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Which Cloud Based IT Infrastructure is Best for RIA Firms?

More and more Registered Investment Adviser (RIA) software applications and technologies have moved or are moving to pure cloud offerings, encouraging RIAs to move all or part of their infrastructure to the cloud. However, there are a few different models of cloud infrastructure that RIAs need to understand in order to evaluate the best option. The question is what is right for your firm?

Let’s start by looking at an RIA firm’s network infrastructure options.

Network infrastructure refers to the hardware and software resources that enable connectivity, communication, and operations between users, processes, applications, services and external networks/the Internet. In short, it’s the technology that allows your firm to run business applications and store data.

There are three types of network infrastructure models – local, cloud, or hybrid.

Local IT network infrastructure allows your firm to run business applications and store data within your organization’s local network. Your firm invests in the hardware, software, and services necessary to operate your business, such as servers, workstations, laptops, printers, software applications, line internet connectivity, etc. Most firms that have a local IT network infrastructure are typically run by an internal IT department because there is significant day-to-day management to keep that network up and running smoothly.

One of the advantages of this type of network system is that it is yours. You don’t have to share it with anyone and it can be custom designed to meet your technology, security, and operation needs. For the staff working in the office, a local infrastructure offers a more reliable performance with faster speed for improved work flow.

However, it generally involves a significant up-front as well as on-going investment in hardware, software, and people resources. Also, if there is a disaster, your servers may all be located in one location causing a disruption in business operations.

A cloud IT network infrastructure is a computing model whereby a third party service provider makes resources like software applications and data storage available over the Internet. You contract with a third-party cloud provider, usually for a monthly fee, and they perform all updates and ongoing maintenance. One of the main advantages of cloud infrastructure includes centralized data storage and remote online access to computer services or resources. This is important if your advisers typically meet with clients at their location or work from remote offices. A pure cloud infrastructure may offer a lower up-front investment, but you need to weigh that against the amount you’ll pay for the appropriate internet connectivity to ensure a fast speed and work flow. It’s analogous to renting vs. buying. If you are just starting your RIA firm, a cloud infrastructure will get you up and running quickly and with very little capital. However, most small firms start with an inexpensive Internet service that may not offer the download and especially upload speeds that you need. For a cloud environment, upload speed is very important.

There are two types of cloud networks public and private. With a public cloud network, your environment is hosted on a shared environment along with all of the provider’s other clients. This should raise a red flag for an RIA firm. You have to meet strict IT compliance regulations to protect the data you handle for your clients and your own firm.

A private cloud system gives you access to the benefits of cloud computing but behind the safety of a firewall on your own virtual private network. You want to secure your environment from the vendor’s other clients.

The main benefits of a cloud system are remote access, centralized data and flexibility. A cloud system may be advantageous if you are growing quickly. Your vendor can offer you more capacity or different service plans allowing you to scale quickly as you grow.

On the flip side, with a cloud system, you are entrusting your system security to a third-party provider. You want to make sure that your cloud service provider has the most up-to-date security certifications. If you are on a public cloud system you share resources with other firms. You may not have as much control over your system as you would like.

But there is a third option, which is a hybrid cloud network infrastructure, in which an organization provides and manages some of the network infrastructure in-house while the rest is provided externally. For RIA firms it provides the benefit of combining local and cloud infrastructure as well as RIA-specific cloud applications, which is why it is becoming more and more popular.

The advantages of a hybrid cloud network are many:

  • The mobility and flexibility that a cloud system offers.
  • Enhanced disaster recovery and continuity practices by backing up your data offsite.
  • More reliable IT infrastructure performance in the office with some form of local infrastructure.
  • Better able to meet the goals and objectives of your firm by leveraging cloud applications and a combination of local and cloud infrastructure.

Now that you understand your IT infrastructure options, you need to evaluate which would be the best option for your firm. In our next post, we’ll help walk you through What RIA Firms Should Consider When Evaluating Switching to a Cloud Infrastructure.

ĪTEGRIA® designs and supports all three network infrastructure environments. There are definite advantages to each model that should be aligned with your organization’s technology needs. However, we feel a hybrid cloud network is the best model because it allows RIAs to take advantage of the benefits cloud applications and remote access, while keeping the control and speed of a local infrastructure in the office.

If you need help identifying your firms’ technology needs or evaluating the infrastructure options to best meet those needs, give us a call at 888-996-4642. We are happy to talk this through with you. We only serve RIA firms, so we understand the complexities of your industry and can share best practices in technology design to help you grow your business.

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