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The TABB group predicts that by 2016, 50 percent of financial institutions will be using managed services to outsource the management of their IT infrastructures. In addition, the Technology Services Industry Association’s (TSIA) annual survey shows spending for managed services continues to rise at a double-digit rate.
So far the upward trend in managed services adoption has largely been driven by cost control, with lower TCO and shifting IT spend from significant, upfront capital investment to more predictable monthly operational expense as prime objectives. However TABB notes that it is accompanying benefits such as increased flexibility, agility and IT responsiveness, faster time-to-market for growth products and tighter security and GRC adherence that will really move adoption into the mainstream.
PERCEPTIONS AND REALITIES
Market data management is becoming increasingly complex, further exacerbated by new derivatives and indexes as well as tighter regulations. Therefore the business case for transferring responsibility for system management to companies that specialize in this area is compelling. However, during a recent webinar co-hosted by TABB Group and Thomson Reuters, the audience of 100 were polled on what challenges and concerns would limit their transition to a managed service environment. Fifty-three percent cited security as their biggest concern.
Delivering managed service is not only about doing things cheaper, but about removing the complexity that comes with managing sophisticated and constantly-evolving infrastructures and making security a non-issue.
Downtime and outages within market data systems can be costly, and have significant impact on revenues. With built-in layers of redundancy and instantaneous recovery, managed service providers can develop offerings to ensure that downtime simply does not happen for the client. Should a problem occur, back-up systems ensure service is continuous.
Ensuring secure and auditable access to data at enterprise, group and individual level is also crucial to organisations to protect their intellectual property and ensure sensitive data is only accessed appropriately.
A common misconception is that managed services are “in the cloud” and therefore not secure, and that cost benefits are derived from sharing of resources and infrastructure. But this is not the case. For mission-critical managed services, each customer needs a completely dedicated environment with full separation from other customer deployments, so that no other customer within the data center has any access to another customer’s environment.
Additionally, providers must work closely with customers to align with corporate policy and ensure that access to systems by employee groups and individuals are managed through secure authentication processes, based on a strict information security framework that complements the physical security restrictions and provides key functionality such as access control, password management and strict data classification. It is also important that access across all of these layers is fully auditable by the administrator, offering full transparency to the customer.
External threats and attacks are another area of concern for IT managers, with the potential to slow or, even worse, crash systems and lose data. Securing data traffic via a multi-layered security architecture including routers, firewalls and intrusion detection systems ensures such threats are also prevented, with systems able to proactively detect and block any internal or external malicious transactions, and secure the data traffic of any sensitive customer data.
In addition, government security certifications such as FISMA (Federal Information Security Management Act) and FedRAMP (Federal Risk and Authorization Management Program) are offering more formal recognition of the high standards managed service providers must meet. They also provide standards for compliance controls to meet SSAE 16 (Statement on Standards for Attestation Engagement), a written assertion to auditors that systems and operating activities accurately perform the services they are designed to provide. The certification from regulators offers further reassurances that managed services can offer the most secure path to market data system management.
Any competitive advantage that may have once existed for financial institutions building their own advanced proprietary systems is a thing of the past. Experts in managing market data systems are building scalable offerings that deliver the highest quality systems, at a lower total cost of ownership and with the highest levels of security – a natural fit with the market needs we see today. By outsourcing technology innovation to the companies that specialize in it, financial institutions can return to focus on the things they do best.
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