Eagle's Lehner on Data Needs in 2011

It is often said that with complexity comes opportunity. And complexities within the data management industry are not few. This is why software company Eagle Investment Systems launched its first data management product, more than 14 years ago.

Boston-based John Lehner, the firm’s president and CEO, says: “What led us to this space was looking at the problems people had.” At that time, Eagle focused on accounting and trading, and over and over again the problems clients were struggling with were data processes and the governance around the data. “I think many firms now recognize they have a lot of challenges to overcome in this space, and that they now need to address them,” he says.

In fact, now might be the right time to get houses in order. “Things have stabilized enough to make firms feel comfortable to make the changes—the investments in the business that they need to,” says Lehner, adding that there has been a noticeable up-take in activity.

Still, it may be too early to declare that the industry has bounced back fully after the recession. But it is clear that the days when data management projects had to be canceled or postponed due to financial uncertainty are long gone.

Instead, cost management is under scrutiny. According to Lehner, firms are now investing in data management, not to handle their growth but to change their operating model to reduce their costs. Investing in data management has become a formalized practice, and it is no longer a nice-to-have, he explains.

“It’s all about getting to a point in which the industry has metrics and standards in place, and perhaps then, the data management industry will be able to move down a similar path to accounting and performance measurement, for example,” he says, explaining that these other areas are more mature in terms of securing funding for investments.

For data management, one of the main and ongoing changes undoubtedly remains regulatory reform. This is what is driving many of the investments in this space too. In fact, following the financial crisis the regulatory overhaul and potential impact on data management, has become one of the ongoing discussions in this space. But with regulation came uncertainty. Since the Dodd-Frank Wall Street Reform and Consumer Protection Act many have questioned to what extent the future requirements and possible consequences are well-understood. “We are looking at what it really means,” says Lehner.

In the US, the company has just faced a similar process with clients with regards to Tarp legislation and new accounting changes for the US market. “It took the better part of almost a year to really understand what had to be done, what changes firms had to adhere to, and what will be the real impact to business,” he says, adding “I feel we are at the same point with the Office of Financial Research.”

The set-up of the Office of Financial Research (OFR) was announced in the Wall Street Reform Act, and the new agency will be responsible for collecting data from financial institutions. Lehner says: “Everyone is looking at it, people have read the legislation, but I don’t think it’s clear to everyone yet what it is exactly, and what they have to do.”

So far, a lot of opinions are flowing around, and few can say exactly what is going to hit the industry, and how quickly any new requirements will have to be met. Right now, the OFR only exists on paper, and there is little more to do than talk about the potential impact.

Next year, the complexity of the matter will turn into new opportunities, for both Lehner and the data management community.