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Posted: March 26, 2012

Embracing the cloud

Alternative asset managers are doing it

Kevin Kelly

In last month’s article Doing Well and Doing Good, my colleague Beth Busenhart talked a lot about the importance of managing the impact of social investments and the role web-based technology is playing in this burgeoning market. But social investors aren’t the only investors getting more serious about using technology to help track and manage funds.

Although the investment community has been slow to adopt the use of cloud computing solutions, private equity firms, institutional investors, pension fund managers, family offices and other alternative asset managers are starting to sit up and take notice of the benefits offered by the cloud.

Like businesses of all types, investment firms can use web-based software to reduce costs while gaining flexibility and easier access to company data. The benefits of cloud technology are so great, in fact, that a recent report from the Gartner group predicts cloud computing will be a $150 billion industry by 2013.

Some of the specific reasons more investment firms are jumping on the cloud computing bandwagon include:

• Reduce IT infrastructure needs – By shifting to cloud-based technology solutions, investment firms can significantly reduce the hardware, software and staff resources needed to maintain the IT infrastructure. This also means IT staff can focus on more strategic day-to-day initiatives than resetting servers and managing hardware.

• Lower costs – With cloud-based services, investment firms pay for what they use, which generally saves companies money.

• Gain mobility – Data in the cloud can be accessed by those with the right credentials from wherever they are, giving investors much greater access to data when they’re away from their desk.

• Work with highly skilled vendors – In general, cloud solution providers have a deep understanding of a very specific business segment or challenge. By working with cloud providers, investors are able to tap into a highly skilled pool of technology professionals, with deep expertise on everything from fundraising and deal sourcing to disaster recovery.

Perhaps the most compelling reason investment firms are turning to cloud solutions is because of the impact on the bottom line, particularly when it comes to fundraising and redeployment.

For Raleigh, North Carolina-based Investors Management Corporation (IMC), that was certainly the case. IMC recently moved from its thorough and careful spreadsheet-based process of evaluating potential investments to a cloud solution that puts all of that information in a centralized database system that helps them track and analyze investments and financial metrics, as well as manage all research and due diligence documents.

“We knew five years from now we would want to have a record of what we did five years ago,” said Reeves McGee, who was responsible for managing all of IMC’s elaborate spreadsheet process. “We are now able to manage our efforts more professionally and make better decisions about how we’re spending our time and our business development resources. Ultimately, we feel this leads to better investment decisions.”
 

Kevin Kelly is founder and CEO of Application Experts, a Broomfield-based company that develops cloud-based software solutions to help alternative asset managers track the success of their investments. App-X provides PULSE, the only software on the market designed to track the non-financial results of impact investments, and AIM, one of the leading cloud-based solutions for tracking fundraising and fund performance. Kevin can be reached at 1-800-914-9120 or info@app-x.com

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