Data moving to the center of your enterprise
By Duncan Cooper, Product Manager, Data Management
Data is intellectual property; it’s what drives decisions and investments within your firm. It’s what you create from actions every day. It’s what you consume to justify and support those decisions. If data is not at the heart of your organization’s strategy, you will be missing opportunities compared to your competitors who have better, faster and more comprehensive information than you.
Today, any investment manager consumes and generates vast amounts of data, and the consumption of data is constantly expanding as firms require additional attributes and new sectors and asset classes are being introduced. As the demand for data expands, the complexity of managing that information and ensuring that it is available in the order management, risk, performance and accounting systems, is key. In this complex environment, investment managers should ultimately be asking themselves this question: what use is the data we hold within our firm, if we can’t access it and generate value from it within the systems we use every day?
“Investment managers should be asking themselves this question: what use is the data we hold within our firm, if we can’t access it and generate value from it within the systems we use every day?”
A massive driver in the industry today is towards services that will combine data from multiple vendors and create golden-copy reference and price data for consumption in end-user systems. This driver mainly derives from the need to get better quality data, in more accurate and timely fashion, and hopefully with a reduction in the cost of operation. These types of services have multiple advantages. For instance, you can gain the best data vendor information for a specific asset class or region. You can combine data vendor data sets for a single security, thus getting the analytics and ratios from your preferred vendor without impacting static data provisions. And lastly, you remove the barrier to change between data vendors to get the best possible service, quality and availability to suit your requirements, as you move from a vendor specific technical interface to a generic golden-copy data provision interface.
As such, we see many investment manager’s focus shift towards solutions that provide data consolidation from different sources, data management in terms of operational processes, and finally data distribution in terms of technology and connectivity to downstream systems. Reports from Aite Group show that there is increased spending and diversity in the approach to solving data management challenges within the financial services arena.
“It is expected that 2018 will form the tipping point where we see firms switch from IT led data integration projects to more business led data services projects.”
It is expected that 2018 will form the tipping point where we see firms switch from IT led data integration projects to more business led data services projects. We will see firms looking to optimize the cost of data management and data integration by using such services. The benefits provided to a business could be grouped as:
- Simplification of data into the organization
- Reduction in cost of operation to deliver data
- Greater choice and removal of switching barriers
- Increase in business agility to react to changing times and data requirements
As the industry prepares for the changing priorities driven by trends such as Brexit and regulatory changes like MiFID II and GDPR, each of the above points will have a vital role to play.
While traditional data management processes can deliver point 1 with alacrity, the ability to outsource the data management business process, or to react to data needs still lies within the client firm. In some cases, the costs associated with this can be massive. In a recent example, an organization in The Netherlands reported that changing a data attribute on their Security Master feed was a six-month IT project with an associated cost of around USD 250,000.
Ultimately, the nirvana we see for the turn of the decade is one with a more service-based consumption of data, no longer tied to the traditional methods of sourcing, scrubbing and loading, leaving the problems in the client’s side. Instead, we foresee the introduction of a more subscription based ‘pay for what you eat’ type data buffet, which providing exactly what you want, when you need it.
Such a data service may not fit with every firm, there may be complexities or requirements in the dealing with data that would make costs or delivery unfeasible for some. However, for a clear majority of firms with common data requirements, this is a solution pattern that would help deliver much reduced time to market in terms of project delivery, combined with a cost reduction in operation.