Five to ten years ago, talking about Software-as-a-Service (SaaS) products with my clients would have been a very short converstation: they simply weren’t interested. Today, however, the landscape has changed. Investment advisors are more open to using systems in the cloud because they have begun to realize that owning technology and controlling every aspect of it is expensive. In the past, they wouldn’t have had it any other way.
Now, we live in a different time, with newfound economic pressures and more sensitive budgets. To those managing the operational budget, the cloud looks good. Some of my more progressive clients have been ahead of this curve. Instead of building and implementing systems internally, they have been using outsourced technology systems through the likes of Fidelity’s WealthCentral platform. They have enjoyed using best-of-breed technology, without paying a premium to own it.
CLOUD-BASED SYSTEM ADOPTION GROWING
Those with experience using cloud-based services are looking to expand use of that technology, and some firms who never would have considered it in the past are taking a hard look at putting some of their systems in the cloud. No matter which group your firm fits into, you are unlikely to find a complete solution in the cloud, nor should you. As an example, clients of mine who effectively leveraged cloud services in other areas in the past are only now thinking of using hosted Exchange services from the likes of Rackspace or Google. I also work with advisors who moved quickly to Google for email, but wouldn’t think of moving their portfolio management system to the cloud.
Recently, some of our clients have made the move and transitioned their servers into the cloud. Options exist for moving workstations processing into the cloud via terminal services and virtual machines, but not many advisors have taken it to that extreme yet. Terminal services and virtual machines are frequently used in the contingency systems that most advisors implement, so using them for primary system access isn’t much of a leap.
WHY YOU MAY WANT TO MOVE YOUR SYSTEMS TO THE CLOUD
Typically, one advantage of cloud-based systems is vendor-based redundancy that eliminates the need for similar infrastructure at investment firms. In other words, you don’t just save money on primary hardware and software systems, you also save on redundant infrastucture and simpify the requirements of your contingency systems.
Advent offers a SaaS solution through their Advent OnDemand service. This service is available directly through Advent and other channels, such as Fidelity. In my experience, clients utililizing Advent’s SaaS offering give up some flexibility, but save a considerable amount of money to utililze Advent’s infrastructure rather than purchasing and maintaining their own. It is not the right solution for every firm, but it is worth looking into.
As users of Portfolio Center and Junxure consider the necessary system upgrades to support their expanding SQL server requirements, they need to understand whether the systems they implement will continue to support their growing databases. In some cases, these users may need to incur the expense of a full SQL server license in addition to purchasing respectable server-class hardware for their next generation server. When looking at the price tag associated with these potential upgrades, these users will do well to consider Portfolio Center Hosted, before committing to new system expenditures. The SaaS version of Portfolio Center is scheduled to be released in April 2013.
2013 AND BEYOND
For the remainder of 2013, advisors will continue to adapt SaaS and cloud-computing systems that spare their businesses significant expense while posing relatively low security risks. Firms will also resist the urge to move their systems into the cloud fully. Their perceived need to actively manage security locally is too great for investment managers to entrust to these controls to the cloud for the time being, but at this rate, 2014 and 2015 could be mostly cloudy.
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About the Author: Kevin Shea is President of InfoSystems Integrated, Inc. (ISI); ISI provides a wide variety of outsourced IT solutions to investment advisors nationwide.
For details, please visit isitc.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@isitc.com.
AUTHOR’S NOTE
I touch on cloud-computing briefly in this article and may seem to use the terms SaaS and cloud interchangably. Cloud-computing apps and SaaS apps both sit in the cloud. They are closely related, but not the same thing. If you want to learn more about the differences, here is a link to an article that explains it.