The RIMES II Data Governance Conference took place on 4th November in London. Attendance has risen since last year’s event: 75 senior attendees came from asset management firms, hedge funds, custodian banks and other asset owners – all meeting to learn about and discuss some of the most topical data challenges currently facing the industry.
It has become clear that the need for new ideas and approaches to data governance is greater than ever, as firms rethink their business and operating models. A recent survey by the Economist Intelligence Unit revealed 35% of buy-side firms modifying their business model as a direct result of current and forthcoming regulation. This outcome is validated by a recent RIMES survey that revealed 60% of respondents saying their firms were ready to address greater transparency prompted by regulations such as Solvency II and the European Market Infrastructure Regulation (EMIR). Respondents cited regulatory requirements (27%) and rising costs (26%) as the biggest limitations of existing data operating models, but the majority (63%) felt that new regulations would have a positive impact on their overall data management.
As we approach the end of 2014, the data governance landscape has changed substantially. Since the RIMES Data Governance Handbook was published in 2013, firms have moved beyond the initial stages of engagement with governance issues. Throughout the year, participants at the 30+ forums hosted by RIMES in all major financial centers across the globe have talked about data transparency and controls, and about data accuracy and appropriateness. Industry participants in every region are working out how to cope with the new regulatory environment.
The RIMES II Data Governance Conference saw the participation of many key decision makers, including COOs, CDAs and heads of department with a data management remit but who are also working in areas such as performance, risk and compliance. Companies represented ranged from investment management giants through to smaller asset managers and hedge funds.
Among the speakers were Mary Knox from IT research and advisory company Gartner; Christophe Bessagnet, VP, Head of Performance and Reporting from investment servicing specialists State Street Global Services; John Boyce from investment management consultancy Investit; and Steve Cheng from RIMES. The event also included a panel discussion, during which John Boyce and Steve Cheng were joined by Claire Pannell, Head of Data Vendor Management from Legal & General and Jacqueline Joyce, from Market Data and Commercial Services at Aviva. This panel looked at the impact of regulation on data management, including longer term strategic planning, impediments to change and the role of suppliers and customers.
Best practice in data governance is at the forefront of RIMES’s ongoing work, and the idea of best practice as an ‘artefact of the past’, based on unquestioned assumptions, was challenged by Mary Knox from Gartner. Many different challenges make traditional data practices unsustainable, in particular three important dimensions: complex relationships, user diversity and velocity. Delegates heard about new realities, the difference between data governance and management and the need for a ‘hybrid’ approach when it comes to data management. Centralizing and controlling is valuable, but without abandoning heterogeneity – the focus should be on opening rather than limiting, access.
Change management was also high on the agenda as a key way to retain and develop activity; businesses must manage the ‘creativity’ of clients (e.g. content, methodologies, data elements) and deliver results correctly and fast. Christophe Bessagnet was able to show ways in which effective data provision from RIMES was achieved for State Street Global Services without mushrooming complexity or delays of many months. The principal in-house risks were lack of flexibility/agility, lack of support for business development and the costs/risks of workaround solutions. Working with a managed data service provider such as RIMES offered the ability to listen/respond, wide data coverage, adaptation to specific formats and guaranteed data quality – with added value extras on top. The result for State Street was reduced time to market and more space to focus on core business objectives.
Data as a service, not a product
Buy-side firms can become more efficient by adopting the right operating model and understanding impacts of regulatory change. The data management landscape continues to evolve, and this can have an impact on how best to choose a data sourcing partner – and how to ensure the good data governance that underpins data quality. Some highly relevant results were revealed from deep-dive research conducted by Investit on IT sourcing, involving IT Directors, CTOs and investment managers. John Boyce from Investit explained that this research showed not only that data is now being bought and consumed more as a service (not a product), but also that good data governance boosts the productivity of these services. It concluded that choosing the right data provider/s means ongoing efficiencies, quality and innovation, and the right smart sourcing framework is just as important.
The impact of the Hybrid Model
The 2014 RIMES Buy-Side Survey revealed that 65% of respondents saw cost control as the key data management priority and 76% said quality was a key benefit of best practice data governance. Drivers for change are cost, poor data quality (from an end user perspective), timeliness and limited business agility. Steve Cheng from RIMES explained that a hybrid data model, which spreads out data over various resources whether in-house or external, can bring about very important improvements, and delegates were given seven key steps towards achieving an effective managed data service strategy:
- Understand the data needs of the business
- Inventory data services & activities
- Select your first movers
- Identify your costs: categorize
- Increase confidence in your cost analysis
- Compare your options
- Build your business case
Cost and efficiency
The Total Cost of (data) Ownership can be dramatically different when comparing in-house management of disparate data sources with the adoption of a managed service data model. Discussions with clients and analysis at RIMES suggests that moving to a service model can result in reduced data management costs. The RIMES Managed Data Service and its three components (RIMES Benchmark Data Service, RIMES Reference Data Service and RIMES Data Governance Service) can give buy-side firms and other asset owners the efficiency, scale and accuracy of data needed to focus on core competencies – complete with a reporting suite offering the necessary transparency & control required in a new regulatory environment.
One thing is certain, and that is that changes in the market and its regulation will continue. Debate around good data governance and how best to achieve it will be continuing at the RIMES II Data Governance Conference in New York on June 11, 2015, and during RIMES Forums taking place throughout 2015.