Private cloud adoption is on the rise as hedge funds seek to take advantage of performance and economic benefits to scale more effectively, run operations more efficiently and focus on core business.
“The days of installing and managing technology in house are going away,’ said Chris Grandi, chief executive of Abacus Group, a provider of outsourced IT services to hedge funds. “There’s a strong trend on the part of hedge funds to put more investment into the cloud and consolidate technology using the cloud service environment.”
Abacus closed out 2012 with 100% annual revenue growth. In addition, the company has doubled its client base in the last 12 months, propelled by demand for its private cloud solution.
The challenging market environment continues to impose cost pressures and regulatory demands on asset managers, forcing top-tier, new and emerging hedge funds and private equity funds to identify new methods to better allocate IT resources and lower operating costs while still adding measurable value.
“Our business model is to take out the costs of technology by moving it into our private cloud environment,” said Grandi. “Even the larger, more established funds, which have always relied on in-house technology, are seeing the benefits of having someone else provide the core backbone technology.”
Abacus has continued expansion into new data centers, including the newly opened Equinix NY5 data center facility in Secaucus, New Jersey. Abacus now hosts in four geographically disperse facilities, enabling increased redundancy and high availability.
Abacus has also launched StorageBurst, an on-demand service that offers hedge funds a platform to store large amounts of data off-site and that easily stores and back ups tick level data to meet regulatory requirements.
"It was critical to us to work with a provider that understands our business, and could deliver secure and flexible infrastructure,” said Brian Kessler, chief financial officer and chief compliance officer at Tourbillon Capital Partners, a hedge fund, in a statement. “We were also conscious about emerging regulatory requirements, and needed a provider that could help us archive and access data we might need to comply.”
Abacus is partnering with key technology providers, including SS&C Technologies, to provide investment firms hosting their platforms on Abacus private cloud with a global FIX connectivity service that integrates with existing systems and functionality.
“One of the biggest challenges for hedge funds is the need for multiple application service vendors,” said Grandi at Abacus. “The average $5 billion to $10 billion hedge fund is using one vendor for OMS [order management system], another for EMS [execution management system] and another for portfolio management. Hedge funds have succeeded in consolidation their core technology, but the problem with having disparate application providers still exists.”