The buy side is significantly behind the sell side in terms of progress towards reaching data management nirvana, according to speakers at this week’s TSAM 2009 conference in London. Most buy side firms are lacking in data tsars or relevant executive level champions to push forward change in the area of improving data quality, delegates to the buy side data management panel were told.
Keith Hale, executive vice president and co-founder of Netik, commented: “The sell side is almost certainly ahead of the buy side and this can be evidenced by the fact that many on the buy side do not have data tsars or a centralised data system.”
A quick poll of the attendees to the session indicated that this was the case, although a delegate from Aviva said that her firm had a “gatekeeper for market data”. However, the gatekeeper role was to check on spending for market data and police vendor relationships, rather than being responsible for the content of the data.
“We have seen the whole spectrum in terms of data management on the buy side,” said fellow panellist Marc Firenze, chief development officer at Eagle Investment Systems. “There are some that have gone some way to tackling the data quality issues and some that haven’t started.” Firenze added that the idea of a data gatekeeper, such as that at Aviva, was an excellent first step in tacking the area of data management.
Hale suggested that the current economic environment is unlikely to help matters. “It will be difficult in these conditions to justify investment in data management, as it can be hard to prove ROI,” he said.
Mike Atkin, managing director of the EDM Council, said the problem is endemic because the industry suffers from “short-termism”. Although progress has been “remarkable” over the last few years from a relative point of view, the ultimate progress that has been made towards achieving better data management is “terrible”, said Atkin.
In order for any kind of progress to be achieved there needs to be a significant cultural shift in the way the area of data management is approached, agreed the panel. “It is seen as an IT based problem but it requires firms to embrace the changes in culture,” said Firenze. “If you look at the fact that static data is not actually completely static for example, as around 2% of this data changes and firms need to be in sync to manage that change.”
The key word of the day was “teamwork”, the panel concluded. For strict data governance to be achievable, there needs to be adequate communication going on across a firm’s siloed departments.
This siloed structure is part of the problem, added Hale, because it leaves the question of who owns the data project open for debate. He suggested that an enlightened chief technology officer was the appropriate data champion within the buy side to drive forward change.
Atkin disagreed and indicated that it didn’t matter who owned the project, just as long as they have the clout to get the changes approved. “This is difficult because individuals do not coexist well under pressure. You don’t need to worry about competition from other firms with regards to data management, you need to worry about your competitors across the hallway,” he warned. Atkin added that the cultural problem of maintaining cooperation within a firm to achieve success in a data management project was still a significant issue.
Atkin was, however, positive that change is on its way for the buy side as a result of regulatory requirements and a focus on risk. He criticised the current incremental approach to data management as “too fragile” to be sustained in the long term. He suggested that projects based on this approach were likely to be derailed by changes in management structure and issues within the market. “Workarounds and short term projects are common and can cause a mess in terms of managing the alignment process of a firm’s data management system,” he warned.
Audience feedback from various roundtable discussions suggested that compliance may become data management’s “new best friend”, with regards to helping projects to get funding. However, Atkin said that in order for these projects to be successful data management must be seen as an “objective” rather than a “task”.
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