End of financial crisis allows investment firms to boost cloud budgets

Capital market firms are set to increase their investments in private clouds, according to analysts Ovum, as spending on infrastructure rebounds following the budget constraints of the global financial crisis.


Investment firms are to increase spending on cloud computing as budget constraints begin to lift in the wake of the global financial crisis.

As part of the 'Cloud in the Capital Markets: A Progress Report', Ovum spoke to 380 capital market firms across major geographical regions, comprising of buy-side, sell-side, and corporate banking companies.

The survey showed that across all three sectors, 67 percent had plans to increase investment in IT infrastructure in the next year as budgets are freed up for IT infrastructure projects. Much of this spending is likely to be aimed at setting up private clouds, said Ovum senior analyst, financial services technology, Rik Turner.

“You would expect an increased investment in infrastructure coming out of a period of re-organisation, head-count reduction, and budget constraints in the wake of the global financial crisis. But the question becomes are they spending it on dedicated infrastructure for applications, or are they reorganising their internal IT infrastructure for cloud-based delivery,” said Turner.

“A lot of the big investment banks have been doing this recently, and essentially they are going towards private clouds. The move is more mature in some areas than others, but all of them are on that journey.”

The research also highlighted the extent of acceptance of cloud services among the 100 sell-side respondents, such as investment banks and agency brokers. The results showed that the majority were either considering, planning, trialling, or had already deployed cloud services within their organisation.

For example, 85 percent were at some stage of implementation of cloud services for market data provision, 83 percent for risk analytics, and 84 percent for post-trade services.

Turner said that running risk analytics in the cloud is one area which has clear benefits for sell-side firms.

“Risk is an obvious area because you need very short term and much larger requirements of hardware. It is easier to reach into the cloud and provision 200 servers to run a humungous Monte Carlo simulation for pricing and risk, and then immediately tear it down and put it back into to the pool, as opposed to going to the IT department and getting them to provision 200 servers for two weeks."

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