Towards the Holy Grail

"Enterprise data management (EDM) is not a thing, it's a concept. The stuff seems so obvious, it's almost laughable that we're talking about it," said Mike Atkin, managing director of the EDM Council, when speaking on the enterprise data management panel at the recent North American Financial Information Summit (NAFIS).

The passionate veteran set the scene for a heated discussion on what is commonly referred to as the Holy Grail in the reference data industry, reminding everyone that "three years ago we couldn't even spell EDM."

Today, Atkin and his EDM Council team are working to address business challenges associated with moving towards a horizontal operating structure. Managing data enterprise-wide in financial institutions is now recognized as the ultimate goal, with some institutions even having recruited chief data officers to oversee the firm's data projects.

Alan Paris, a director in the Pricewaterhouse­Coopers Financial Services Advisory Division, tells IRD that EDM is a process to organize, design and safeguard information assets throughout their lifecycle-from acquisition to distribution of contents found in security masters, data warehouses, transaction systems, documents and digital media. "Data management's main objective is to help organizations focus on streamlining their data management processes, standardizing and reusing quality data to gain the strategic requirements for enterprise operational excellence, agility and innovation."

Since the turn of the millennium, a number of software vendors have provided enterprise data management solutions to help organizations centralize, cleanse and normalize data, and create and store a golden copy.

The products available are mainly targeted at different parts of the market and promise a number of special features aimed at supporting a business case for improved data quality and decreased operational risk (see boxes for a selection of products). With the companies behind the solutions coming from different starting points, they have developed differently too.

"Eagle PACE has been very strong in the investment management area, while GoldenSource grew up from its FTI days in the capital markets area. Both started off not as just securities masters, but a way to manage and roll-up financial information," says Paris. He adds that Asset Control and TAPMaster were built as a pure play securities master data management tool for the capital markets and investment management industry, while SunGard FAME started as a data analysis tool. "You would buy FAME and the database and the tools to connect to it, so that you could do quantitative and comparable analysis on firms and they built out their data management suite from there," Paris remarks.

Technology not the problem

But Norman Brower, executive director, reference data solutions at Morgan Stanley, and NAFIS panelist, said: "I don't actually view EDM as a technology problem." His argument is echoed by Paris, who is advising on different EDM projects. "The platform is not the solution," says Paris. "First you need to have a strategy and understand your business, technical and functional requirements."

Thus, the selection should be based on the firm's strategy and goals. "The technology should be secondary to what you want to accomplish from a business perspective," says Paris, adding: "Are your goals to have compliance information? Are your goals to price a portfolio at the end of the day? All those have to be tied together and require different products and different solutions." He suggests that some solutions might be more suited to, or have built out its suite in a better way to meet, specific requirements.

And already at this strategy development stage there are certain critical barriers that are not necessarily technology-related. Paris remarks that one problem is the lack of clear data accountability. "Data management is still associated with IT, but users are in business units," Paris notes. Without a chief data officer, no one executive in the business is solely responsible for data quality. At NAFIS, Brower also raised this topic, arguing that "information management has moved out of technology but into the main domain."

Another often-debated barrier is poor data quality, with the PricewaterhouseCoopers 2004 Global Data Management Survey finding that "executives are still paying insufficient attention to the quality of their business data." "I don't actually think data quality is as good as it should be," said Brower.

Overall, the need to manage information meaning across the business is much broader in scope than integrating applications, according to Paris. "Unfortunately, as businesses demand greater agility and look to the IT organization to help them achieve this, the way IT approaches information management is often being questioned," he says, adding: "There are no real off-the-shelf solutions to solve this problem yet."

But to jump the EDM hurdles, there are some aspects financial institutions should consider when creating an enterprise data management strategy. "Companies get the best results from their data management programs when they focus on a clear business purpose. The purpose indicates the questions the company wants answered and the exact data to be studied to give the answer," advises Paris.

"In creating a program for data management, leading companies employ a team of people with varied skills-business process, technology and statistical analysis-and with a sound knowledge of the business and its industry. A focused data management program finds factual evidence to guide managers to make sound business decisions that enhance revenue and further company strategy," he remarks.

And as with most other business issues, bringing together a team with the right skills does make a difference. Paris says a data management program is most successful when implemented by a cross-functional team, explaining that an EDM project requires more than skills in technology or business. "It requires a team that brings together expertise in business strategy, statistical analysis and technology," he says.

"The most successful teams have an understanding of the business and industry of the company. In addition, a successful team knows the financial and personnel resources needed to implement the system. Beyond needing the necessary business acumen, the team requires people who understand the technology of databases and how they are structured," Paris explains.

Maximizing potential

Next, it is important to consider how to maximize the data's potential. "For better management decision-making, companies package information for maximum usability and deliver the right information to the right person at the right time," Paris says, adding that technologies are available for indexing and organizing information to make it searchable. "By collecting data into a data warehouse and applying statistical analysis techniques, companies spot trends and develop strategies to capitalize on advantages or reduce risks associated with those trends."

Paris further explains that analyzing data to produce knowledge enables companies to make tactical decisions about day-to-day business operations, as well as strategic decisions regarding planning and forecasting. "Using the accumulated knowledge, companies avoid expending valuable resources on less profitable products or customers, instead focusing their attention on maximizing revenues. Leading companies are learning from data to manage their businesses based on known facts rather than blind assumptions," he says.

But despite the vast number of topics to consider, EDM projects are generally seen as being well worth the hard work. "The benefits are significant and include more effective business processes, new insights that drive competitive advantage and value creation, better decision-making, greater efficiency in meeting compliance requirements, and tangible returns from the substantial investments already made in IT infrastructure and systems," says Paris.

And these benefits were probably also the reason that the-at times, fierce-EDM debaters at NAFIS reached the conclusion: "We agree it's important."