We recently had the opportunity to chat with IHS Markit’s Global Head of Business for EDM, Jamie Penniman, and Head of Product for EDM, Devendra Bhudia. In our conversation, we touched on cloud deployment, ESG data, empowering the CDO, and more. This article is part of Citisoft's Solution Market Perspective Series
Last year was transformative for the workplace and tested the limits of most managers’ business continuity plans. Now that the dust is settling, how do you think the industry’s sentiment on data storage, back-ups, latency etc. will evolve over the long term?
Dev: We’re seeing more movement toward managed services, with a number of migrations over the past year. Before the pandemic, we had a solid pipeline, which has only increased since. This movement is being driven by organizations that were traditionally on-premise deciding to go remote, as a result of the pandemic. Nearly all of our clients have a cloud-first policy now and though the industry was headed in this direction beforehand, the pandemic has no doubt accelerated things. Our new opportunities are now predominantly managed services.
One of the biggest considerations for cloud deployment is data privacy law. There are three main aspects: data privacy, data protection, and compliance. There are a variety of different national and regional regulations and, within each region, a number of different sets of rules. Our cloud provider, AWS, allows us to deploy within a client’s region, helping the client to remain compliant. AWS is increasing its geographical coverage, which allows us to also expand our coverage and meet clients’ compliance needs. With the acceleration of managed service adoption this year, we anticipate regulatory mandates will be an area of evolution.
Jamie: It’s worth noting that, in comparison to many other industries, financial services was actually well-prepared to shift to a remote environment. Our clients were generally on the trajectory of digitalization and modernization of their infrastructures already. That said, 2020 represented a marked shift from where we were a few years back. With new clients, it’s almost assumed they will go down the path of deploying via managed services.
Asset managers also saw continued M&A activity last year. It’s no secret that operational integration is one of the biggest challenges that managers face when merging organizations. How should these acquired or merged companies be thinking about data integration?
Dev: For mergers and acquisitions, data strategy is key. We think of data as an asset—entities that are merging can’t just drop one data set and expect to maximize the potential of their merger. It’s important to think about the target operating model and choose the right data platform for that. The best fit is typically the platform that provides an opportunity to scale to volumes, asset classes etc. This also applies to de-mergers when clients need to separate out business lines.
Jamie: A lot of our clients have gone through M&A over the past few years—there has certainly been an increase. To maximize ROI, these firms need to have strong data governance. Being able to rationalize and put controls on data across all ecosystems is necessary groundwork for a successful merger. Even for managers that remain independent, controlling the data that goes to each affiliate and managing vendor data costs will allow those businesses to grow and better leverage their investment.
In a recent example, we worked with a European client that was using EDM. After merging with another firm, they opted to manage everything centrally through a 24/7 operations function. We were able to help them offer better responsiveness and control costs by managing data quality globally for all the different affiliates and subsequent downstream systems.
IHS Markit’s thinkFolio business recently announced a partnership with Northern Trust. Can you tell us a little about that integration?
Jamie: The partnership is a response to increasing demands for front-to-back solutions. Northern Trust is a longtime client of EDM and we at IHS Markit wanted to build on this existing integration and offer an end-to-end solution by tying thinkFolio’s investment management platform with Northern Trust’s managed services. The seamless services and interoperability are a real benefit to clients of IHS Markit and Northern Trust and are a testament to the way managers are now viewing their operating model more holistically.
Dev: The collaboration also minimizes integration and operational costs, which is a benefit for us and for our clients.
ESG is a major area of focus for asset managers but there isn’t a lot of standardization around ESG data. What sort of challenges do your clients face in documenting their ESG investments?
Dev: In terms of managing and using ESG data, we see three main use cases:
- Analytical use cases where clients are looking to capture data from multiple vendors to drive in-house schemes
- Reporting use cases where clients want the ability to report against investments
- The ability to run due diligence on entities
In response to these use cases, IHS Markit helps at two levels: capturing ESG info from multiple vendors and storing the data by leveraging the ESG module in EDM Warehouse, our data warehousing solution.
The main challenge at the moment is that there are a lot of ESG data vendors, all offering non-standardized formats. There’s no standard set of fields, no coherent classification scheme. Though we think this will evolve over time, it creates a data management issue in the near-term. Since ESG is a growing area of focus, we think some standardization will be driven by regulators. We’re focusing a lot of attention on the Sustainable Finance Disclosure Regulation (SFDR) right now and anticipate other mandates will follow on a global basis.
Jamie: The work we are doing on the data management front is part of a broader IHS Markit ESG strategy, which includes ESG reporting, indices, commodity trackers, repositories, advisory services and more.
What are you most excited about in EDM’s roadmap? Anything you can share on things to come?
Dev: One of the things we’re focused on is empowering the CDO or equivalent (e.g., data governors). We’re launching a solution called Data Dictionary, which will give these personas a direct window into what is happening in the data management organization. The Data Dictionary will enable these senior-level stakeholders to be the true custodians of data, its processes, and governance. We will give them the ability to view end-to-end lineage through EDM. We have a few clients getting ready to go live, and many more that will implement it later this year.
This solution was developed on our software-as-a-service (SaaS) platform, which is another area of focus for us this year. SaaS-based deployment will enable us to scale in performance, empower business users through progressive UIs and increase our client base using a single cloud-deployed code base.
The last thing I’ll mention is our expansion into private markets. EDM has extended its footprint into the private asset space by leveraging what we have learned from our sister product, iLEVEL —the portfolio monitoring platform. This focus puts EDM in a position where we can provide new value to asset managers who act as limited partners or hold positions in private assets.
Jamie: IHS Markit is making a significant investment in EDM to align with market trends and dynamics. Namely, we’re building a SaaS-based no-code/low-code framework to allow true business users to load and transform data. The Data Dictionary that Dev mentioned is a prime example of this.
Here’s a use case: As a data officer, using the Data Dictionary, I’m going to define my data objects and once I’ve defined that data taxonomy, I am going to go over to EDM. Here I’ll define my own search, do my own data quality checks, and push any exceptions. Where a traditional model would lean heavily on IT, I can now create screens, workflows, and user entitlements through an easy-to-use interface.
Any closing thoughts on data trends or the evolution of the industry?
Dev: The biggest trend we see is the movement to SaaS deployment—deployed software just really isn’t being implemented any more. Along with this trend, we’re hearing clients ask for more operational responsibility and insights into their data and services. There’s a clear desire to empower business users and gain a clear view of all processes and technologies, whether outsourced or in-house. As various user personas become more common in the data management space, it is important to empower each persona with targeted and efficient user journeys.
Jamie: We’re focusing on bringing consumer-grade behavioral design to an enterprise platform. Putting data at the fingertips of business users is going to be game-changing and, as Dev mentioned, most of our development now is SaaS-based, which accelerates time to market and ability to scale for us and for our clients. This means that user-empowered design is going to be available to our clients in the near-term.
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