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07 October 2013

#DMSLondon - Data Architecture: Sticks or Carrots?

Great day on Thursday at the A-Team Data Management Summit in London (personally not least because Xenomorph won the Best Risk Data Management/Analytics Platform Award but more of that later!). The event kicked off with a brief intro from Andrew Delaney of the A-Team talking through some of the drivers behind the current activity in data management, with Andrew saying that risk and regulation were to the fore. Andrew then introduced Colin Gibson, Head of Data Architecture, Markets Division at Royal Bank of Scotland.

Data Architecture - Sticks or Carrots? Colin began by looking at the definition of "data architecture" showing how the definition on Wikipedia (now obviously the definitive source of all knowledge...) was not particularly clear in his view. He suggested himself that data architecture is composed of two related frameworks:

  • Orderly Arrangement of Parts
  • Discipline 

He said that the orderly arrangement of parts is focussed on business needs and aims, covering how data is sourced, stored, referenced, accessed, moved and managed. On the discipline side, he said that this covered topics such as rules, governance, guides, best practice, modelling and tools.

Colin then put some numbers around the benefits of data management, saying that for every dollar spend on centralising data saves 20 dollars, and mentioning a resulting 80% reduction in operational costs. Related to this he said that for every dollar spent on not replicating data saved a dollar on reconcilliation tools and a further dollar saved on the use of reconcilliation tools (not sure how the two overlap but these are obviously some of the "carrots" from the title of the talk). 

Despite these incentives, Colin added that getting people to actually use centralised reference data remains a big problem in most organisations. He said he thought that people find it too difficult to understand and consume what is there, and faced with a choice they do their own thing as an easier alternative. Colin then talked about a program within RBS called "GoldRush" whereby there is a standard data management library available to all new projects in RBS which contains:

  • messaging standards
  • standard schema
  • update mechanisms

The benefit being that if the project conforms with the above standards then they have little work to do for managing reference data since all the work is done once and centrally. Colin mentioned that also there needs to be feedback from the projects back to central data management team around what is missing/needing to be improved in the library (personally I would take it one step further so that end-users and not just IT projects have easy discovery and access to centralised reference data). The lessons he took from this were that we all need to "learn to love" enterprise messaging if we are to get to the top down publish once/consume often nirvana, where consuming systems can pick up new data and functionality without significant (if any) changes (might be worth a view of this post on this topic). He also mentioned the role of metadata in automating reconcilliation where that needed to occur.

Colin then mentioned that allocation of costs of reference data to consumers is still a hot topic, one where reference data lags behind the market data permissioning/metering insisted upon by exchanges. Related to this Colin thought that the role of the Chief Data Officer to enforce policies was important, and the need for the role was being driven by regulation. He said that the true costs of a tactical, non-standard approach need to be identifiable (quantifying the size of the stick I guess) but that he had found it difficult to eliminate the tactical use of pricing data sourced for the front office. He ended by mentioning that there needs to be a coming together of market data and reference data since operations staff are not doing quantitative valuations (e.g. does the theoretical price of this new bond look ok?) and this needs to be done to ensure better data quality and increased efficiency (couldn't agree more, have a look at this article and this post for a few of my thoughts on the matter). Overall very good speaker with interesting, practical examples to back up the key points he was trying to get across. 

 

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Xenomorph is the leading provider of analytics and data management solutions to the financial markets. Risk, trading, quant research and IT staff use Xenomorph’s TimeScape analytics and data management solution at investment banks, hedge funds and asset management institutions across the world’s main financial centres.

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