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How to build a business case for a market data inventory platform

You know the benefits that having a market data inventory platform can bring to your organization. But securing budget and selling the concept internally can often prove difficult. Below we outline the key objections and provide useful discussion points that can help you to respond and build your case internally.

Why do we need a market data inventory platform? Can’t we just keep using spreadsheets?
Knowing the benefits that a market data inventory platform can bring is essential to selling your concept internally. Market data managers we surveyed identified six benefits of a market data inventory platform, including bringing transparency and control over costs and improving management efficiency. Take a look at that blog and use these benefits as they apply to your organization to build the case for replacing your manual process with a more automated and centrally controlled approach.

How can I secure buy-in from senior management and other influencers?
Identify who they are, figure out their motivations, goals and challenges and then demonstrate to them how having a market data inventory platform can help them achieve their goals and solve challenges.

For examples, a chief operations officer’s concerns might include scaling operations while managing costs. Here you need to show how a platform that can centralize all the information about your information services spend and contractual obligations will save significant time and money, but also give them a strong foundation to support growth going forwards.

It may also be useful to demonstrate how the platform can be used by other divisions under the COO’s remit to manage a variety of costs –market data, index licensing, software, hardware, research, subscriptions and more – from a single service so the COO can see potential to address broader enterprise challenges.

It’s important to understand the costs involved and to identify the potential Return on Investment (ROI – see the next section) so they can see the impact on the bottom line. Also, be clear about how an implementation or migration project would be managed and the timescales involved.

You then need to manage a communications program with your target decision-makers and influencers to discuss your proposition. Listen clearly to their feedback and objections and then work with your internal supporters and suppliers to address those objections.

It’s too expensive
To justify spend on a platform, the key is to understand the Return on Investment (ROI). Look at how you are currently managing the invoices, ensuring compliance with contractual terms, and identifying redundant services to save costs.

If you currently have a manual process and rely on spreadsheets to track details, you can look at how many man-hours are spent each month inputting data, reconciling invoices, and gathering data to understand usage and relevance of services. Once you calculate that cost you have the first input to measure any potential ROI.

You can then look at time saved. When implementing a market data inventory platform, many of the previously manual processes are automated. Inputting invoices from many vendors is no longer manual but is automatically uploaded into the system; it manages the reconciliation process, highlighting only discrepancies so you can focus only on the issues that need to be addressed; centralizing all your contract and spend information can also save valuable management time by providing transparency into costs, and a fast and easy way to find information.

The result is that your team can be freed up to focus on higher value work, and while this can be hard to measure, it must be considered in any evaluation of ROI. But it also enables to make more informed business decisions.

Typically firms that use an inventory platform see an annual savings of between 10-30% of their information services spend, which more than covers the typical cost of the platform.

Budgets are tight and it will be another year before I can look at it
It takes time to build a business case and secure budget for a new implementation or a migration to a better platform. But it’s worth considering the opportunity cost of not moving. What are you currently spending to manage your information and services spend? Where are the inefficiencies? What capabilities could you have that would help you perform and manage costs better for your enterprise?

Finding a sense of urgency, built around the current costs, inefficiencies and risk of non-compliance with supplier contracts, is useful to securing sign off for additional budget to support your business case for a market data inventory platform.

It will take too long and require too much of our internal resource to implement or migrate a platform
It’s hard not to imagine any software implementation that requires the integration of multiple sources of information and a change in processes being a long and drawn out process that would require significant internal resource.

To address this, you need to feel comfortable that the company you are going to choose to provide market data inventory services has the technical and management capability required to deliver a smooth transition process, and client references that can testify to their experience.

The core focus of the supplier is to help financial institutions and corporate enterprises to save time and money, and make the implementation or migration process as easy as possible. You should test their knowledge of invoice management processes, reconciliation and analytics and have them walk you through any prior implementations or migrations to explain the process, internal resource requirements and timelines.

In our experience, a typical implementation takes as little as two weeks, with the heavy lifting handled by our team of experienced implementers, who then train internal teams and hand over the day-to-day administration of the system.

Is it better to build rather than buy?
The decision to buy or build is a complex one. The usual argument centers on the fact that buying is typically faster and cheaper than building and you leverage external expertise that is hopefully being continually invested in ongoing product development. But building gives you much greater control and flexibility to create a product that suits your needs perfectly.

Issues with building your own product can arise with scope creep, or when your original developers leave, resources and budgets are constrained leading to frustration in users who need additional features or development, or manual workarounds are developed as a short cut.

With market data inventory and enterprise cost management platforms, the supplier market is a mature one, where the products have been developed over many years to cater for a wide range of needs and to deliver a high level of flexibility. With a critical mass in the world’s largest investment banks and asset management firms, and benefiting for the ongoing feedback from their very large user communities, the level of sophistication of the services is usually considered far greater and more cost effective than building from scratch.

It’s worth conducting a cost benefit analysis (with enough margin for the inevitable scope creep) of your own development with the overall cost of buying an external platform to see what you think will get you the better return.