April 1, 2020

Markets Media: Hedge Fund Infrastructure Q&A with Michael Pusateri, Siepe

Why is it important for hedge funds to have robust cloud infrastructure solutions in place?

Events such as COVID-19 are unpredictable and hedge funds and buy-side institutions need to arm themselves with premium cloud infrastructure solutions so that they are already prepared if anything like this does arise. Hurricane Sandy in 2013 was another situation that forced employees to work remotely for several days. We’ve come a long way since then and as the industry becomes more reliant upon technology, having a plan and roadmap in place is crucial. Technology should be an enabler of better decision-making and not a barrier. 

In general, businesses need to be able to plan and illustrate how their company is going to grow, and with that, how cloud infrastructure will factor into evolution. Creating a sound cloud roadmap allows firms to pinpoint possible areas of operational risk, reduce overhead costs, and streamline overall technology operations across the organization, as well as developing more robust security and disaster recovery features. 

A roadmap also helps firms guide the firm through experimenting, laying the foundation, facilitating the migration which leads to the transformation in the organization. As organizations evolve, bring on new business and leverage new resources, a well-developed cloud roadmap will play a very important role in the overall scalability and success of a company and it will help them navigate through an unexpected crisis such as the one we find ourselves in right now.

How often should a cloud roadmap be revisited?

Your cloud roadmap should reflect the growth trajectory of your business so it will vary from one company to another. In the financial sector, regulation and the overall structure of the industry landscape are evolving rapidly so a cloud roadmap should be revisited at least once a year to ensure that operational risk and overhead costs are addressed. However, the current COVID-19 pandemic will have lasting impacts on how buy-side firms approach cloud infrastructure solutions. Many will re-evaluate how employees work remotely and take a hard look at how their business was impacted by the situation.

From a regulatory perspective, there are concerns with the concentration of relying on only one cloud provider when firms should be employing multiple cloud providers.

What is the biggest mistake hedge funds make when approaching cloud infrastructure solutions?

Overall, the biggest mistake is not working with cloud partners to move non-critical workloads to the cloud. Often times, developers are the ones pushing and expanding into it with or without management’s approval which doesn’t lay the proper foundation. Ultimately, this means that firms end up spending more time and resources fixing these issues than focusing on customers and revenue-generating opportunities.

Another mistake – one that we’re unfortunately seeing now – is waiting until a major event or crisis occurs and then evaluating how your firm’s cloud infrastructure will hold up. These decisions need to be made early on so that the foundation can be laid and solution providers like Siepe can scale with the business. Waiting until something like COVID-19 has already impacted your firm to make technology decisions can be fatal. Once this winds down and the industry is back to business as usual, I think we’ll see a lot of managers making some major changes to their cloud infrastructure approach.

Originally featured on Markets Media