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Thoughts from InvestOps 2023: The Benefits of Doing the Foundational Work

My colleagues and I attended InvestOps EMEA 2023 last week, where we held a Lunch Workshop with our partner Snowflake. It was a fantastic three days of panel discussions, keynotes, and breakout sessions, with fantastic engagement across various topics such as generative AI, ESG, the move to T+1, and outsourcing various processes like data governance. These topics, and the questions they provoked from the audience all had a common theme: when it comes to an organization’s data management initiative, firms must prioritize the foundational work.

What does that mean?

The foundational work means paying attention to the nuts and bolts of your data management systems and projects and not just the finished product. Those can take the form of having your data properly modelled, ensuring that your data is clean, and addressing data siloes. These can be overlooked for myriad reasons, however these tasks and processes, as well as others like them, are extremely complex, resource intensive, and oftentimes thankless.

Imagine you walk into a house with a brand new kitchen, what do you notice? I bet it would be the countertops, the cabinets, the appliances, and the fixtures – the finished product. What most people do not think about is all the foundational work it took to get to the final product. From framing to electrical, and plumbing, you need a strong foundation to reach the finished product. Not everyone understands plumbing or electricity, because they’re complicated subjects that require a specialist with significant expertise. Awards are not handed out for those things either, but the interior designer can get recognition. Everyone knows it doesn’t matter how good the kitchen looks if it doesn’t function properly.

How does doing the foundational work help?

Proper data management has several benefits that can be observed almost immediately, most of which are why firms embark on their data management project. It provides you with a single source of truth for your data and eliminates data siloes, leading to increased operational efficiency as individuals and teams all work from the same set of data. In turn, this increases data quality and data governance, which informs good investment decisions and contributes to regulatory compliance.

There are compounding benefits when you start with a solid foundation. Firms will not only see cost savings as they eliminate more siloes in the form of tech overhead, but it will save them the cost of having to fix what may have been stitched together improperly in the past. It allows them to seamlessly add in additional data sets or combine data sets to create new products with confidence and ease. As the industry continues to explore how AI/ML tools can be best utilized, firms need to have quality data for those programs to learn properly and allows the users to trust the results and create customized investment strategies. This is all the result of putting in the proper foundation at the inception of the transformation journey.

Final thought from InvestOps 2023: What happens if I don’t?

Firms are often forced to address the problem in front of them, and looking at things tactically to solve short term problems does not lead to good outcomes over the long term. Let’s say a firm wants to onboard new asset classes but did not think through how to model the data upfront, but tries to leverage a data model for a different asset classes, or skips this step altogether. The result will be that they may need to spend more money fixing what was done prior to account for the new requirements. Doing so forces you to pivot in the middle of a project as you react to problems instead of proactively addressing them from a position of strength.

While these are not new ideas or concepts they are not outdated – quite the opposite; they persist because they are true – as we saw at InvestOps 2023. No matter what the initiative, firms must think strategically and set up a solid foundation so they can react nimbly and thoughtfully for the future.

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