Why Does the Investment Industry Struggle to Manage Data?

Since Simplifi was created from the need to solve data management challenges, we thought it would make sense to dedicate our first bite-size to this fundamental question.

We’re in an era where data is considered gold, and investment firms are sitting on a goldmine. However, a startling statistic from KPMG reveals a critical gap: while 75% of financial services executives consider data management a top priority, 67% admit their organizations struggle to leverage data effectively. This disconnect begs the question: Why do so many investment firms struggle to manage their data? Let's break down the common pitfalls:

1. Data is a Tech Problem

   This is the most fundamental misunderstanding. Technology is crucial, but it's just one piece of the puzzle. Think of it like this: the Finance department needs technology to help run smoothly, but technology on its own won't make Finance run smoothly. In the same way, data management requires IT, but this is only one piece of the puzzle.

   
   

2. Data Management is a Unique Skillset

   Managing data requires a governance mindset blended with cross-functional skills:

   - operational knowledge (how processes work)

   - technical understanding (to anticipate the IT team's needs), and

   - a product mindset (how data can be used and monetized across the organization)

   
   

3. Data Ownership

   “Who owns the data?” is the first question that gets asked and is often answered with silence! An understanding of the industry, business and operating model is crucial to answering this question, and is where a data specialist can help you find the answer. Without clear ownership, data management can become a free-for-all, leading to inconsistencies and inefficiencies.

   
   

4. Conflicting Definitions of "Data"

What data is actually in scope? Differing opinions and a lack of clarity can quickly lead to confusion and wasted effort. Data specialists can help in getting everyone on the same page about the type of data that will be managed.

5. Stakeholder Scepticism and Project Fatigue

   Too many companies have been through multiple failed data projects. This leaves stakeholders jaded and unwilling to invest time and resources in yet another initiative that promises the world but delivers little.

6. Lack of Stakeholder Alignment

   Related to the the last point, getting everyone on the same page and working towards the same goals is essential for success.

So, what can be done?

• Acknowledge the Need for Expertise

  Just like you wouldn't ask your IT team to handle legal matters, recognize that data management requires specialized knowledge and skills.

  
  

• Secure Executive Sponsorship

  Data management initiatives need strong support from the top.

  
  

• Be Realistic About Expectations

  Understand what can realistically be achieved and by when, and avoid overpromising and underdelivering.

  
  

• Designing and Implementation of Clear, Concise Data Program

  A structured, iterative program which adopts a phased in approach, and looks at People, Processes and – lastly – Technology.

  
  

• Prioritize Strong Project Management

  Don't underestimate the importance of skilled project management, particularly when it comes to stakeholder management.

By addressing these challenges head-on, firms can move beyond the struggle and unlock the true potential of their data.