Over the last few years many firms have matured their enterprise data management strategy and moved from having several data management systems that provide golden copy data to individual business domains, to an enterprise data management solution that serves multiple domains. However, there is still progress to be made.
What’s driving firms to continue to evolve towards centralized enterprise data management?
Ultimately there are three main drivers that shape an enterprise data management strategy: cost, quality and compliance. Financial markets firms need to ensure they can keep costs low and then drive them lower, they need to make sure their data quality remains high and in fact is improving, and they need to comply with all the external regulations that banks and asset managers are exposed to today. To achieve these aims, financial firms are moving towards real-time, or near real-time, centralized enterprise data management solutions.
Both the buy side and the sell side were using end-of-day, end-of-week, end-of-month enterprise data management batch processing for years and were perfectly happy with it. However, when the sell side started providing electronic prices to the buy side they had to move very quickly to an event driven real-time or near real-time application of enterprise data management. This is because, when you’re providing programmatic prices to your clients across a range of asset classes, it’s essential that your prices are up-to-date, that your entity data is up-to-date, that all of your reference data is up-to-date. Otherwise you’ll be providing wrong prices, or you will be through your credit limits or you’ll be exposing yourself to some sort of risk you don’t want.
Why do new strategies often result in an event-driven data operations approach?
Examples that highlight how an event driven approach can get something done, which you wouldn’t have been able to do with a batch driven approach, are timely responses to a rating change or a stock split. If your counterparty has a ratings change, if the rating goes down or the rating goes up, this has impact on how much credit you are willing to extend and what kind of collateral your willing to hold, perhaps even the kind of price you are willing to provide them. You don’t want to wait till the end of the day or even the next day to update this. It’s important that you do this intraday. The exact same logic applies with a stock split. If you have a stock split when you provide prices to the clients, it’s really import that you ingest the price to reflect the stock split. The ability to respond to critical event types intraday will likely be a requirement that stems from an enterprise data management strategy. The operational implementation of that requirement is invariably a real time or near time event-driven approach.
How is a firm’s enterprise data management strategy likely to mature further?
Enterprise data management has evolved significantly over the last 10 or 15 years. Data management started out silo-based, within each application in a business. There are obvious problems with that. Firms had no consistency across the organization, and compliance and reporting were poor. So, the organizations moved to the next obvious step which was to have some sort of shared data management resources within a business. The next level of enterprise data management strategy has brought businesses to a centralized, shared enterprise data management platform across the entire organization. Many firms are at this point now.
A further stage of maturity in enterprise data management strategy is resulting in moving onto outsourcing the physical infrastructure, the technical infrastructure, and to allow the solution vendors to host the applications and perhaps to even do the data operations or much of the data operations themselves. In that circumstance, in order to continue to improve those drivers, cost, quality and compliance, the vendors will be providing service level agreements (SLAs) back to their customers. The SLA’s will be around cost, will be around latency, response times, quality and obviously the ability to comply with all the various laws and regulations.
Click here to watch our CEO, John H Eley, being interviewed on the topic of Driving the Maturity of Enterprise Data Management. Or contact us to find out how to move your enterprise data management to the next level of maturity.