Mary Knox here. What is the impact of the recent market turmoil on data management initiatives in financial services firms?
From the client conversations I have had it seems that (at least some cases) strategic initiatives are being funded, while spending on day to day operations may be being cut – and the ability to do that is sometimes as of the result of the strategic initiatives. A case in point: I recently asked an investment banking executive in charge of enterprise data management if his initiative faced the “budget axe.” He said no, the reason being that his initiative was resulting in a 10% cut in third party market data spend alone (see Cost Cutting Through Market and Reference Data Management). Continued funding was a “no brainer.”
Here are some top level findings on data management based on conversations I’ve had with clients and other analysts:
- In many financial services firms – at least forward looking ones – spending on data management infrastructure and data consolidation is continuing, driven by risk and operational cost reduction considerations. Some leading edge firms – particularly those less-scathed by the market turmoil – are making these investments to prepare for future acquisitions and regulation.
- In many financial services firms – regardless of the magnitude of impact of the current market turmoil – operational spending for data management (including DBAs, third party data spend) will be reined in.
- Also reined in will be spending on business intelligence and other applications – portals, dashboards, analytic applications – that use or display the data. Much of the curtailment will be for new spending, instead of maintenance and support for current licenses – as much due to the renegotiation policies of some vendors as due to the risk associated with dropping vendor support.
As we work to prove or disprove these assumptions, we would like to hear from you – what is your experience?