Outsourcing Data Management
| Date: | November 2009 |
| Author: | Ian Yuill |
| Price: | £5000 to non-members of the Investit Intelligence Member service |
The investment management industry has wrestled with the problems posed by the ever growing demand for data. This growth is fuelled by a number of factors: increased trading of new instrument types, the impact of regulatory changes and the need to supply business functions such as performance measurement, counterparty risk and client reporting.
The expectation is that demand for data will continue to increase as new products evolve, regulators become more intrusive and the insatiable appetite for more up-to-date information continues. Investment managers have realised data management requires a significant investment (both in terms of the business processes and IT) in order to meet current demands and keep pace with anticipated future requirements. Previous Investit research in 2007 showed that as an industry, investment managers were ill-equipped to deal with the demands of business processes for accurate and timely data.
Over the last 2 years, firms have increasingly recognised the importance of a good data management capability to their business. However, they have faced the daunting task of improving data management in rather poor economic circumstances. Even firms that have invested significant sums in creating a more advanced data management capability, recognise that further investment is required if they are to keep up with expected demand. In this scenario it is perhaps unsurprising that managers are showing some interest in the possibility of outsourcing data management to a third party.
The report analyses the drivers and barriers to outsourcing data management, specifically focusing on three core approaches:
- TPAs
- Specialist providers
- Offshore centres
We found that outsourcing the entire data management function is currently not a feasible proposition. Our research demonstrates that components of data management can be outsourced to third parties and we explore how this should be done.
Table of contents
| Management Summary | 1 |
|
1 |
Introduction | 3 |
1.1 |
Scope | 5 |
1.2 |
Methodology | 7 |
1.3 |
Basis for outsourcing data management | 8 |
2 |
Market Standards for Data Management | 9 |
2.1 |
The data management dilemma | 10 |
2.2 |
Scope of data management | 11 |
2.3 |
Consumers of data within investment managers | 14 |
2.4 |
Outsourcing business functions | 15 |
2.5 |
Future data management requirements | 17 |
3 |
Models for Outsourcing Data Management | 19 |
3.1 |
Drivers for outsourcing | 21 |
3.2 |
Barriers to outsourcing | 26 |
3.3 |
Outsourcing models | 30 |
4 |
Options for Data Management | 43 |
4.1 |
The package market | 45 |
4.2 |
Component outsourcing for data management | 48 |
4.3 |
Implementing an outsourced data management service | 50 |
4.4 |
Characteristics of successful outsourcing | 53 |
5 |
Governance Models | 55 |
5.1 |
Data governance responsibilities | 56 |
5.2 |
Impact of offshoring | 57 |
5.3 |
Third party reference data management | 59 |
5.4 |
Outsourcing data governance? | 62 |
6 |
Conclusions | 63 |
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