Data straightjacket stifles business flexibility

Senior professionals at asset management firms think their ability to undertake business initiatives is hampered by the need for aggregation, the operational process of pulling together data to support key investment, control and reporting functions, concludes a report.

The market study, conducted by independent consultant Paul Miller and sponsored by software provider SimCorp, found that the firms that do not see aggregation as a major issue have deployed simpler application systems architectures, composed of fewer applications.

It also found that the majority of firms have a high dependency on spreadsheets and bespoke databases and even those that have deployed a data warehouse still need to store the results of aggregation processes in multiple locations. The study indicated that this constitutes a significant operational risk.

Cath Rawcliffe, vice president - sales and marketing, SimCorp said: "These processes are creating a data straightjacket which hampers asset managers’ ability to adapt to business change. If the operational platform is complex, it is more difficult to extract useful information from it.

“Yet even though the vast majority of firms said they could reduce the number of systems they have in use today, many continue to add further complexity in the form of more processes and data stores. This study indicates that the more this approach is followed, the more difficult it becomes to adapt as business requirements change."

The study reveals that aggregation is seen as an important issue by asset managers, from both an operations and IT perspective. A large number have "high " or "medium" levels of aggregation process duplication across business functions. The management of data, the timing of aggregation processes and reliance on third parties to either perform aggregation functions or deliver data to be processed were seen as causing difficulties.

"While appearing to solve immediate problems, the continued introduction of new aggregation processes further entangles already complicated operations," said Rawcliffe.