Cloud Computing. Opportunities for Investment Managers

Transcription

1 Cloud Computing Opportunities for Investment Managers

2 Cloud Computing: Opportunities for Investment Managers Cloud Computing is rapidly changing the way IT is consumed Spend growing at 19% rate, to $109 billion 2012 ( Compare to 3% growth in overall IT spend. Hosted Infrastructure growing by 41% 250 Hosted Software growing by 26% Annual Cloud Spend USD billion Why should Investment Managers care? How can we use this to our advantage? What are the pitfalls we need to be wary of?

3 IT spend by Investment Managers: Large and Growing Hedge fund IT spend in 2011 was $2.09 billion, close to 9 basis points AUM for the industry. The growth rate in IT spend has recovered to 5% over the next few years We use hedge funds as an example for which there is data; these trends hold for other asset managers There are returns to scale; Smaller managers consume closer to 12 basis points

4 IT spend by Investment Managers: Greater Demands, Increasing Margin Pressure Investment Managers continue to experience pressure on management fees: At the same time, demands on IT and operations are growing: This results in IT costs which disproportionally hit the bottom line of smaller investment managers: Small funds charge most IT to management, Larger funds expense 20%-30% to the fund In-house shared service costs (payroll, hardware) make allocation less feasible

5 Value Drivers for Cloud Computing in Investment Management Cloud computing done right can deliver: Lower Costs Cloud operators are able to leverage their buying power and large investments in networks, operations, datacenters to deliver hosted solutions at a lower cost than a small operation can approach. Agility Moving away from applications installed on physical hardware allows new services to be turned up much more quickly, often through self-service. Subscription-based software enables quick and easy try-buy evaluations Secure & Reliable IT hosted service providers are able to stay on top of the constant drumbeat of security vulnerabilities and fixes and employ the experts who can deliver a quality service without interruption. Focus Your staff can focus on making a better return rather than on operating IT infrastructure and applications on a shoestring.

6 Cloud Computing Made Simple Essential characteristics of Cloud Computing: Accessed over a network Your applications and supporting IT are accessed over a network, relieving you of many IT management tasks On Demand You pay only for what you need, and can (relatively) quickly turn services on or off when your needs change on your own, without having to trouble (or even possibly employ) the IT staff As a Service Everything you need to use the service comes bundled: support, software, hardware, datacenters, etc. Clear accountability for delivery. Scalable The economics of a large provider to many smaller consumers mean you do not have to wait days after requesting a service to have it turned on: the hardware is already plugged in and waiting. For more details go to 145/SP pdf

7 Cloud Computing Made Complicated Other elements of Cloud Computing are less complex than IT people make them sound: Service Models SaaS PaaS IaaS Deployment Models Private Cloud Community Cloud Public Cloud Hybrid Cloud

8 Cloud Computing made Relevant Source: Citi Prime Finance

9 Every Silver Lining has a Cloud That sounds great! What could possibly go wrong? Things to look out for when evaluating a service. Cost Effective? Does this replace spend? Or add to it? Do you still need an IT function? Agility? Are you locked in to a narrow choice of products? Does the vendor really provide scalability? Can you try/buy without excessive commitment? What if you need to switch providers? Reliable/Secure? Does the provider understand your regulatory environment? Is the provider commercially viable? Does the provider understand how to provide a secure service over the network? Focus? Does the provider understand the investment management business? Do all the parts play well together, or will you be left to sort out the mess?

10 FSI-Cloud: Asset Manager in a Box We are partnering to bring the cloud to the investment management community

11 How to make technology work for you, not against you How to make technology work for you, not against you Investors Limited Partners General Partners Investment Advisors Registrars & Transfer Agents Custodians Legal Advisor Buy Side Core Functions & Services Investment Managers Prime Brokers (or asset custodians) Executing Brokers Clearing/Exchanges (OTC derivatives) Administrators SEC/CFTC Compliance (SD, MSP, ECP) Auditors & Reporting

12 Headwinds to performance Hedge Fund Sell SideSide Exchange Custodian FX Portal Complex system integrations Investor Front Office Relations functions functions Market Data Provider Complex data & voice networks SaaS Provider Back Office functions Middle Office functions STP with Custodians and brokers Broker Depository Shopping and swapping services FX Analytics Investment Manager ECN Clearing Firm Meeting compliance requirements

13 Disadvantages of legacy and do-ityourself models Legacy Investment Managers, Inc. High CapEx capital spend High operational overhead Higher cost of compliance Slow time to market for business Slow concept to market for products Static vs. dynamic infrastructure Limited access to global community Greater IT dependence

14 Advantages of BT s cloud roadmap and outsourcing Leaders Investment Management, Inc. OpEx pay as go as to save capital Lower operational overhead Lower cost of compliance Faster time to market for business BT Radianz Cloud Faster concept to market for products Dynamic vs. Static infrastructure Broad access to global community Asset Manager Depository Less IT dependence Corp Client Custodian Broker Clearing

15 Integrated and secure community, on demand and best of breed Investment Management asset manager or fund asset manager or fund manager Corporate Client 360 investor view 360 investor view BT Radianz Cloud investor client sales traders / broker dealers prime brokers / custodian banks global private network l b l i k ISO data centers

16 About BT moving the fabric of the market into the cloud Financial Markets Financial Services Enterprise Banking & Insurance Fast facts 170+ countries 30 year focus in financial services 68,000+ trading turrets worldwide 15,000+ BT Radianz member locations 400+ BT Radianz providers Sub millisecond low latency trading 250bn in transactions settled daily 29 million card payments daily Faster Closer Smarter

17 About Virtual Clarity UK Company founded in 2009 Offices in London, Mountain View, Amsterdam and New York We help businesses turn technology to competitive advantage: Agile IT strategy and governance Next generation Data Centres Operating Models optimised for Virtualisation Mission Critical Cloud Computing Shorten time to value for new technology Product and Service strategy for the Cloud Virtual Clarity offers a compelling combination of: Financial IT specialists spanning Funds, Funds Retail, Retail and Securities End User Computing transformation and modernisation Wisdom in putting Cloud Computing to work Our mission is to help businesses virtualize their entire infrastructure and transition to the cloud, making these a core part of the enterprise strategy Virtual Clarity