Hedge FirmIT Challengesin an Era of Constant and Rapid Change

2 0 1 6 F I N A N C I A L S U R V E Y

Avere Systems and VLG Research surveyed middle-office managing directors in financial services organizations to learn what challenges are of highest priority over the next two years.

I N T R O D U C T I O N

2

Q U E S T I O N 1

Investment banks

Brokerages

Mutual funds

Retail & commercial banking

Hedge funds

What business segment of the financial services industry are you primarily involved in?

47.4%

21%

10.5%

15.8%

5.7%

Financial Services Segment

Investment banks

Brokerages

Mutual funds

Retail

Hedgefunds

Q U E S T I O N 2

With which function of the financial services industry are you primarily involved?

Information Technology 95%

Compliance & Business Continuity Mgmt. 5%

Research

Front-Office functions

Back-Office support

Risk Analytics

Financial Services Function

Information Technology

Compliance & BC

Q U E S T I O N 3

Do you run your own pricing and risk analysis algorithms?

Yes, we perform our own

Some; we both perform our ownand outsource a portion of it

No, we outsource pricing and risk analysis computing functions

26.3%

58%

15.8%

Runs Own Pricing & Risk Algorithms

Some (Both perform own and outsource)

YesNo

Q U E S T I O N 4

What is your average nightly job volume for pricing and analytic processes?

Less than 500 cores

500 – 4999 cores

5000 – 9,999 cores

10,000 or more cores

I don’t know

11.1%

5.5%

16.6%

22.2%

44.4%

11.1

5.5

16.6

22.2

44.4

0

5

10

15

20

25

30

35

40

45

50

Less than 500 cores

500-4999 cores 5000-9,999 cores

10,000 or more cores

I don't know

Average Nightly Job Volume

Q U E S T I O N 5

How do you predict the demand for risk analysis jobs will change in the next two years?

Increase by less than 50%

Increase by 50% to 100%

More than double

Stay about the same

Decrease by less than half

27.7%

38.8%

11.1%

22.2%

0%

27.7

38.8

11.1

22.2

0

5

10

15

20

25

30

35

40

45

Increase by <50% Increase by 50-100% More than double Stay about the same

Demand for Risk Analysis Jobs

Q U E S T I O N 6

Which measurement means the most to your evaluation of new products and services?

Ability to increase alpha throughput

Ability to more precisely predict risk

Ability to more precisely price assets

Comparative cost savings

Return on investment

11.8

35.3

5.9 5.9

41.2

0

5

10

15

20

25

30

35

40

45

Alpha throughput

Predict risk Price assets Cost savings ROI

Most Important Evaluation Measurement

11.8%

35.3%

5.9%

5.9%

41.2%

Q U E S T I O N 7

What would you consider a valuable, realistic increase to alpha throughput?

10% increase

25% increase

50% increase

Double or greater

29.4

47

23.5

0

5

10

15

20

25

30

35

40

45

50

10% increase 25% increase 50% increase

Considered a Valuable, RealisticIncrease to Alpha Throughput

29.4%

47%

23.5%

0%

Q U E S T I O N 5 - 7 C O M P A R I S O N

27.7

38.8

11.1

22.2

0

5

10

15

20

25

30

35

40

45

0-50% increase 50-100% increase Double or greater Stay about the same

Prediction of Demand for RiskAnalysis Jobs in the Next 2 Years

29.4

47

23.5

00

5

10

15

20

25

30

35

40

45

50

10% increase 25% increase 50% increase Double or greater

Considered a Valuable, RealisticIncrease to Alpha Throughput

Q U E S T I O N 8

Considering analytics capacity and effectiveness, which method is most appealing to you?

Allow larger numbers of models and simulations to run on your existing infrastructure

Expand existing infrastructure to meet growing capacity and performance demands

Enabling use of cloud resources to improve capacity without moving data

Adopting solutions that allow for a focus on processing power spend instead of infrastructure

0

1

2

3

4

5

6

7

8

9

#1 (Most Appealing) #2 #3 #4 (Least Appealing)

Analytics Methods: Most to Least Appealing

Q U E S T I O N 9

0

1

2

3

4

5

6

#1 (Most Frustrating) #2 #3 #4 #5 #6 (Least Frustrating)

What is the most frustrating part of your role?

Time to evaluate new technologies

Measuring success

Working within company imposed boundaries

Budget

Time to results

Predictability of IT needs to support continued growth

In summary, hedge fund IT managers are faced with a growing challenge: Meeting the need for more power and faster speed while justifying their spend by showing a good ROI.

R E S U LT S