TheTRANSFORMATIONof IT and Hedge Fund Operations

State of the Industry

• Managing investments is not just about managing investments anymore.

• Hedge funds require sound operations and infrastructure to succeed.

• A variety of industry factors play key roles.

competition for assets

technology innovation

investor expectations

regulatory oversight

Regulations

• Post-Madoff & 2008 Financial Crisis, SEC and FINRA keeping closer eye on financial services industry

• e.g. Dodd-Frank, SEC cybersecurity roundtable last month

regulatory oversight

Competition

• More competition than ever for investment allocations

• Technology powering smaller firms to compete on institutional-level with larger funds

competition for assets

Investors

• Demands for transparency are stronger than ever

• DDQ requests have increased exponentially

• Investors expect sound operations & technology to support investment management

investor expectations

Technology

• Increased focus on managing operational risk

• Emergence of ‚big data‛ trend as firms manage more and more info

• Reliance on mobile devices, BYOD

technology innovation

Technology Shift

5 YEARS AGO

• $200K-500K technology investment

• In-House Comm. Room

TODAY

• OpEx vs. CapEx• Leverage Cloud or

Data Center

Cloud Adoption

74%

90%

87%private cloud

avg. satisfaction level

using cloud services

Source: Cloud Usage Trends Survey, Eze Castle Integration & IDG Research, September 2013

Why Go Cloud?

• Business needs driving cloud deployment:

Easy access to applications; simplified application management

Greater control and predictability of IT costs and budgeting

Reduced complexity and management of IT

Improved disaster recovery/business continuity

Enabling global support of local and remote offices

Reallocating personnel resources

60%

55%

55%

54%

42%

41%

Source: Cloud Usage Trends Survey, Eze Castle Integration & IDG Research, September 2013

The Right Time

Office Relocation New Applications Technology Refresh

• Ideal time to review infrastructure

• Don’t invest in moving outdated technology

• Migrate to cloud prior to relocation

• Easy to add new applications (in hours)

• Long-term planning no more

• Predictable cost structure

• Conduct a cost-feature comparison for on-prem refresh vs. cloud

• With cloud, transition process is simple

Due Diligence

• Institutional investors demanding more transparency than ever

• Due diligence questionnaires evolving/expanding

• ‘Checking the box’ is not enough

• Detailed responses on DR/BCP, security, operations, etc.

INVESTORS

How often are IT policies &

procedures tested? How is data backed up and at what

frequency?

Do you have a written business

continuity plan in place to guide

employees during a disaster?

Have you conducted a

security vulnerability assessment or

penetration test?

DR/BCP

Disaster Recovery

• Infrastructure-centric• Details

implementation/support of recovery infrastructure

• Minimizes & mitigates effects of outages/disasters

• Allows continuation/quick resumption of mission-critical functions

Business Continuity

• People-centric• Concept-centric• Details mission-critical

services, functions & personnel

• Reveals risks• Documents, tests and

educates on steps to return to operations

Disaster Recovery

• A fully managed service that supplies the resources and redundancy to quickly resume and maintain mission-critical functions when faced with outages & disasters.

Managed Disaster Recovery

Features & Benefits to Look For

• No hardware or software purchases necessary• Replication of production virtual machines (VMs)• Remote access to applications (MS Exchange, OMS, SQL, etc.)• Virtualized solution with resource pool• 24x7x365 support• Proactive maintenance and bi-annual testing

Security Practices

• Security = Most frequently vetted topic by investors in 2013.

Principle of Defense in Depth

Principle of Least Privilege

Audit & Logging Systems

Secure User Authentication Protocols

Security Practices

• Employ multiple layers of security simultaneously, e.g.:

• Windows hosts protected by anti-virus software with up-to-date virus definitions

• All Internet and DMZ facing hosts protected by OSSEC host-based intrusion detection

• Limit access to only those who need it• Implement restriction policies

• Access Control• Applications• Data• Inbound/Outbound Internet

Principle of Defense in Depth

Principle of Least Privilege

Security Practices

• Central logging system that records:• All login/logout events• Inbound/outbound connections through

Internet-facing firewalls

Audit & Logging Systems

Secure User Authentication Protocols

• Assign unique domain user IDs to each employee

• Enforce strong passwords• Restrict access to active users and

active user accounts only

Looking Ahead

• Future of cloud services looks certain:

hybrid cloud

private cloud

public cloud

38%

41%

28%

6%

9%

11%

39%

46%

49%

18%

5%

13%

Future Use of Cloud Servicesincrease decrease remain the same not applicable

Source: Cloud Usage Trends Survey, Eze Castle Integration & IDG Research, September 2013

Eze Castle Integration

Awards 2013/2014Founded

Office Locations

Employees

Core Services

1995

Boston, Chicago, Dallas, Hong Kong, London, Los Angeles, Minneapolis, New York, San Francisco, Singapore, Stamford

340

• Strategic IT Consulting• Outsourced IT Solutions• Project Management• Communications• Network Design/Mgmt• Internet Service

• Private Cloud Services• Business Continuity• Disaster Recovery • Storage Solutions• Colocation Services• Message Archiving