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A Model for Data Governance Does Your Organization Really Have One?

The current focus on new regulations, and their impact on risk management practices, has turned the attention of financial institutions to data. It is increasingly evident that accurate and consistent data is key both to compliance with incoming regulations and to reaping the benefits of a robust risk management strategy. Business managers have come to the realization that data is an asset that can be turned into a strategic advantage. By tapping into their data assets, savvy business heads are transforming what was once the long-forgotten poor stepchild of the financial enterprise into a weapon that can be wielded to boost profits, streamline operational processes and meet the stringent needs of new regulation, whatever shape it eventually takes. The complexity of todays financial institution, however, presents data managers with unsurpassed challenges, making data consistency, standardization and timely processing difficult to achieve. The spate of

mergers and acquisitions in the wake of the Credit Crunch has also left many firms with multiple security masters, multiple entity identification databases and multiple approaches to managing them. Achieving the twin aims of regulatory compliance and operational competitive advantage is possible only where a true data governance model is in place to ensure that all stakeholders understand the goals, methodologies and deliverables of the data management strategy. For many institutions, implementing such a model is a daunting prospect that, even if its possible to put in place, may take years to do so. Many others believe they have a model in place, when they clearly do not. What can firms do to prepare their organizations to adopt a data governance model that will help them achieve their data management aims? What are the key considerations of such a model, and where can they get help in setting the main cornerstones in place?

This paper attempts to answer these questions, and offers some straightforward next steps toward implementing a robust data governance model.

The Enterprise Data Landscape

New regulation is driving demand for data across the enterprise. Shortfalls in risk provisions within financial institutions highlighted by the Credit Crunch are being addressed through the tougher capital adequacy requirements embedded in incoming regulations like Basel III globally and Dodd-Frank in the US, which also will have a global impact. In all cases, the onus is on the financial institution to generate and maintain the kind of ordered, accurate, consistent and timely data that the new regulations will require. Firms will need to take an enterprisewide view of their businesses, presenting a significant data management challenge. Larger firms in particular may have multiple operating entities in different geographies and asset classes, a situation complicated by historical merger and acquisition activity. However, if regulation is the proverbial stick driving the marketplace to act, savvier executives see the ordered, accurate, consistent and timely data they are being required to produce as the carrot. Firms are beginning to identify the availability of this data throughout the enterprise as a strategic asset. This asset can yield the kinds of operational efficiencies business managers are looking for in todays uncertain markets, by streamlining and automating previously manual and error-prone processes. But it can also present energetic adopters with new opportunities to innovate, a capability that market practitioners acknowledge is required in order to secure the budget to act. In short, getting full control of enterprise data is no longer a mere cost-saver; it is a catalyst for gaining a competitive business edge. Part of this new recognition of the importance of data management within the enterprise is also being driven by the post-crunch emphasis on risk management. At the base level, regulatory requirements for greater provisions for capital adequacy are forcing firms to make smaller amounts of capital work harder. This means seeking out new, and potentially more risky, opportunities in order to achieve the greater return on investment now needed to keep clients, management, the board and shareholders happy. In this aggressive environment, it is essential for risk-takers to have access to as much accurate and timely information as possible, in order to minimize the probability of failure. With markets increasingly global, both in terms of geography and range of asset classes, the traditional market-based view of risk is no longer sufficient to cover all bases and allow business managers to innovate. As such, the requirement for enterprise-wide data for risk management purposes is growing, and has been tagged as a killer app for proponents of enterprise data management, a discipline that has long sought a truly compelling business raison detre beyond the cost-saving argument. In other words, the risk management requirement has transformed enterprise data management from a technology cost to a business opportunity. Delivering on the requirement, however, may be more of a challenge than it initially appears. First, while the underlying data sets may overlap significantly, the delivery format, data points, update frequency and other elements may vary widely between what is required for regulators and what is required for managers. Second, years of restructurings, mergers and acquisitions, and other corporate actions, have made many financial institutions highly complex organizations, with multiple business silos, each with its own data and approach to date management. All of this presents data professionals with a huge challenge: how to collect and integrate the enterprise data asset, and present it to the right people, at the right time, in the correct format? There is no magic-wand solution to this challenge. Instead managers can help themselves by establishing a clear model for data consistency, data processing and on-time delivery of information for a broad range of high level consumers. A data governance approach ensures that all stakeholders across the enterprise are pulling together to meet the data management challenge. The first step is for institutions to take a look at their existing processes and ask themselves whether they have a governance model in place. Many will find that they dont. However, establishing a solid, and clearly and widely understood, data governance model is a relatively straightforward process, with the benefits easily identifiable and quickly achievable.

How Data Governance Underpins Successful Data Management

As it analyzes its existing processes, a financial institution needs to consider what data governance is, and just as importantly, what it is not (see Figure 1). Data governance is a term that is frequently misunderstood, giving rise to the situation where many firms believe they have a governance policy in place when, in fact they do not. But the default alternative is no better. Daunted by the prospect of an enterprise project, with few supporters and high costs, many firms choose instead to allow their disparate businesses, geographies or other silos take their own data management paths. The result is a bottom-up tangle of disparate data sources, normalization processes and taxonomy rules that leads to inconsistency between operational areas without any of the benefits of true data governance. Ultimately many firms find themselves somewhere in between, leaning back on the time-honored method of asking Joe in the corner. He knows where to get that vital piece of information for that risk report. He understands where the data comes from and what that says about quality. How? Because he always has. But Joe wont be around forever, and there arent enough Joes to cover all the bases involved in todays complex enterprise. Those firms taking this in-between kind of approach run the risk of missing out on the benefits true data governance can bring. Worse, by failing to take a proactive approach they can find themselves creating a chaotic environment in which different business units operate under conflicting data approaches. Under this scenario, different operating units may use differently sourced data to drive key calculations relating to risk or trading analytics. They may use inconsistent sources of valuations or pricing data, resulting in different ways of evaluating the portfolios they hold. They may pay multiple times for the same data provided by different suppliers, and they may not meet the needs of either the regulators or their own senior management.

What can a robust data governance approach bring to your organization?

In short, it can yield on-demand access to consistent, accurate and fit-forpurpose data. It can transform the enterprise data asset into a source of information that is consistent across all aspects of the business, yet flexible enough to be applied correctly to the nuances of different activities. This meets the demands set both by new and changing regulatory environments and a newly risk-aware senior management and board. With these incentives, all financial institutions should be actively engaged in setting a governance model for management of their data asset. Practitioners will find that getting started is not as arduous as it seems, and a simple set of steps can secure some quick wins, helping build momentum and support for true enterprise-wide data management.

So what is data governance?

Simply put, its a set of processes that allows an institution to make best use of the strategic asset that is the data it holds across the enterprise. A high quality data governance policy takes a top-down, and at times tactical, approach to building a framework for managing data in a way that fits the institutions business model. While the governance model involves all stakeholders, it must specifically involve both business-side and IT/operations-side personnel, to ensure the right balance is struck to deliver on the promise of enterprise-wide data management and its associated benefits.

And what is not data governance?

Mainstream thinking around data governance often leads to an overwrought response: a rigid, allsinging, all-dancing data management initiative that touches all aspects of the enterprise but that is too unwieldy and ambitious to achieve. Attempting to institute a single, enterprise-wide taxonomy, for example, is too complex to implement within a reasonable timeframe, and is likely to prove fruitless. With the best of intentions, practitioners embark on multi-faceted, multi-year projects that soon run out of support as they fail to deliver at the first hurdle.

Figure 1. Data Governance

What is NOT Data Governance?

The guy in the corner who knows where to get that tricky data set you need so urgently.

What IS Data Governance?

Identified data stewards who are dedicated to understanding specific data sets, and their management needs and processes. Specific tasks aimed at fixing business problems stemming from data issues. Embracing data management as a strategic activity that empowers business managers to maximize returns on their operations. A swift adoption of a flexible approach to fixing data problems, learning from the experience, and co-opting new knowledge for the next challenge. An enlightening process that yields new opportunities as it moves enterprise data forward.

Broad, sweeping projects to clean up data once and for all.

Data management perceived as a necessary evil that meets the onerous requirements of harsher regulations but with minimal effort and cost. A multi-year process that will involve many casualties and reap questionable benefits.

A black hole from which there can be no return.

A Check List for Data Governance

From a strategic standpoint, financial institutions need a data hierarchy and organizational structure that frees the availability of data so that it can be used to meet the business objectives of the company. The design of this structure also needs to take into account the specific corporate objectives of senior management, whether they are a specific methodology for calculating risk and other analytics or to make sure that regulatory requirements are met across multiple regulatory regimes. Such a strategic approach requires internal acceptance among stakeholders. Achieving this acceptance can be supported by engineering a series of quick wins that builds credibility early on, rather than focusing on deploying an enterprisewide taxonomy covering all securities in all asset classes and geographies, or worse, allowing individual business units to take on the task themselves, a focused effort to address and fix a specific business problem can yield fast results and engender support among beneficiaries. Success here can be achieved by empowering people to make decisions and push through change. Doing so requires documenting each step; who deals with what, how were changes implemented, how frequently is review required? In this way, a governance framework can be built. Striking the right balance among stakeholders is important. Many ongoing governance projects fail to involve both business practitioners and the IT organization. Instead they are initiated and led by one side or the other. It is essential to involve both, allowing for coordination and consistency of approach, and the efficient deployment of technology resources to solve identified business issues. Getting this balance right is rarely achieved, and once more there is no one-size-fits-all solution. Developing an operating model that takes account of organizational structure, physical location, available IT infrastructure and resources on the ground will depend on the individual situation of each institution. What is universal, however, is the need to set this operational model in place, which can only be achieved by involving both sides of the fence from the outset. Empowering people to make decisions is also essential, and entails assigning responsibilities. Whatever the ultimate organizational structure, a successful governance initiative needs both project champions and data stewards. The former, essentially evangelists within the organization, make the case for governance internally and point to early and successive wins to build support as the project gains momentum. The latter are needed to push change through. Data stewards, who understand data and the business issues addressed, will manage the process on the ground, implementing the appropriate data management approach for the immediate task in hand. Highly targeted projects yielding quick wins can allow the project leaders to establish a set of standard procedures around data sourcing, cleansing, aggregation and distribution. These processes should be based on specific business needs. Data managers should identify opportunities to demonstrate how governance can help the business, then execute swiftly. Lessons learned from the experience can be added to the overall governance model, and applied to the next opportunity to address a business challenge. This step-by-step approach has the dual benefit of both improving business processes and gaining internal support for wider implementation of the initiative.

Getting Started
With this approach, institutions can make rapid progress toward an enterprise data governance model. It does not have to be difficult, nor does it have to break the bank. There are quick wins to be had, along with lessons learned to be gathered and added to the broader governance framework. By executing on demonstrable business solutions, the governance will receive early and positive attention from senior management. As data mechanisms and organizational structures take shape, support from management will build, and early benefits will be co-opted to other areas within the enterprise. While successful navigation of the complexity of todays financial institution requires care and diligence, and a firm focus on where the project is headed, getting started is simple.

Making It Happen: Accenture

Initiating a successful data governance project can require a provider who takes the time to understand the unique situation of each institution, has the knowledge base to develop a holistic data governance approach and the methodologies in place to implement the solution. Accenture not only understands the complete data governance lifecycle, based on our deep knowledge and experience with all types of financial institutions, but we also have developed a proven approach combining leading practice research, industry insights and our core capabilities. Accenture has years of specialized experience helping the worlds leading financial services institutions and capital markets firms, with a track record of delivering proven results. Our Capital Markets Practice is currently serving 174 clients. We have a dedicated Data Management practice with the experience, knowledge base and core skills to deliver data governance projects. While the ultimate solution developed during each project is unique, we develop each solution following our three-stage approach honed from this specialized experience: Collaborate, to understand the clients unique requirements and objectives; Current Environment Assessment, to assess the current conditions and issues; and Future-State Design, to develop and implement the solution. Specifically, each stage focuses on: Collaborate, taking the time to know the client - key tasks include: Introduction of key individuals and specific assignment of roles Establishment of clear scope of engagement Gaining a clear understanding of a clients preferred future state vision Working with the client to define the data governance challenges Current Environment Assessment key tasks include: In-depth interviews with key stakeholders and staff Assessment of current operating procedures Assessment of current communication process Assessment of current data governance and quality model Future-state Environment Design key tasks include: Assessment of leading practice and high performance model fit Identification of the future state objectives and operating model Conducting a Gap Analysis Creation of an implementation plan and roadmap In implementing this approach we utilize innovative tools and methodologies developed in our Financial Services Data Management Practice to deliver our core capabilities to our clients, including: Data Governance Strategy Planning Operating Model Transformation Business Process Reengineering Accenture Delivery Methods Whether it is a full data governance model implementation or the design of a data steward training program, Accenture has the experience and knowledge to deliver the full range of successful data governance projects.

Despite the ongoing reliance on Joe in the corner and failure to implement a robust data governance approach at many firms, now is a good time for financial institutions to transform their data management operations from a source of cost into a market advantage. Those financial institutions that implement data governance approaches may not only find themselves ahead of new regulations, but also potentially gaining competitive advantages.

To learn more about how Accenture can help your firm transform your data governance model please contact:

Paul J. Obrocki
Accenture Capital Markets +1 (416) 641-4285

Mark A. Watson
Accenture Capital Markets +1 (617) 488-1225

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About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with approximately 236,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is