Managed data services provider RIMES recently held a round table in Zurich, marking the fourth time the company orchestrated one of these industry events at the capital of the European nation. Benchmark specialists working for Zurich-based investment managers provided some insight into the data management and data governance difficulties they are encountering.
The consensus of the round table was that institutions are currently struggling to do their best given the current situation. They are coping with a regulatory framework that is stringent, complex and constantly changing. In addition, many of these rules and regulations are ambiguous, since industry participants, regulators and lawmakers have been seeking to alter them through legislation and court action.
Some companies are also having a hard time effectively managing their benchmark data. While they may need these to measure the performance of their different portfolio strategies, harnessing index & benchmark data can be expensive. There are also challenges surrounding their use. Certain firms may struggle to determine who in the organization is using this data, and whether their use is crucial to operations.
Other institutions noted problems associated with information distribution. Some participants at the event voiced their concerns about the restrictions that surrounded distributing this resource.
RIMES can help buy-side firms navigate their challenges. The company has more than 125 data partners, and can leverage these resources to assist its clients.
RIMES has put significant time and energy into bolstering thought leadership in this particular area. The managed services provider has worked with all the main investment management consultants such as Cutter, Investit and Deloitte. RIMES developed a white paper with the latter, titled “Benchmark/Index data management and related costs,” which was released in 2013.
The white paper spoke to specific market trends. The document explored the expenses associated with data management, and emphasized the hidden costs. While obtaining information from vendors is not cheap, many firms that work with these service providers overlook the costs that go along with acquiring data and managing it in their processes.
The Data Governance Best Practice Handbook, released in 2013 in association with Investit, provided buy-side firms with specific guidance on what they should do to establish the proper data governance framework. While there is substantial information available, this document gave them some well-outlined steps they can use to move toward having the best policies and procedures.
Institutions can harness The Handbook not only for practical advice, but also for helpful tools they can use to evaluate their progress.
What challenges are buy-side firms encountering?
In terms of the specific data management and data governance difficulties firms are facing, the Zurich event gave participants the chance to weigh in.
One person noted that his challenges have centered on distributing key information.
“Our experience of data governance has related to distribution of data that we maintained internally. So, we have had some questions on whether we could distribute this information internally and what the limitations would be on such activities,” he said.
“In addition, we have had questions about how many users can harness the available information. What we see now is that we have to declare in the contracts exactly how many users will access the data. This is not just with one specific vendor, but with our information suppliers across the board.”
The individual also noted the confusion that some are facing around what it means to be a user. He wondered out loud what defines a “user,” and asked if people who maintain the data should be counted.
Another respondent spoke to the need that data governance has for the buy-in of people in many different parts of an organization.
“Since we are a big company, we need financial people to get the same information, as well as people in other departments,” he said. “There also needs to be a sponsor for this data. You can come up with a solution, but if you don’t have a sponsor, you will not get there.”
What firms can do to progress
While a wide range of buy-side firms are facing difficulties in terms of data management and data governance, these companies have many resources they can leverage to overcome these challenges. There is a wealth of literature these firms can use to set up the right information policies and procedures.
If they want broad thought leadership on the subject, they can access the many research papers produced by RIMES. If they are seeking specific steps they can take to develop a proper data governance framework, they can look to The Handbook.
Buy-side firms that are looking for something more in-depth might consider working with a company like RIMES to undergo a comprehensive assessment of their data policies and procedures. Having this done might speed things up a little by showing firms the exact concerns they can target to get the most done.
The input of participants in the Zurich conference shows the diverse problems that companies can have. While one participant noted his problems with data distribution, another noted the key importance of having buy-in across an organization. If buy-side firms are truly interested in proactively addressing their problems, working with a company like RIMES would be a great place to start.