Many advisors are now interested in moving their IT resources to the cloud, and at least one IT expert believes such a move will soon become a necessity. "Legacy Windows applications are dying," says David Kramer of External IT. If they don't "SaaSify" (a Kramer term for moving to "software as a service" model) within five to ten years, they will be out of business. If the External IT vision of the future is correct, what does that mean technologically for advisors? Can they all just move to the cloud and have nothing to worry about?
Not according to Ken Garber, External IT's vice president. To succeed in the cloud, he says, advisors will need three things. First, they will need unification. By this he means a method of bringing all of their firms' applications and data together in a single, unified interface. Second, they will need "provisioning"-the resources of an app store.
You start with a workstation that is a clean slate, and then you "provision" the applications you want to deploy for each user (MS Office, financial planning software, CRM, etc.). Last, but not least, you need someone to support your IT infrastructure to make sure all of the hardware and software your staff relies on operates smoothly. Coincidentally, External IT offers just such a service, but before we can fully appreciate its Portal Desktop solution, let's review some cloud models being deployed today.
At the most basic level, cloud computing is simply a model whereby you access your IT resources over the Internet. Today, in our profession, just about every software provider has, or is developing, some sort of cloud solution for its advisor clients. When venturing into the cloud, advisors face a number of challenges. The first is that not all clouds are created equal.
The folks at External IT like to discuss the different clouds as four different "flavors." The simplest of the four is something called managed hosting. When you do business with a managed hosting service, you are renting a server or servers instead of purchasing them, and they are housed and maintained offsite. Some of these services simply provide the hardware and perhaps the operating system; others will install and maintain your applications for you.
Providers of desktop/server applications without the software as a service option often offer a hosted solution they call a "cloud" solution. While such a service may technically have the characteristics of a cloud service because you access your applications and data over the Internet, this model does not provide many of the benefits that advisors usually associate with the cloud.
For example, you may not get the scalability you desire. You probably will not benefit much, if at all, from economies of scale. Security, mobile access, file sharing etc., may not be included as part of the package. What you generally do get are highly reliable servers and the opportunity to outsource the backing up of your data as well as disaster recovery for your servers.
The software as a service model allows you to rent your applications monthly or yearly over the Internet. Many advisors deploy SaaS business applications such as Salesforce CRM or Microsoft Office 365 in their offices today, as well as Black Diamond Performance Reporting, MoneyGuidePro financial planning software, the NetDocuments online document management system and Redtail CRM.
The SaaS model provides advisors with the economies of scale, anywhere/anytime access and other benefits of cloud computing. What it lacks is the ability to integrate multiple SaaS solutions into a unified workstation or platform without the intervention of a third party (such as a custodian or B-D) or an agreement among the individual vendors to provide the integration. Although many advisors have already adopted SaaS applications as part of their software infrastructure, what they would really like is a platform that combines multiple SaaS applications into a unified solution.
The hosted desktop is yet another solution. This usually combines some of the characteristics of a traditional desktop with those of a virtual desktop. You might boot up your computer in a traditional environment. That computer might have some traditional desktop applications running. In addition, there is a second, virtual desktop that sits on your primary desktop.
When you enter this virtual desktop, you are accessing applications that run in a hosted environment outside of your office. A hosted desktop offers an opportunity to run Windows-based applications offsite instead of locally, but it can be difficult to set up and maintain. It also may not address the issue of integrating Widows applications seamlessly with SaaS applications. In addition, a hosted desktop solution is not likely to work seamlessly with mobile devices unless you, or your provider, deploy additional software.
The final option, which External IT provides, is the Portal Desktop. According to External IT, it is "the world's fastest, easiest way to manage IT assets." External IT uses a fully hosted IT automation platform called OS33 as the basis for its services. With OS33, External IT can provide a fully integrated Portal Desktop capable of delivering applications, data, e-mail, file-sharing collaborative tools and more, all in a single integrated platform. External IT is not the only provider that deploys OS33. It is a firm, however, that does a substantial portion of its business with financial service firms.
The External IT OS33 platform consists of three layers. The unified Portal Desktop is what the advisors and other end users see as described above. The company manager layer is used by a firm's system administrator. Here, the administrator can create groups, departments and companies. This allows him or her to assign roles and permissions by groups instead of individuals. For example, an administrative assistant might need access to a different set of data and applications than an advisor does. The administrator could control this type of permission for each role. If you have a B-D and an RIA under the same umbrella organization, but you need to keep the data for each separate, you could do this by creating two separate companies.
The third level is the cloud control panel. In a typical RIA deployment, the cloud control panel, which governs the high-end IT capabilities, would be accessed by External IT on your behalf, although firms with the necessary technological know-how could be granted access to this level as well.
This platform can include hosted applications as well as SaaS applications. The advisor Portal Desktop, accessible from any Web browser, means that advisors and their staff can access all of the firm's IT assets that they have permission to use from anywhere, at any time, using any Web-enabled device, be it a PC, a Mac, an iPad or an Android phone.
There are a few things about the External IT OS33 platform with its Portal Desktop that might make it appealing to a large portion of the advisor community. The first is provisioning on demand. If you add a few interns for the summer, and you want to provision their Portal Desktops with MS Office, the Salesforce.com CRM or perhaps a financial planning application, your firm's administrator can do it in a matter of minutes. When the internships are concluded, you can "deprovision" those additional seats. You only pay for them when you need them.
Second, firms can designate cloud drives as the default "save" location for various types of files, something they can't do with other systems. So, for example, if your firm wants to use the Amazon Elastic Compute Cloud (Amazon EC2) as its default storage location, every time an employee saved a Word document, it would be saved to the specified virtual drive on Amazon EC2.
Third, much as they do with the Windows desktop, employees have a fair amount of flexibility in organizing their desktops. They can create links to their calendars, their inboxes, financial data, etc. They can also view their own virtual online file directory, as well as any shared ones they have access to. They can also create personal shortcuts to frequently accessed documents, spreadsheets, presentations, Web sites, etc. And the firm can create "shared shortcuts." These are created by the administrator, giving all employees access to commonly used resources such as retirement plan forms, expense forms, commonly used templates and the like.
Fourth, as mentioned earlier, the platform can host both SaaS and Windows apps. A sampling of vendor solutions the firm currently hosts for advisors includes Brentmark, Docuware, iRebal, Junxure, Lacerte, Laserfiche, Morningstar Principia, RedBlack and Worldox.
There is a great deal of additional functionality that will appeal to advisory firms. The Desktop Portal includes an announcement section to push out firmwide information of all sorts. There's an employee directory so your staff can view e-mail addresses and phone numbers of co-workers, as well as their system status (whether they are logged in to the system). There are news feeds, gadgets for market tickers and other types of information, built-in Wikipedia and Google search capabilities, a help desk status console and a built-in SharePoint portal.
Abacus Wealth Management, a fee-only RIA firm with offices in Los Angeles, San Francisco and Philadelphia, has been using External IT for some time. According to J.D. Bruce, an Abacus managing director, "We use External IT to host our applications and documents. We have been very pleased with the service they provide."
Advisors clearly crave a single unified environment that gives them access to all of the software tools they require to perform their jobs. To date, there have been few platforms that appear capable of unifying hosted Windows applications, various SaaS applications, cloud storage, technology support and other technology assets that advisors require in a single, intuitive package. External IT and its OS33 platform appear to offer just such a solution.
Only time will tell if the firm can attract a meaningful number of financial advisory firms to its platform, but it is encouraging to know that there are such firms that offer an alternative to the custodian-driven integration initiatives garnering most of the attention. Custodians will serve the needs of many firms, but their integrations will not work for everyone. Those looking for an independent third-party integrator may find that External IT is exactly what they are looking for.