Why Hedge Funds Flock to the Private Cloud

In a sign that hedge funds are flocking to cloud-based IT solutions, Eze Castle Integration announced yesterday that it has surpassed 2,000 users and more than a pedabyte of data in its Eze Private Cloud.

Eze Castle Integration provides IT solutions and private cloud services to hedge funds.

According to Wikepedia, a pedabyte is a unit of information equal to one quadrillion bytes or 1,024 terabytes of information.

While cloud computing can be a confusing (and even nebulous) term, ECI has launched the Cloud Forum, an educational website focused on cloud computing use at hedge funds.. On the site, the company tackles a number of topics including the history of cloud computing and the differences between public, private and hybrid clouds. ECI also charts the history its own growth, which began in 2006 when it claims to have deployed the first hosted cloud platform at a large hedge fund. Over the next year (2007), 18 hedge fund spinouts moved to the hosted platform, the company reports.

In 2008, Eze Castle opened its hedge fund hotel in Manhattan where it offers a cloud-based suite of services and fully managed suite of office applications, which supports more than 200 users. Then,in 2009, Eze Castle turned its cloud infrastructure into a product and launched the Eze Private Cloud, a fully hosted platform, which by 2010, had more than 30 applications running on it, including order management and execution management systems. In 2011, it expanded to data centers in San Francisco and London, supporting over 130 hedge funds. Today Eze Castle says it’s an IT partner of over 600 fund funds worldwide, including more than 80 firms with $1 billion or more in assets in the Eze Private Cloud. [Update: Of these 600 firms that use a range and combination of outsourced IT services, including help desk and disaster recovery, 140 hedge funds are using the Eze Castle private cloud services, according to the company.]

Why has it been so successful in attracting hedge funds? Typically, hedge funds want to focus on their core competency, which is generating alpha based on their research, investment and trading strategies, and don’t want to spend time, money or resources on duplicating commoditized infrastructure and networks. Some hedge funds may view this as a more cost effective solution than running their own data centers and applications with inhouse staff. On the other hand, hedge funds wouldn't risk the safety of their assets to virtualized hardware or networks without assurances of security, reliability and performance.

Clearly, hedge funds are more comfortable relying upon the private clouds as compared to the public cloud accessing information and applications via the Internet. “Private cloud solutions are becoming the preferred choice for hedge funds seeking enterprise-grade environments that are fully managed by a team of experts,” commented Bob Guilbert, managing director at Eze Castle in the release. The company provides users with business technology services including email, files services mobility services, security disaster recovery and 24 x7x365 support.

While Guilbert (in yesterday's milestone release) claims that Eze Private Cloud is the "defacto solution for the hedge fund industry," no doubt there are other competitors nipping at its heels. Nevertheless, Eze Castle seems to have the first-to-market advantage and a strong edge; its milestone is noteworthy and impressive. “Reaching the 2,000 user and petabyte milestones is further validation of the industry’s trust and confidence in the Eze Private Cloud,” comments Guilbert in the company’s release.