On November 19, RIMES hosted a webinar on the premises of the BVI (German Investment Funds Association). Andrew Barnett, Global Head of Product Strategy at RIMES, presented on the topic of in-house data management vs. Data Management as a Service. What follows is a summary of the key points raised in Andrew’s presentation.
The two data management options
Data enablement is critical for an efficient and agile asset management process. Firms have two options available to ensure they can access the right data, at the right time and in the right format:
- purchase ever more technology and increase headcount to manage growing volumes of data, or
- use specific, consumption-based managed data services.
The issue with the first approach is that while data management is foundational to every investment management organization, it is not a core business activity. Firms need to focus on their value proposition, not the operational element of data management. The logical approach is therefore to identify the areas within the business that are not core, and outsource these to partners for whom data management is their core.
Data management trends
RIMES’ 2020 Global Data Management Trends Survey, reveals many of the trends that are impacting how investment firms approach data management. Significantly, more firms this year flagged improving data manipulation and mastering as a key priority compared to last year.
The sign of a well governed data regime is that firms can find, understand, trust and interact with data across the organization. It’s important that data is not so imprisoned in technology that a fully governed change structure is required to get data out. Data availability is critical, because the moment firms get data in front of multiple end uses, they can create a beneficial feedback loop that helps optimize data management. But data availability can be difficult to achieve; firms need to understand which tools to use, and how to manage data within the terms of their licenses.
Another priority area that has increased in importance between 2019 and 2020 is around the sourcing of data. This trend ties into the explosion in data sources seen over this period. RIMES itself has seen its data partner network grow from 500 to 650 in just eighteen months, and the datasets it manages increase from 1250 to nearly 1700.
The increase in Environment, Social and Governance (ESG) data has been an important element of this growth. At present, ESG data is complex to manage as there is no commonality around how ratings are created. RIMES is increasingly being asked to help make sense of this data and to cross reference it with other data sets, such as credit and tax data, to help provide insights for firms to diversify their ESG offerings.
Another trend identified in the RIMES Survey is around centralizing data sourcing. For many firms, bringing vendor management functions into a centralized Chief Data Office is advisable. Doing so enables data management teams to be smarter with the way they use their data and can help manage costs. Governance and policy should also be centralized, even where firms enable federated data management, as doing so helps ensure consistency.
Common data management challenges
In RIMES’ experience, there are a range of challenges facing investment firms today:
- Frustration that data is a tax on strategic objectives. Restrictive data governance hinders business agility.
- Finding the right skills. Data skills are in short supply, and firms have realized they need them if they’re to rapidly pivot to offensive strategies. Firms need to answer how they can get the right talent at the right time.
- Demonstrating business benefits. Data projects can take time, and the outcomes are often technical. If an organization has failed to unlock its data, then it can’t create feedback loops and business stakeholders may struggle to see value.
- Managing data access. Firms need to secure the visibility and lineage of data so they can ensure they are operating within the terms of their licences.
- Building a business case. If the business case for outsourcing data management focuses only on cost it may fail. Organizations must focus on showing value across risk management, scaling against growth, resilience, etc.
- Market data costs. Costs are increasing all the time, and firms need to ensure they are managing their universe of data interests intelligently, and optimally from a cost perspective.
- Legacy technology & processes. Disentangling from legacy technology and licenses can be challenging, particularly when clients need to be migrated to new systems.
- Regulatory pressures. Data is at the heart of most regulations, so it makes sense that the Chief Data Office ‘owns’ this area. The key is to focus on building a regulatory book of record, rather than meeting regulations on a tactical, point-solution basis.
- Remote working. Business continuity has been stretched like never before by COVID, and some firms found that important tools like FTP sites failed.
Managed data services can help overcome these challenges in a way that in-house alternatives cannot by delivering agility, global 24/7 support, access to expert practitioners and coverage across all data domains.
Selecting a Data Management as a Service solution
When selecting a Data Management as a Service option, firms should look for a partner that:
- Treats sourcing, mastering and validating data as its core business differentiator
- Tailors is services to the client’s business case and its policies and controls
- Cross references data domains to produce insights and information that can be used for product differentiation
- Allows you to pay for what you use (i.e. you pay for a service, not a platform)
Finally, organizations should be aware of the difference between Data as a Service and Data Management as a Service. Data as a Service is concerned with sourcing, validating and distributing data. This is relatively simple to do, thanks to advances in cloud technology, and it relatively low value. Data Management as a Service, on the other hand, enables data to be cross-referenced and mastered, something that requires a strategic combination of technology and expertise. This delivers value to firms, and enables them to focus on using their data rather than processing it.
RIMES Managed Data Services is a proven data operating platform that helps firms of all sizes and in all regions align their data consumption closely with business needs. Contact us to learn more.
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