Bells and whistles or cultural change?
Jinfo Blog

18th March 2010

By Tim Buckley Owen

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Fragmented IT systems bear a key responsibility for the financial crisis, according to a survey from Thomson Reuters and the independent research firm Lepus. But the risks the report highlights actually go way beyond the trading floor, affecting every aspect of a business’s effectiveness. Surveying data management strategies at over 100 top tier buy- and sell-side firms, the report reveals that more than three quarters of participants intend to increase spending on projects that address data quality and consistency issues.  Portfolio management, regulatory compliance, trading, finance, clearing and client profitability are all areas that will benefit (http://digbig.com/5bbgaf). As a supplier of data handling solutions for the trading floor, Thomson Reuters is scarcely a disinterested party. Indeed, this survey acts as a launch pad for the latest release of its Enterprise Platform for Data Management.  You have to wonder, though, whether IT really could have produced any kind of solution to the crisis.  Evidence to last year’s Commons Treasury Committee investigation had the credit reporting agency Standard & Poor’s apparently admitting that it could ‘take a whole weekend’ for computers to perform the calculations needed to assess the risks associated with the toxic assets bundled up with thousands more as collateralised debt obligations (http://www.vivavip.com/go/e19230).  The Turner review of global banking regulation, also published about a year ago by the Financial Services Authority, talked not simply of IT failure but of ‘exaggerated faith in rational and self-correcting markets’ brought about partly by ‘financial innovation of little social value’ (http://www.vivavip.com/go/e17065). All of which seems to suggest that it’s cultural change at least as much as IT upgrade that’s needed. Indeed, there seem to be few areas of a business that wouldn’t benefit from a culture of improved data management. And this includes territory that is the customary province of researchers and information managers. A recent Economist Intelligence Unit report, Integrating Risk and Performance (summary and download details at http://digbig.com/5bbgjm – registration required), concluded that the people at the top of the company who set the objectives seldom saw all the risks that might jeopardise their achievement. But only 9% of those surveyed cited ‘the right technology’ as the most important prerequisite for solving this; far more felt a need for ‘the right processes’ and involvement by senior executives and line managers. Sure, better IT may be needed on the trading floor. But elsewhere in business there’s also better enterprise content management systems for regulatory compliance (try http://www.vivavip.com/go/e25999), better records management when litigation looms (see http://www.vivavip.com/go/e25155) and more effective engagement with social media for customer relationship management (http://www.vivavip.com/go/e28138). This LiveWire posting was revised with new material added on 21 March 2010.

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