24
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Citi Prime Finance’s 2011 IT Trends & Benchmarks Survey
24
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Citi Prime Finance’s 2011 IT Trends & Benchmarks Survey
In recognition of the changing landscape, market data providers
have begun to adjust their price models based on the fact
that the applications being used by their clients may now be
dispersed across multiple off-premises centers as well as
potentially on-premises. Many have developed pricing that now
treats the hedge fund like a singular entity and just tracks their
overall usage regardless of where that data is consumed. This
is preferable to needing multiple data licenses based on the
physical location of applications.
There are additional benefts to be gained for frms utilizing
the Hedge Fund 3.0 model in terms of how they ensure their
disaster recovery and business-continuity planning. One of
the major benefts of leveraging a data center maintained by a
managed service provider is that these frms also have cages in
other data centers and they ensure full data replication among
each location. Provisioning a fully replicated infrastructure
across multiple data centers becomes a matter of simply paying
the managed service provider for the additional capacity, and
maintaining enough bandwidth between the fund’s offces
and the data centers to replicate any data that might be
locally hosted.
This is aparticularlygoodarrangement given the increased focus
in recent years on process controls and compliance. For Hedge
Fund 3.0 frms, documenting their disaster recovery / continuity
of business plan begins with them collating documents from all
of the fund’s off-premises hosting partners: managed service
providers, vendors of hosted software and service providers
such as prime brokers and administrators.
Given the variety of benefts discussed in this section, it is fair
to say that “infrastructure as a service” and the emerging
Hedge Fund 3.0 model have become the de facto standard for
funds launching within the last two years. Better stated, new
fund launches will lean toward the managed service provider
infrastructure model frst, and then ask themselves what, if
any, applications should reside locally within their offces. Not
only does this approach result in a quicker time to market
for the fund launch, but it also minimizes capital expenditure
by substituting a hefty initial cash outlay for a much smaller,
recurring operating expense.
Opportunities also exist for older vintage funds to leverage
this model to upgrade or augment their Hedge Fund 1.0 or 2.0
infrastructures. This will be explored as part of the coming
section that focuses on how to apply the hardware and software
lessons discussed thus far in this report.
“The market is familiar with the concept of software as
a service; now we have infrastructure as a service. You
can eliminate the capital expenditure while lowering the
operating expense by leveraging a managed services
provider for infrastructure.”
– President of a Managed Service Provider
in the Alternative Asset Space