Blog Posts — September 1, 2021

Cloud Native vs. Cloud Hosted: The Differences Are Big…and They Matter

This blog post was originally published March 2019. Since then, being ‘on the cloud’ has become more than just a trend, but a must-have for investment managers. In the updated blog post, we answer some of the most frequently asked questions about cloud technology.

Q. In the simplest terms, what’s the difference between cloud hosted and cloud native?

Cloud hosted—often associated with infrastructure-as-a-service—is the same thing as having your own data center. The difference is that you are running on the cloud provider’s virtual hardware, rather than your own. It’s purely an infrastructure play—a way to simplify and speed up the provisioning of new hardware. Cloud native, on the other hand, is all about leveraging the technologies that are built on top of that virtual hardware.

Q. Are there cost benefits to all cloud-hosted systems?

There can be, but not always. If you consider only the hardware costs, it’s more expensive to run in the cloud. The only way it becomes less expensive is by investing in technology and development that automates the management and deployment of your virtual machines—because that will allow you to reduce your IT workloads and operations headcount. If you don’t go that route, you’ll still be doing a lot manually, just as you did with your old data center.

Q. What are some of the key user benefits for cloud-native?

  1. You now write far less code, because the foundational code is already embedded in the platform-as-a-service technologies. As a result, your development team can now focus on writing code that supports your own unique solutions, because the other stuff is being handled by the cloud provider. The payoff is reduced development lifecycles, which enables firms to deliver new business functionality quickly and efficiently. So unlike cloud hosted, cloud native actually allows you to enhance your products. And that, at the end of the day, translates to competitive advantage.

  2. It decouples your business logic from what’s under the hood, technologically speaking. So if something starts to run inefficiently—or maybe your clients want something new—deploying a different technology isn’t a problem. There are no big risks and it’s not a mammoth undertaking. Platform-as-a-service gives you a lot more flexibility because your business logic is no longer chained to your technology, which means that you can iterate, adapt and evolve much more easily as conditions change, with no interruptions to your operations.

  3. The final big benefit involves the management of the solution itself. With a cloud native platform-as-a-service, if you work hard to leverage it, you can do a lot to reduce your total cost of ownership, while simultaneously delivering more value to your clients. And for investment managers today, with competition ratcheting up and margins shrinking, that is a critical objective. For example, platform-as-a-service lets you provide high availability and full redundancy for disaster recovery at a fraction of the traditional costs—and you don’t need to spend resources making sure that any code changes are implemented in multiple data centers. With cloud hosted, you don’t automatically get that.

Q. With so many end benefits, why are there investment solutions only cloud-hosted?

Designing, developing, and changing pieces of your system in real-time requires a completely different mindset. Taking advantage of the breadth of innovation that cloud-native infrastructure can provide requires highly qualified staff with out-of-the-box thinking, tremendous business expertise, and a different approach to managing your projects and costs. It’s a wholesale change that modernizes technology infrastructure, but the catch is, it’s a heavy lift.


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