Opening Cross: It’s Not What You’ve Got, It’s the Way that You Use It

“For us, data is strategic. It doesn’t just sit there and accumulate; it’s a living organism that will grow and become more important…. Because the more data you have, the more challenges you have—maybe even for smaller firms like us. And those responsibilities will always be there,” said Klay Stack, managing director and head of technology at Marathon Asset Management.

Of course, simply recognizing data as an asset doesn’t mean you’re in a position to get best value from it. In fact, one speaker privately bemoaned that when asked about data management, the IT execs on panels went into great detail about the level of storage infrastructure they’ve put in place, rather than what they’ve done to improve the accuracy, quality and correlation of the data. “That’s not managing data; that’s just throwing it in a cupboard,” the speaker said.

This was also reflected by executives from smaller firms believing that their businesses don’t need a dedicated chief data officer, saying instead that their data requirements could be effectively managed by their technology staff, whereas the larger and more mature firms represented took the opposite view: that a CDO will be critical to organizing disparate datasets across multiple business areas.

“We have a small, agile group of developers to maintain our database schema… and we work with a third party to host in a secure cloud,” said Jack Kline, chief information officer at Seer Capital, adding that the firm’s data management is “centralized and highly organized,” despite saying that—at only around 50 staff—“there isn’t room for a CDO in our firm.”

In fact, lack of a specific, strategic role covering data management appears not uncommon. On a separate panel, Paul McInnis, head of enterprise data management at Eagle Investment Systems, cited a survey conducted by the vendor and WatersTechnology, which found that 80 percent of respondents considered data an important asset, yet 60 percent had no data governance structure in place.

What drove data governance efforts at JP Morgan Asset Management, for example, was the realization over time that “we didn’t have a single version of the truth—for example, we had different rates of return for the same security, which meant there were potentially many different answers to the same question, and a lot of duplication,” said Scott Burleigh, executive director at JP Morgan Asset Management. “Client guideline management—investment mandates about what to include in portfolios, risk management requirements, limits, counterparty instructions—impacts our data strategy and drives our data needs more than anything else. And clients are watching us like hawks—even more so since the crisis.”

One reason good data governance is so important is that as firms seek more data—and increasingly, unconventional and unstructured data sources—to perform Big Data analysis, the value you can derive from data depends to a large degree on how usable you make it.

On another panel, Kevin Mahn, chief investment officer at Hennion & Walsh Management, said his firm performs painstaking analysis of what customers want, what assets they are selling out of and buying into, and what seasonal trends might affect decisions, but whose wholesalers—without the analysis required to draw meaningful conclusions—are overwhelmed by the data. “Are we just giving them lots of data, or something they can actually use? We’re spending a lot of money to capture that data,” he said.

And that’s the key—capturing data and storing it is actually relatively cheap. But good governance, effective data management and meaningful analysis—while offering potential profits—come with appropriately hefty price tags.