Hybrid connectivity is gaining momentum across the financial sector, and in this article we discuss the evolution and key considerations of a hybrid real-time infrastructure for network capacity and data distribution. We also explore how the combination of traditional physical data ingress with cloud-based services enables organizations to achieve greater scalability, resiliency, and flexibility. Additionally, we highlight how hybrid connectivity enables faster expansion of network capacity without the delays and costs of purchasing new hardware and updating physical infrastructure.
Amid recent market volatility, service outages, and compromising events, our own hybrid architecture remained resilient and enabled us to scale and adjust more quickly compared to our former traditional approach. The diagram below is a representation of FactSet’s architecture for real-time data collection and distribution.
Because expansion of network capacity in a traditional physical architecture often requires firms to purchase new hardware, configure routers/switches, negotiate new ISP contracts, and physically update infrastructure, the process can take weeks (or months, in some cases). Alternatively, a hybrid approach using services such as Amazon’s AWS Direct Connect and TNS’ Xpress network enables firms to shift to a more dynamic model. They can adjust bandwidth, connectivity options, and network segmentation based on their needs and what the market conditions dictate.
Another factor is that with traditional physical architectures, organizations often must guess future data peaks, buy enough hardware upfront to cover maximum capacity and headroom, and pay ongoing maintenance costs regardless of actual usage. There is little to no cost agility compared to pay-as-you-go pricing models.
A combination of the two architectures provides a predictable cost model for data ingress/collection while leveraging cloud elasticity through an appropriate mix of reserved capacity and pay-as-you-go resources. To further expand on cost efficiency, here are benefits to consider:
Optimized resource utilization
With pay-as-you-go, firms can run baseline workloads on existing on-premises infrastructures and use cloud resources for peak demand to avoid over-provisioning. This reduces the need to invest in expensive on-premises infrastructure for infrequent spikes.
Speed of innovation
As Cloud providers onboard new machine types and classes, for example, they can be very quickly tested and deployed and their performance implications understood compared to an on-premise situation that would require weeks of logistics to set up.
Flexible scaling
Firms pay for additional cloud resources only when needed, which can lower overall IT costs compared to maintaining enough hardware for a full-time maximum load.
Legacy investment protection
A hybrid approach allows organizations to continue using existing hardware and licenses (and maximizing the value of those investments), whereas a cloud migration takes an immediate “rip-and-replace” approach.
That said, cost efficiencies are not guaranteed. Hybrid cloud can add costs for network connectivity (VPNs, leased lines), management complexity, security tooling, and data transfer fees. Careful planning and workload placement are required to realize these efficiencies.
While the hybrid architecture provides significant advantages, there are drawbacks.
Management
Managing a hybrid cloud setup requires integrating on-premises infrastructure with public or private cloud resources. This adds complexity to network configuration, monitoring, security policies, and overall administration, potentially requiring specialized skills, tools, and knowledge.
Risk
Data moves across different environments in hybrid clouds, often requiring multiple configurations to achieve the same level of security and compliance in one environment. More configurations require more maintenance and checks to avoid errors and data breaches.
Latency and performance issues
Connectivity between clouds and on-premises resources often involves network latency, bandwidth limitations, and reliability challenges. This can negatively impact application performance, especially for real-time or mission-critical workloads.
By leveraging leading solutions, firms across the financial services industry can dynamically adjust bandwidth and connectivity options to:
Meet their operational, performance, and client needs
Respond to market demands
Optimize costs
Maintain strong service levels
From the start we built our real-time infrastructure in a cloud environment, and our team is well versed with the challenges discussed in this article and has developed tooling to manage a complex architecture. As our footprint for real-time data distribution has expanded, our hybrid architecture has enabled us to quickly tap into a global infrastructure across dozens of regions and availability zones. This enables us to provide our clients with new content in partnership with regional data collection providers.
While traditional networking methods still have their place in certain scenarios, it’s hard to match the flexibility and innovation of cloud and hybrid architectures.
To learn more about FactSet’s real-time product solutions, visit our Real-Time Data Suite.
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.