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The leading knowledge platform for the financial technology industry

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Outsourcing: The Time is Now?

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Is outsourcing for reference data management an idea whose time is coming? This is a question we were keen to ask our faithful Reference Data Review readers when we set out in April to do another one of our surveys.

We measured the views of sell-side, buy-side and custodian firms in the U.K., Mainland Europe and the U.S. to understand how they viewed the outsourcing proposition, what they thought the potential benefits and/or barriers would be, and what they would need to see from providers to make them feel comfortable enough, among other things.

The findings have been very positive insofar as most data managers said they would consider the outsourcing question when evaluating their data management processes. This is somewhat tempered by the quite practical need to prove the business case, and the traditional caution of financial institutions waiting for someone else to make the first move.

Is Banc of America’s move to become the first adopter of SunGard’s new managed data service the signal the industry needs to come onboard the outsourcing train?

It certainly is the endorsement SunGard has been looking for. And perhaps it will offer some encouragement to other firms that value the proposition but need to secure senior management buy-in to the idea.

The arguments for outsourcing certainly make sense: leave the basic, messy data management chores to a data specialist, focus on your own business and gain from the efficiencies and lower costs that it can provide. And the theory is if enough firms come onboard, everyone benefits from elimination of the need for each firm to repeat the same tasks and the resultant economies of scale that can bring.

What we need to see now is more firms coming onboard to make the model truly work. How that becomes dispersed among other competing providers, such as Accenture, Capco and IBM, remains to be seen.

I’m sure you’re all keen to find out more. So you’ll be pleased to hear that the full survey findings will be made available in the next couple of weeks…

While its good news for outsourcing, there’s been bad news for Findac – Mike Atkin’s plan for a new data industry body that has collapsed before it even got off the starting blocks. Seems the industry just could not (or did not want to) support the weight of two very similar organizations. We’re pleased, however, that Mike has landed on his feet at Outsell, where he will no doubt continue to provide us with his views of the world! We’re also pleased to be present at Osney Media’s Technology Solutions for Asset Management (TSAM 2005) event this year (June 9th at the Brewery in London). We’re particularly looking forward to the reference data management and corporate actions streams.

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