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Capital markets firms are falling behind in Big Data as industries from utilities to manufacturing successfully employ enterprise-class solutions to improve operations. But capital markets firms aren’t keeping up either because they’re too new on the block or because compliance drains their coffers, according to TABB Group’s Paul Rowady.

Big Data Strategy 11-28-2012“Investing in new technologies and solutions is counter-intuitive during a downturn (and capital investment statistics of late support this claim),” Rowady said Monday. “Capital markets firms need to selectively strive against this urge.”

Getting High on ROI

But strategizing must precede striving, according to John Weathington of San Francisco-based consultancy Excellent Management Systems. Each firm’s top decision makers should spend the time and money to evaluate the return of a Big Data solution.

“Some organizations are obsessed with spending money on Big Data without any concern for the value it represents,” Weathington said in TechRepublic’s Big Data Analytics blog. “Return on investment lies at the intersection of Big Data’s rational contribution to strategic purpose (return) and capability (investment).”

ROI for capital markets firms include new trading strategies and transformed risk management. Pete Harris recently completed a survey about this, polling major financial markets firms in the U.S. for Andover, U.K.-based financial IT researcher A-Team Group.

Harris, A-Team Group’s president of Americas, will present his latest Big Data research at The Yale Club of New York City on Thursday. Click here to register for “Big Data in Trading and Risk Management” if you’ll be in midtown Manhattan tomorrow. Harris and SAP will discuss the benefits of:

  • Faster, in-memory analytics of large, complex portfolios
  • High volume, highly diverse Big Data sets for trade analytics
  • Aggregated analytics of exposures and positions

The good old days of analytics models that are as simple as a six-sided cube have melted away. Firms could end up trying to model something with an unwieldy 571 sides, according to SAP’s Keith Wood.

“So forget your Exadata, your Teradata, and all the materialized views out there -- they are only ever going to be good for the Donald Rumsfeld-style ‘known:known’ problems,” Wood told me after his “Real-Time Risk Aggregation Supported by a Panopticon-Powered SAP HANA/IQ/ESP Platform” webinar on Tuesday. “The only solution if you wanted to do this in real time is to have an engine that can do the simple correlation on any dimension (and only that dimension) on the fly.”

Show Me the Money

How organizations bankroll these changes vary between firms, according to an informal poll taken during an SAP webcast on Wednesday. About 40 percent of respondents attending “Infrastructure Management” indicated that FSI infrastructure spending is enterprise driven, while the usual suspect -- line of business -- only received 20 percent of the vote.

Respondents may have been talking about the regular IT budget. Regardless, the groups that Rowady and Weathington worry about will have to act fast -- and wisely.

Once both groups rise to their respective Big Data challenges -- springing from their duffs or focusing thier exuberance, as appropriate -- capital markets firms can start running as efficiently as other industries.

Related Articles:

Journey to Hypergraphica: Redesigning Capital Markets Solutions” by Paul Rowady

Getting the right ROI on Big Data” by John Weathington

Freedom in a Digital World” by Seth Godin