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Is your organization’s back office ready for multi-cloud? Five reasons why it is the future

May 2023

15 May 2023 - The concept of multi-cloud has been gaining more traction across financial services in recent years amid ongoing concerns about security, regulation, downtime and service levels.

By now, most asset servicers and their alternative fund manager clients already acknowledge the benefits of the cloud. It has been widely accepted that having a cloud strategy is advantageous as it enables asset servicers to store data and run applications across multiple devices while offering clients quick, easy access to their own data.

The next logical progression is multi-cloud. At its core, it simply means rather than use a single cloud service, asset servicers (and, by extension, their clients) leverage cloud services from more than one provider.

Multi-cloud has many obvious benefits for both asset servicers and their clients, including from a security, innovation and access standpoint.

Below are five key reasons why multi-cloud is shaping up to be the future model adopted across the alternative asset management sector.

1. Enhanced security:

By leveraging different security technologies and strategies from multiple cloud providers, a multi-cloud approach can help reduce the risk of cyber-attacks, data breaches, and other security threats.

In general, the security benefits of multi-cloud environments stem from risk diversification, redundancy, resilience, and the ability to leverage best-of-breed security solutions from multiple providers. However, adopting a multi-cloud strategy does not automatically guarantee improved security.

2. Increased innovation:

Being able to offer the latest technology and functionality to clients is increasingly important for asset servicers and here again, multi-cloud can have an impact.

By being able to access the latest innovations from each provider, it allows asset servicers to deliver better products and services to their clients.

This approach is also enabling faster Software as a Service (SaaS) product onboarding, which can come with Platform as a Service (PaaS) or Infrastructure as a Service (IaaS) requirements from providers. Users of multi-cloud agree it boosts innovation - according to the Flexera 2023 State of the Cloud Report, 21% of organizations believe that a multi-cloud strategy helps them innovate faster.

3. Improved resiliency:

By leveraging multiple cloud providers, it can also improve the resiliency of systems and processes, and reduce the risk of downtime or service disruption. If one cloud provider experiences an outage or other issue, the asset servicer can recover data from a multi-cloud application on another provider to ensure continuity of service.

A 2020 survey by market intelligence organization IDG found that 41% of organizations believe that a multi-cloud approach delivered better disaster recovery/business continuity.

4. Addressing vendor lock-in:

One risk of any technology is vendor lock-in, whereby the user becomes beholden to its provider about what future developments, enhancements, and services it can access.

This can be addressed through the use of multiple cloud providers, traditional data centers and the proper architecture and design.

5. Private cloud as a multi-cloud approach extension

A natural extension of multi-cloud is to include traditional on-premises infrastructure, which is managed as a private cloud. Private clouds are created to leverage typical cloud management techniques and tools - such as Kubernetes, development operations pipelines, and infrastructure-as-code - for on-premises infrastructure assets.

When combined with public clouds via a setup which makes the process seamless, it can then be considered a ‘hybrid cloud’, designed to deliver the benefits of both approaches.

What comes next for multi-cloud?

At this point in its development, the cloud is firmly embedded in asset servicing but it is by no means the finished product. A multi-cloud approach is gaining in popularity, but challenges remain to its more widespread adoption, including around costs, security and a lack of in-house expertise. Indeed, these factors rated as the top three concerns in the latest Flexera 2023 State of the Cloud report.

However, Citco expects more asset servicers and their clients to overcome these sticking points and adopt a multi-cloud approach in the future. This is because of the need to keep supporting innovation, provide the latest security, and avoid any downtime or service disruption which is now unworkable for most businesses.

Multi-cloud also allows users to handle the ongoing regulatory changes that are commonplace across the financial world. Adhering to regulations can be a significant challenge for many organizations, but by using multiple cloud providers, asset servicers and their clients can ensure they are compliant by outsourcing their cloud strategy to providers, reducing their exposure to risk.

Does your administrator have multi-cloud?

At Citco, the decision was made early on to develop a multi-cloud strategy. This enabled the business to mitigate any risk that would impede the company’s independence.

Citco is committed to a multi-cloud strategy going forward as it allows the business to integrate enhancements from different providers as they emerge.

The business will also seek to extend its private cloud footprint by repatriating some of its public cloud workload and data. Data repatriation, also known as cloud repatriation or reverse cloud migration, refers to the process of moving data, applications, or workloads from a public cloud environment back to an on-premises or private cloud infrastructure. This can be done for various reasons, including cost, compliance, security, or performance considerations.

If you are interested in learning more about multi-cloud and how it can be incorporated across your fund management business, please do get in touch.

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