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The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Talking Data Management with Andrew Delaney: It’s Data Management, Jim, but Not as We Know It

Markit’s decision to use Livingstone’s software asset management (SAM) services, announced last week, is the company’s first visible deal in our space since Dan Simpson, former head of CADIS Software, left his company’s acquirer to become Livingstone’s CEO some 10 months ago.

Because it’s Markit, we at Data Management Review find the deal interesting. But a scratch beneath the surface reveals a slice of the data management spectrum that’s often overlooked: keeping track of your software assets.

Livingstone has been contracted to provide a programme of SAM activities that include a comprehensive audit protection service, process assessment and gap analysis support across Markit’s existing activities. Under the deal, Livingstone’s licensing specialists will work closely with internal teams on procurement-related activity like software renewals, true-ups, and audits, as well as on IT-related activities including software deployments, server configurations and technical architecture.

The support and recommendations that Livingstone provides will be based on the effective licence positions (ELP) that it will create and manage on all the software vendors in scope. The ELP is a balance of licences held by Markit and will help identify areas where they are either under or over licenced; driving cost reduction and risk mitigation.

Key to the deal is the fact that Livingstone’s services will support Markit’s ongoing risk reduction and compliance initiatives. And that’s what piques our interest from a data management perspective.

In an earlier A-Team iteration, we spent a lot of time looking at market data and market data management. One element of the latter involved the use of inventory systems to manage market data contracts; ensuring entitlements were adhered to, and users paid only for services that were being used. Skip across the way to the reference data space, and the likes of CADIS and Bloomberg PolarLake emerged as providing a similar role in the enterprise data space, ensuring contracted data services were used to their full potential.

But Livingstone and their ilk seem to be addressing a need for understanding how software assets are being used – or not – which can play into a broader consideration of operational risk.

There are several layers to this.

First, many financial institutions have been borne of mergers and acquisitions. Early on, duplication of software licenses can hinder management as it strives to deliver on promised cost savings. Over time, different software versions – perhaps even some obsolete ones – can pose a risk to the institution, and knowing where the proverbial bodies are buried is a good start to mitigating this kind of operational risk.

Second, as overblown banks seek to divest of non-core operations, extricating previously integrated operations can be tricky. Understanding how software licenses fit into this puzzle is key to unravelling it.

Third, KY3P: Know Your Third-Party. Increasingly, regulators are requiring financial institutions – and their service providers – to understand the liabilities of their suppliers. Emerging regulations like the US’s Reg ITS – for Infrastructure, Technology & Systems – are starting to require financial institutions to take responsibility for their operational infrastructure, and the use of third-party systems is a major component of this.

As Roy Flint, managing director of group technology services at Markit, put it: “By working with Livingstone to reduce associated risks and enhance compliance, we look forward to improving governance and control of our software estate.”

Expect to see more activity in this space as firms begin to realise that software licences truly rival data services in terms of cost and liability.

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