalities more so (68%)than larger irms with over $1 billion in AUM(50%).

Nearly half of irms currently using the cloud(49%) are leveraging it for application hostingneeds, a igure remarkably similar to the results oflast years survey (50%). Cloud-based application hosting often makes sense for hedge funds andinvestment irms, giving them the ability to quickly and easily add users and new applications to an infrastructurethat provides increased resiliency and requires less maintenance and upfront capital expenses.

Survey indings show that 24 percent of current cloud users are outsourcing the entirety of their ITinfrastructures a slight increase over the 22 percent of irms who reported the same in 2012. Mid-to-large irmstended to report this over their smallest and largest counterparts. Lastly, 42 percent of irms indicated they areusing the cloud for otherapplication services orinfrastructure needs, a signthat the breadth ofsolutions offered via thecloud continues to expandand bring value to

investment irms andbusinesses of all kinds.


Figure 3

Figure 4

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CLOUD DEPLOYMENT MODELS:PUBLIC VS. PRIVATE VS. HYBRID

Based on these survey results, the inancial services industry has clearly adopted cloud computing and continuesto see value and reap the beneits of such services. Whether irms are building out their own clouds or relying onthose designed by experienced third parties, cloud services have clearly found a home in the inancial industry.

That said, not all clouds are created equal.

Survey respondents were asked to indicate which type of cloud was best suited for their industry. For thepurposes of this survey, cloud deployment models were deined as follows:

Private Cloud: This model of cloud infrastructure is provis ioned solely for a single organization, whether

managed internally or by a third party and hosted internally or externally.Hybrid Cloud:A com position of two or more clouds (pr ivate, community, or public) that remain uniqueentities but are bound together, offering the beneits of multiple deployment models. It can also be deined as

multiple cloud systems that are connected in a way that allows programs and data to be moved easily from one

deployment system to another.Public Cloud: This model of cloud infrastructure is provisioned by the cloud provider for open us e by the

general public. It may be owned, managed, and operated by a business, academic, or government organization, or

some combination of them (e.g. Amazon Web Services, Google Documents, etc.).Nearly half (46%) said the private cloud was bestsuited for inancial services, followed by 31percent who selected a hybrid cloud and 24

percent who chose the public cloud [Figure 5]. Forthe smallest size asset class (less than $100million), hybrid and private clouds were the topchoices, garnering 39 percent and 37 percent ofthe responses, respectively. All other asset classesoverwhelmingly selected the private cloud as theideal choice for the inancial services industry.

When asked why irms selected a particular cloudmodel over the others, common themes emerged.Those who selected the private cloud as theoptimal deployment model for investment irmsmost often gave security as the resounding reasonwhy.

Proponents of the public cloud cited its ease of useand low cost as the primary beneits. Respondents who selected the hybrid cloud naturally highlightedthe combined value of security and accessibility.


Figure 5

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For security reasons. Security is the

number one driving factor aboveeverything else.

PRIVATE

Securitypurposes. Greater

control over

accessibility.

More control and moresecurity.

HYBRID

I like the security ofthe private cloud and

the accessibility ofthe public cloud.

It satisies the need for simplicity and security.

It is lexibleand easy to

use.

I am small enough that Idont need my own special

private cloud. I amrelatively uncomfortable

with something publicbecause of security sohybrid would be best.

PUBLICFor easy access to data

for consumers andservice providers.

No cost, easy to use.

Goodvalue.


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When asked what cloud deployment models theirorganizations were currently using, respondentsprovided answers similar to those they felt wereideal for their industry. Forty-seven percent(47%) of irms indicated they were using private

cloud services, and this was the top choice for allof the asset classes.

Hybrid cloud users made up 27 percent of therespondents, followed by public cloud users at 26percent [Figure 6].

BUSINESS NEEDS DRIVING

CLOUD DEPLOYMENT

Next, our survey asked irms what they perceived as the top business requirements or needs driving clouddeployment within the industry. For this question, we invited respondents to give multiple responses.Simplicity is often one of the greatest appeals of the cloud, allowing companies all over the world to quicklyand easily access general ofice and inancial applications, shared iles and other business requirements.Within this survey, thetop driver according torespondents of nearlyevery asset class, is easyaccess to applications andsimpliied applicationmanagement. Sixtypercent (60%) of overallirms selected this as theprimary driver to cloudadoption [Figure 7].

Another critical factorinluencing clouddeployment is greatercontrol and predictability

of IT costs and budgeting,a factor that 55 percent ofirms selected in oursurvey. Not only does thecloud beneit irms in the short term by reducing upfront capital expenditures and transitioningcosts to ongoing, operating expenses its advantages also translate to the long term. Technology budgetinghas long been a challenging process for hedge funds and investment irms, who have historically had tofactor expensive hardware purchases, new applications and refresh cycles into the equation. Or in manycases, irms have not taken the time to create their budgets and have been surprised with unexpected costson an unexpected timeline. With the cloud, however, IT costs are predictable and structured to ensure irmsare not surprised in the short or long term.


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Figure 6

Figure 7


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Reduced complexity and management of IT is another critical factor driving irms to the cloud, according to55 percent of our survey respondents. By leveraging the experience and expertise of a third -party cloudservices provider, irms themselves no longer need to worry about technology maintenance or monitoring.Day-to-day cloud management, upgrades and other service issues are handled by the cloud provider, freeingup irms to spend their time on higher priority items.

Disaster recovery and business continuity have become household terms for investment irms, withincreased regulatory and investor scrutiny in recent years. Devastating disasters such as Superstorm Sandyon the East Coast of the U.S. have also prompted irms to take a closer look at their business recoverystrategies and reevaluate their technology systems. Fifty-four percent (54%) of our survey respondentsindicated improved DR and BCP was an important driver to cloud utilization.

Additional factors motivating hedge funds and investment irms to adopt the use of cloud services include:enabling global support of local and remote ofices (46%), meeting industry or government compliancerequirements (41%), reallocating personnel resources to higher priorities and greater value areas (41%),and other (3%).

CURRENT SATISFACTION LEVELS OF CLOUD USERS

Its clear to see that hedge funds and investment irms are adopting cloud services for a multitude ofreasons. And according to our survey, irms are generally happy with the results theyre seeing. Of irmscurrently using cloud services, almost all respondents are satisied with their organizations chosendeployment method whether public, private or hybrid.

When it comes to reducing IT costs, nearly all irms (93%) reported that their chosen cloud deploymentmethod either meets or exceeds expectations [Figure 8]. Ninety-two percent (92%) said their cloud wasmeeting or exceeding expectations by improving users IT experience; only six percent answered below orsigniicantly below expectations. Current private cloud users found their model to be the most effective at

meeting this need, with 98 percent satisfaction (meeting or exceeding expectations). In contrast, only 83percent of public cloud users were as satisied that their users IT experience was improved by use of thecloud. Hybrid users fell in the middle at 91 percent.

Overall, 91 percent ofirms believe the cloud issimplifying managementof their IT, with the mostsatisfaction, again,coming from privatecloud users (98% said itmeets or exceeds

expectations). Publiccloud users said theircloud deployment modelonly met or exceeded thisexpectation 83 percent ofthe time.

One beneit many irmssee from the use of cloudservices is the ability toreallocate internal


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resources to more valuable activities. For example, if outsourcing cloud services to a third -party provider, airms internal IT department no longer needs to focus on the day -to-day management and maintenance ofthe cloud thereby allowing those employees to focus on higher-value areas of the business such as meetingregulatory and compliance requirements and improving security practices across the irm. Eighty -ninepercent (89%) of overall cloud users believe the cloud is currently meeting or exceeding their expectations

in this area, but once again, there are some discrepancies between cloud types. While 39 percent of hybridcloud users say their cloud type exceeds expectations in this area, only 22 percent of private cloud users feelthe same.

One area where hybrid cloud users were less impressed was IT performance, scalability and resiliency.While 70 percent of users still believe their cloud solution meets or exceeds expectations in this area, thatigure is signiicantly lower than the 92 percent and 95 percent that public and private cloud usersprovided, respectively.

Finally, when asked if their chosen cloud deployment method provided a high return on investment, 22percent of all users said their cloud exceeds expectations, followed by 66 percent meets expectations, 7percent below expectations, and three percent signiicantly below expectations. Two percent (2%) of irms

said they were unable to answer. Once again, private cloud users were most satisied with their cloudmodels at 93% (meets or exceeds). Public cloud users were 88% satisied, and hybrid cloud users just 78%satisied.

CONCERNS ABOUT CLOUD DEPLOYMENT

Despite widespread adoption of cloud services, some hedge funds and investment management irmsremain cautious aboutthis type of technologydeployment. When askedif they had any concerns

about their current orfuture cloud deployments,survey respondents notedsecurity, regulatoryrequirements and supportas their top choices.

About half of irms (51%)said they had concernsabout security, includingunauthorized access, dataintegrity and data

protection [Figure 9].Firms with assets under$100 million appearedslightly more concernedthan irms of larger assetsizes.

Thirty-nine percent (39%) of respondents said they had concerns about information governance or meetingregulatory or compliance requirements, followed by 36 percent who said they feared spending more thananticipated on support for the cloud.


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Figure 9


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Additional concerns expressed by irms include:

Fear of vendor lock-in (34%)

Fear of outgrowing or overpaying in the cloud (30%)

Concern regarding unexpected hardware investments (29%)

Inability to access/integrate inancial applications (28%)

Investors/clients are not receptive to private cloud computing solutions (26%)

Nine percent (9%) of irms said none of the above mentioned factors were concerning to them.

SECURITY IN THE CLOUD

Security in the cloud has long been a topmost concern for businesses, particularly so for investment irmsmanaging sensitive inancial data. Following the economic crisis in 2008, investment irms have reevaluatedtheir security practices, and investors have demanded stronger controls to secure and monitor data andassets. Security is no longer a minor add-on to a irms general technology practices. Firms are nowemploying security experts and/or leveraging outsourced IT providers to manage security. For cloud users,security due diligence becomes critical as they evaluate service providers.

Proper security in a cloud environment requires specialized practices at both the physical (data center) andvirtualization (server) level. Common cloud security best practices include:

Physical Security 24x7x365 manned lobby with visual veriication of identity

Multi-factor authentication of visitors (at least two factors)

Secured access doors and elevator banks

Monitored security cameras

Additional door, motion and camera sensors

Key-locked cages and cabinets

Visitor and audit logs for cages


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Figure 10


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Virtualization Security Secure separation

Availability and resiliency

Service assurance

Management and monitoring

Managed Security Monitoring Intrusion detection and prevention (IDS)

Data loss prevention (DLP)

Ongoing vulnerability assessments

High service levels and 24x7x365 expert security monitoring

According to our survey results, investment irms overwhelmingly believe that private cloud deploymentsare more secure (60%) or just as secure (33%) as an on -premise infrastructure [Figure 9]. Firms felt theopposite about the public cloud, with 61 percent citing it as less secure than an on -premise infrastructure.The hybrid cloud fell somewhere in the middle: about half of irms (47%) rated it just as secure as on -

premise with about a quarter noting it was more secure and another quarter rating it as less secure.

INTEROPERABILIY OF MULTIPLE CLOUDS

In some cases, irms take a staggered approach to cloud adoption. A irm may start out with an applicationhosted in the cloud and, at a later time, decide to move ofice productivity solutions to the cloud. In aninstance such as this, challenges could arise if hedge fund systems are suddenly running across multiplecloud platforms. A customer relationship management solution (CRM) could be operating in the publiccloud while an order management system (OMS) runs in the private cloud. If desired, connecting saidsystems can become complex and oftentimes deliver a poor user experience. Just as with an on -premisetechnology solution, it is best for irms to plan for growth and determine if their cloud needs will change or

increase over time.

Of irms who selected the hybrid cloud as thebest-suited cloud model for their industry,nearly three-quarters (74%) said they were atleast somewhat concerned (if not extremely orvery concerned) with the interoperability ofsystems and applications across multipleclouds.

Only three percent said they had no concern atall with interoperability of multiple cloud

platforms [Figure 10].


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CLOUD USAGE: FORECASTING & BUDGETING

With satisfaction levels relatively high for most users, its not surprising that most irms reported they planto maintain the same levels of cloud usage or increase them in the near future. Over the next 12 months,

more than 4 in 10 irms (41%) expect their use of private cloud services to increase. Hybrid cloud usage isexpected to rise also, with 39 percent indicating they will increase use of that deployment method in thefuture. Only 28 percent ofirms overall say their useof the public cloud willincrease [Figure 12].

Similar to projectedusage, cloud budgets haveeither remained the sameor increased for mostinvestment irms in 2013.

Overall, 37 percent ofirms reported that theirbudget for cloud servicesincreased from 2012 to2013; 52 percentindicated that budget hadremained the same. Only ive percent (5%) of irm budgets decreased year over year [Figure 13].

The asset class with the largest increase in budget included irms with over $1 billion AUM. Half of theseirms (50%) said their cloud budgets increasedin 2013. The majority of irms in other assetclasses indicated their budgets remained thesame. There was little variation among public,private and hybrid cloud users.

Firms who indicated their cloud budgets hadincreased did so at an average of about 40percent, with 43 percent of irms reporting abudget increase of greater than 20 percent. Theaverage increase was actually greatest for irmswith the lowest assets under management.Firms with less than $100 million increasedcloud budgets by an average of 59 percent,

while irms with greater than $1 billion AUMonly increased budgets by 23 percent.

OUTCOMES FIRMS EXPECT TO REALIZEFROM THE CLOUD

Without question, across the board, hedge funds and investment irms expect to see a lot of positive resultsdue to their current or planned cloud usage. According to survey results, 60 percent of irms expect theircurrent or future cloud usage to improve their data management abilities [Figure 14]. Other top outcomes


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Figure 13


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irms expect to realize from the cloud include improved ability to manage applications (55%), improvedresource utilization (54%), improved disaster recovery/business continuity (52%) and simpliication ofinfrastructure (52%).

Hybrid cloud users most often cited improved ability to manage applications (74%) as a beneit to their

cloud usage; private cloud users selected improved data management ability 66 percent of the time. Publiccloud users identiied improved resource utilization as the most common beneit of the cloud.

Other outcomes and beneits hedge funds and investment irms expect to realize from their use of cloudcomputing services are:

Cost-savings and lower total cost of ownership (TCO) (48%)

Improved application service levels or IT responsiveness (accelerated service delivery) (47%)

Lower support costs (46%)

Improved scalability/lexibility (46%)

Increased agility in bringing in new business applications (45%)

None of the above (2%)


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Figure 14


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CONCLUSION

We think its fair to say that the adoption of cloud computing services is no longer a surprise, particularlygiven the high satisfaction levels cited by nearly all respondents. Hedge funds and investment irms are

continuing to leverage the cloud to meet their day-to

-day operational goals and maximize their business

eficiencies, and the rate of adoption is growing at a rapid pace.

Our 2013 survey clearly shows that investment irms of all sizes are looking to reduce complexities, simplifytheir technology management and control costs all while maintaining success on the investment front.Whether using public, private or hybrid cloud models, irms are generally satisied with their clouddeployments and many expect to increase their cloud usage and budgets in the near future.

The private cloud remains the top choice for investment irms of all sizes, bringing a secure environment toa cautious industry and alleviating many of the concerns irms have traditionally had regarding cloudcomputing services. Firms expect to achieve success in the coming years as the cloud affords them betterdata management capabilities and improved resource utilization ultimately giving them the tools they

need to focus on their primary investment decisions. It will be interesting to see how the rate of cloudadoption grows in the near future and in what new and exciting ways irms begin to use the cloud tooptimize their businesses.


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ABOUT EZE CASTLE INTEGRATION

Eze Castle Integration is the leading provider of IT solutions and private cloud services to more than 650alternative investment irms worldwide, including more than 100 irms with $1 billion or more in assets under

management. Our Eze Private Cloud is the most widely used hedge fund cloud spanning three continents andsupporting over 2,500 users. In addition to our cloud services, our solutions portfolio includes TechnologyConsulting, Outsourced IT Support, Project & Technology Management, Professional Services,Telecommunications, Business Continuity Planning and Disaster Recovery, Archiving, Storage, Colocation andInternet Service. Eze Castle Integration is headquartered in Boston and has ofices in Chicago, Dallas, Hong Kong,London, Los Angeles, Minneapolis, New York, San Francisco, Singapore and Stamford.

The Eze Private Cloud is an enterprise-grade, private cloud infrastructure that provides hedge funds andinvestment irms a highly redundant, secure and available IT environment. The Eze Private Cloud is the backbonefor Eze Managed Suite and Eze Managed Infrastructure.

Eze Managed Suite is a fully managed IT solution for hedge fund and investment irms that provides lexibility and

simpliied IT operations. The solution combines a robust, highly secure private infrastructure via the Eze PrivateCloud with key business applications and professional IT management.

Eze Managed Infrastructure provides clients easy access to an enterprise-grade private environment with thelatest hardware and software without capital expenditures, expensive upgrades or ongoing maintenance andmonitoring.

To learn more about Eze CastleIntegration, visit www.eci.com orcontact us at 1-800-752-1382 [email protected].


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