A small company that does not specialize in computers, but does have heavy IT needs, sounds like a company that is better off migrating to cloud services. What’s happened to all the hardware and that CTO? Are they still there? Or is the hardware in the garbage and the CTO unemployed?
Abacus Group LLC is an MSP in the USA that has been operating since 2008. Abacus provides IaaS for financial services organizations. Its client base is mainly hedge funds and private equity dealers. Computing resources are all managed and owned by Abacus. They offer hosted private cloud and managed services including telephony, e-mail, hosting and DR.
Jason Elmer, Director of Business Development at Abacus, gave an example of how a client uses their cloud services. “A mature fund may employ six individuals for application type work. The fund spins up a new application, finds out they are trading heavier and they add more resources”.
These customers are not the high frequency traders desperate to shave milliseconds off their response times. These are companies with common enterprise challenges.
One of Abacus' clients is a fund employing 26 users, managing $3.5 billion dollars (yes, really) and relying on a portfolio of applications. This fund’s hardware required a refresh, which required a significant capital expense. Infrastructure rebuilds, both on-premise and in a remote data center, would cost a lot of up-front cash. The fund managers decided it was more cost effective to hand over to an IaaS provider.
This changed the CTO’s role. The CTO in this hedge fund company is now the primary point of contact for Abacus and manages the relationship. The CTO has been freed up to work on other aspects of the business, such as managing the workflow of the fund and implementing a new risk system.
Elmer has witnessed this change of role of a CTO in many private equity and hedge funds. Elmer described what he has seen across the Abacus client base. “In the past the CTO was in-house. They would say ‘the IT closet is my responsibility. Operation is down to the COO’”.
That simple world is gone. “Now the CTO is wearing many more hats than they initially signed up for. The CTO must improve operations, evaluate software, manage vendors, while doing more with less, as technology budgets have gotten tight”.
Elmer described the effect this extra responsibility is having. “The CTO likes the additional responsibility. Decisions are more transparent to him – he has insights into the rest of the business. The CTO is no longer siloed”.
There may no longer be an in-house CTO. While the very large players - the multi-billion dollar banks – will have the full suite of C-level executives, the small shops have no CTO and no computer room on-premise. IT services are outsourced to a company like Abacus to gain the cloud benefits of being more cost-effective, more secure, and more scalable.
In the past the CTO had a narrowly defined set of responsibilities, focused on getting more value from expensive IT infrastructure. The CTO role today is multi-disciplinary, and that’s the way the new CTO likes it.
Investment companies have the same challenges as other professional services organizations. The companies Abacus deals with are not comfortable operating at the forefront of technology, but they have been using cloud services for some time. Their clients use off-premise services because off-premise is now accepted by everyone in the investment space. If the CTO role has changed in hedge funds, it’s changed everywhere.
Nick Hardiman builds and maintains the infrastructure required to run Internet services. Nick deals with the lower layers of the Internet - the machines, networks, operating systems, and applications. Nick's job stops there, and he hands over to the designers and developers who build the top layer that customers use.