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October 1, 2008

Wall Street and Data Management

Well folks, I have been on a little hiatus from blogging but now I am back andthis debacle that is hitting the U.S. and world economy has me a bit steamed. So by now you have all noticed that the stock market is a little down, OK, well, way down and that Lehman Bros. is bankrupt, Wachovia just got bought, Freddie Mac and Fannie Mae were nationalized and AIG received a government guarantee.

All of this was caused by the collapse of mortgage backed securities that are a kind of mathematical product that is based on mortgages that people like you and me take out to buy a house. So in the end, the collateral for these securities are the homes that people own and in many cases, the homes that the banks now own after people defaulted on their loans because they couldn't afford them in the first place. Note that I am not blaming the homeowners any more than the lenders. They are both complicit in this whole thing.

Anyway, in the end, these securities are based on loans that are bought and sold from bank to bank and the securities then get packaged up and resold and then repackaged and resold until eventually it becomes extremely difficult to trace back what mortages are actually tied to any particular mortgage backed security that was sold/bought.

So while a significant portion of what has gone on in the past few months is simply about people getting greedy and assuming the housing market would continue to go up, part of this also has to do with poor data management practices.

So what does data management have to do with any of this?

One of the reasons for the meltdown is that the banks don't have the ability to price these mortgage backed securities because they lack traceability back to the source. They can't tell you what mortgages map to a particular financial product and as a result, no one can say if a certain set of securities is better or worse than another set. Now this particular problem is all about data management. The ability to accurately show the lineage that links the underlying asset to a complex financial instrument based on that asset is not a skill that most banks have. As a result, this only inflames the lack of confidence that has been injected into the market due to the housing bubble bursting, people not being able to pay their variable rate mortgages or refinance those mortgages at a lower rate. So while all of those non-data effects cause concern, lack of good data management to price out the true cost of those effects only pours gasoline on an already raging fire.

In my next post, I will talk about what companies can do or should have done to deal with this situation.

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Posted by Todd Goldman at 4:15 PM | Comments (29)

February 20, 2008

Why doesn't the business care about data governance?

Howdy folks. Back again after a little time off from the blog.

I have as usual, been to a lot of trade shows on Data Governance and MDM. And in the past month or so, I have run into more unemployed Directors of Data Governance than I care to admit. They were all very intelligent, thoughtful, and new quite knowledgeable about data management in general. So why is it that so many of them are looking for jobs. After talking to quite a few of them, I have some thoughts on why is it that the tenure of these folks is short.

Quite of few of them were working in financial services, specifically in companies where the mortgage credit crisis forced quite a few layoffs When asked why they were laid off. Many of them commented that business management didn’t appreciate the importance of data quality and governance. When I asked what were the benefits they were presenting, they commented that the benefits were obvious, but never articulated a specific example where data governance had saved money, prevented a disaster or improved the business in a specific measurable manner.

All of this doesn’t mean that data governance isn’t valuable. However, I think that it is perceived by business managers as just another one of those overhead activities that IT wants to promote. It feels a lot like the general “quality” craze in the 80s that started with Japanese companies and at first, U.S. and European manufacturers didn’t really understand. They would try “quality” programs for a little bit, then fail, and the quality managers would lose their jobs.

Eventually, good product quality became expected by the consumer. You could buy a good quality product for the same as the cost of a bad quality product. So quality manufacturing became an expected part of doing business.

Unfortunately, most companies don't seem ready to think about data quality in the same we think about product quality. Actually, if you turn it around, and thought about product quality the way we think about data quality, I doubt you could drive your car out of the driveway in the morning. The wheels would fall off, the steering wheel wouldn't turn and the car probably wouldn't even start if the quality level of your automobile were as bad as most data environments.

Anyway, so what can anyone do about this? Well here is my short list of thoughts on the topic:

- Stop talking about data governance and data quality as an objective in and of itself.
-Focus on business value: What if we could reduce the number of miss-configured products? What if we could more easily measure the risk of our financial portfolio so we could keep less cash reserves on hand? What if we could more easily cross-sell and up-sell our customers?
- When you create value from good data governance, market that internally. Remind people the savings you are achieving every day as a result. If you don’t market the success, people won’t notice. This is one of the hardest things for an IT professional to do. We aren’t extroverts by nature.
- Don’t call what you are doing data governance. Just do it, measure it, measure the value, then declare your success from the mountain top later. Then go ask for more resources to do more of the good stuff you just did.

What other ideas do you all have about this? I know my list is pretty short, but I am sure that people reading this blog have additional thoughts, please share them.

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Posted by Todd Goldman at 10:45 PM | Comments (1)

December 2, 2007

Security and Data Management

Just thinking about how little has been done regarding the overlap in enteprise data management and data security. Why is it that these two disciplines are still management very separately from each other.

Perhaps that is what both Symantec and EMC are doing with their recent acquisitions?

Or, maybe it is just as simple as the fact that security cuts across everything, so as a discipline, it is one of the most diverse topics you can possibly think of. You have physical security, network security, identity management etc etc. So it really isn't a surprise that as enterprise data management is still kind of young, with MDM and data lineage deployments just now starting to take off, the overlay of how security of structured data is a little behind.

Ack. It's late and I am rambling. check back in with y'all later.

btw, this week I am in lovely Orlando Florida at the Data Governance Conference. So I will send you all my thoughts while I have them.

Also, a belated Happy Thanksgiving to all of my U.S. readers. And if those of you in the U.K. feel left out, then Happy Guy Hawkes day. :)

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Posted by Todd Goldman at 11:15 PM | Comments (27)