With stricter top-down preparedness for data governance functions becoming a new issue for buy-side asset management firms, there are multiple overlooked aspects that now require attention. According to a new study by the EDM Council, data governance efforts need to work toward centralizing information systems in order to ensure better management. The survey found that the way forward for these firms is to implement stronger internal communications processes.
The new study consisted of 21 questions based on the Data Management Capability Assessment Model for 234 professionals at 128 financial industry firms. Results of the survey concluded that to resolve issues with data management, these buy-side asset managers will need more efficient internal organization, improved commitment among stakeholders and enhanced collaboration efforts between data and IT professionals to align with organizational governance goals.
“Stricter top-down data governance functions have become a new issue.”
The EDM Council survey finds pitfalls with data governance
The EDM Council’s survey identified multiple issues that may explain why some buy-side firms have experienced risks and challenges with data management functions. Approximately 30 percent of respondents stated that do not yet have advanced communication capabilities in their fully operational data management systems. In fact, according to the survey, 71 percent of firms felt that advanced communication capability is their most significant obstacle for data management program implementation.
“It is very difficult to integrate data management principles into dynamic organizations if you are your own best-kept secret,” the survey noted. “And since there are a host of people involved in the management program, the communication program is not a ‘one and done’ type of activity. Communication needs to be bi-directional and sustainable if we are to reinforce the value to be derived from the disruption that is inevitable from data management. Survey results show that communication lags (slightly) behind the implementation of the data management program. In essence, communication directly follows governance maturity.”
Communication among multiple stakeholders has become a particular concern for most firms. Approximately 85 percent of respondents stated that they are not confident that they are communicating value propositions, compliance issues and operations implications from their data management programs. Therefore, the report found that stakeholders need to make more concerted efforts to communicate issues with data governance programs across all levels of organizations.
Internal communications are responsible for lack of data management
Conventional wisdom suggests that to ensure streamlined and effective internal communication, an organization needs to create a data management department. This department would not only enforce policy compliance, but it would be responsible for the firm’s data governance functions. However, only 22 percent of firms involved in the survey have these types of departments.
Perhaps the most concerning results of the survey found that under 30 percent of respondents felt they had the internal communication capabilities or the operational functionality to address data governance efforts. In fact, several questions received single-digit positive responses with regard to stakeholder commitment, funding models, collaboration among data managers and IT departments, data management infrastructure implementation and data quality enhancement.
The bottom line for buy-side asset management firms
It may seem obvious that with so many moving parts and stakeholders involved in data governance programs, data management processes need more comprehensive planning to include internal communication procedures. Perhaps the way ahead for many of these buy-side firms is to identify and address these collaborative issues among internal stakeholders at the beginning of the data governance planning process.