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In Search of the King of Holy Grails: ROI

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Return on investment is a recurring theme in reference data management. And the reason seems to be that no one can figure out how to measure it. Recent issues of Reference Data Review have been littered with references – excuse the pun – to the importance of managing expectations with respect to ROI on enterprise-wide reference data projects. Project leaders from major institutions have sought very senior management buy-in for their initiatives, but aren’t attempting to hedge on the return front. Rather, they are aware of the difficulty of showing a black line-item representing the measurable dollar gain from such a project.

At Centaur Conferences International’s highly informative session in London late last month – Implementing Efficient and Effective Reference Data Management in Institutional Finance – delegates and presenters again lamented the lack of useful measures of ROI for reference data projects. As moderators of the day-long conference, we picked up on a groundswell of not frustration as such, but of a certain irritation that ‘obviously’ useful projects were being caught in gestation phase by the absence of solid assessments of ROI. Meanwhile, at another London reference data event – organized by City Compass – delegates wondered whether establishing an ROI was even possible. This irritant apparently is not confined to the London marketplace either. Reading through New York-based Accenture’s recent white paper on data management services, we stumbled across similar anxieties. Listed among the obstacles facing a successful reference data project was “Lack of a Quantifiable ROI: Achieving breakeven on a major transformation can take two to three years after completion. And most benefits consist of downstream operational efficiencies, making it difficult to quantify the business benefits because of the fragmented and dispersed nature of data processing.” So what’s a reference data project leader to do? Help may, in fact, be at hand. A conversation at the Centaur event revealed that it’s not just the lonely project manager who’s in search of this most Holy of Grails. Sandy Throne, a director at the Depository Trust & Clearing Corp., and member of the TC68/SC4/WG10 and WG11 committees, and Tony Kirby, of the Reference Data Users Group (RDUG), suggested that the search has grown in momentum, with growing involvement from industry bodies like the Financial Information Services Division, the Securities Industry Association and the International Securities Association for Trade Communication. “We (ISITC, SIA, FISD) feel there should be a model that firms can use to show their ROI to move the reference data projects ahead,” says Throne. She points to a good first step, Barclays Global Investors’ Margret Hibschman’s presentation last month on the ROI her firm realized and how it was done. The presentation is to be posted on the ISITC web-site imminently and will be worth checking out.

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