While data management staff could encounter difficulties in any buy-side organization, these challenges could prove even more severe in larger entities. While institutions with a greater scope might benefit from a bigger budget for IT and increased ability to bolster efficiencies and reduce costs, smaller firms often have greater flexibility.
Key role of scope
Hedge funds in particular have been able to leverage a broader range of methods to manage data, but the question remains as to whether bigger buy-side firms can use these same approaches, according to Inside Reference Data.
When using existing systems to work with key information, smaller organizations may have the luxury of either conducting quick upgrades or alternatively, scrapping what exists currently and building something that is newer and a better fit for existing requirements.
However, many large financial firms are in a different spot, as they are unable to simply start over with their information systems, one expert told Inside Reference Data. The chief operating officer of a New York-based data management software provider said that hedge funds are rather flexible in terms of data management, as they are not bound by working with “legacy” infrastructure.
“You can help them reinvent the entire idea of data management processes properly,” the expert told the news source.
While having greater flexibility can do wonders for a buy-side firm’s data management, it can also benefit data governance substantially. While a growing number of institutions are realizing the importance of having the proper policies and procedures for their important information, shifting to a new context requires obtaining the buy-in of many important groups.
“Hedge funds are rather flexible in terms of data management.”
Buy-side firms that want to successfully adopt the ideal data governance framework need to ensure that many different levels of the organization are on board. It may start out with senior management, but if mid-level managers and the rank and file do not support a push for creating adequate data governance, such an initiative will go nowhere.
Because smaller organizations have fewer staff members, those advocating data governance may have an easier time rounding up the needed support in a buy-side firm of a more modest size.
By having the proper data governance, an institution can put the right safeguards in place to ensure that its information is high quality and free of errors. In addition, having this framework can increase the chances the buy-side firm complies with all relevant regulations and avoids sanctions.
While the aforementioned benefits may sound quite compelling, presenting them to the key stakeholders in a larger organization could prove a challenge, as any major shift might necessitate substantial effort and coordination, according to Inside Reference Data. If the advocates of more effective data management want to drive reform in more sizable organizations, they should be fully aware of this situation.