Public, private and hybrid solutions offer distinct pros and cons for wealth managers.
By now you probably know that cloud computing delivers shared data and software resources on demand through the internet. But you might still be wondering about all the varieties of cloud platforms on the market. This primer explores those differences, and explains why External IT operates as something called a “private hybrid cloud,” which we believe is the best approach for independent wealth management firms.
Brands such as Amazon Web Services and Google App Engine are examples of “public cloud” platforms. They are owned and managed by providers that supply cloud services to multiple external clients on a pay-as-you-go basis.
Public cloud systems are typically encrypted with a key that only the customers have. As a result, public cloud providers have zero access to your data, but they also cannot manage or troubleshoot problems that occur inside of your virtual servers and workstations. Using a public cloud is akin to buying your own computer or server, except that it resides in a datacenter. If you need a fully managed system, you will still need an IT provider that has access to your private keys and data.
Cost is a primary benefit of public cloud systems because a firm can reduce the expense of maintaining its own IT infrastructure. A major downside is that the same standardized services are available to all public cloud users, and may not meet the compliance and security requirements of financial services firms.
In contrast, “private cloud” computing is used and maintained by just one organization, which keeps the organization isolated from others and often provides higher levels of security, control and customization. Among the chief benefits of a private cloud environment is knowing exactly where your data is located, and what security standards govern data storage there.
Drawbacks to private cloud systems include the initial outlay required for setup, which may be out of reach for small- to mid-size financial services firms, and the cost and resources required to stay current with the technology infrastructure.
Straddling the divide, a “hybrid cloud” environment integrates a company’s use of private and public clouds as well as traditional non-cloud systems. Firms may use private clouds for proprietary applications that require the highest level of security, and cost-saving public clouds for services which firms can tolerate relinquishing control, like email.
A potential hurdle of hybrid cloud computing is that successful integration requires a strong IT team. The team managing the infrastructure will play a crucial role in anticipating configuration challenges and continuing to maximize the firm’s use of cloud software.
What’s Best for your Firm?
In some ways comparing public and private clouds is an apples and oranges comparison. Public cloud storage options like Amazon offer tools that IT service providers and technical end-users can leverage to address their infrastructure needs. It is not an IT service hired to maintain a firm’s infrastructure, whereas firms like External IT do exactly this.
External IT provides the comprehensive service of managing servers, applications, and data. With External IT, a firm’s servers and data are not public infrastructure. We store a firm’s data and grant the firm access to it through private virtual servers dedicated to each firm.
We are confident that the External IT approach to the cloud brings together ease of use, cost effectiveness and online safeguards in a manner that frees wealth management firms to focus on their core competency instead of expending valuable resources on technology. Of course, each RIA and broker-dealer is unique. If you want an objective view about which cloud solution might be most appropriate for your firm, don’t hesitate to contact us.