EDM Council General Meeting

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• EDM Council General Meeting
• New York CityFebruary 16, 2006

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• Business Case Working Group
• Status Report on Progress
• February 16, 2006

• Working Group Leaders
• AIG - Frank Duquette
• Credit Suisse - John Bottega
• UBS - David Goldberg
• IBM Facilitators
• Steve Mckenna, Con Crowley, David Gertler, Andrea
  Ianniello

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Agenda Model Business Case

• Mission and Investigation Methodology
• Key Findings and Core Challenges
• Top Five Issues
• The Governance Mandate
• Business Case Summary (example)
• Next Steps for Consideration

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Initial Charter
From the Inaugural EDM Council Meeting (June 05)

• Current Status
• No consistent business case framework
• Little relevant benchmark data on cost or ROI
• Elusive and anecdotal metrics to quantify value
• Proposed Deliverables
• Framework for Business Case Analyses (multiple)
• Benchmark data on strategic, operational, risk,
  CRM and monetary metrics
• Value to EDM Council Members
• Framework for composite EDM prioritization
• Valid benchmarks with verifiable metrics
• Support objectives of access, consistency,
  transparency and workflow integration
• Leverage with suppliers on data quality and
  components of added value
• Faster business case development and
  time-to-market for EDM solutions

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Working Group Mission

• Collect and share experiences of data
  practitioners on how to elevate EDM as a business
  requirement, justify it in the face of other
  competing priorities and sustain it as an ongoing
  corporate initiative

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Scope of Initial Investigation

• Area Client, counterparty, legal entities and
  business hierarchies
• Rationale Access to consistent data across
  multiple functions is a big challenge and
  required to meet regulatory obligations and
  financial risk mitigation
• Objectives
• Define the business case template for CCP as a
  component of a firms overall EDM portfolio
• Identify key issues and drivers needed to build
  the business case template (with supporting
  evidence)
• Present the template back to EDM Council members
  for use in their internal initiatives

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Interview Process and Guide
12 interviews including representatives from
buy-side, sell-side, and asset servicing
1. List the type of CCP Data projects

• Other Relevant Areas of Discussion
• Quantitative business case metrics
• Anecdotal evidence
• CCP sponsors, funding sources and governance
  structures
• Business unit support mechanisms
• Implementation/roll-out approach
• Impact on downstream applications
• Use of 3rd parties and consultants
• Regional versus global considerations
• Metrics for evaluating implementation value
• Lessons learned

B. Assessment of current pain point and emerging
industry drivers. What caused you to initiate
EDM CCP Data projects(s)? What was broken?
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Key Evidence from the Interviews
From the interview Issues and drivers.
Never the driver but always a consideration
Technological limitations/challenges of managing
multiple systems
Existing infrastructure hard to reconcile
Not the critical driver usually charged with
implementation
Contract negotiation mentioned consistently as a
residual benefit
Can centralized service meet or exceed the
business service objectives
Data content and format normalization is high
priority
More important when viewed as KYC objective.
High priority and consistent driver
Essential to meet KYC/AML objectives
High priority for product/price master files not
CCP
Requirement to synchronize systems post merger is
a core objective
Risk evaluation and exposure measurement is a
huge driver
Inefficient use of resources needed to reconcile
data
Internal client frustration with bad, missing and
late data - a clear driver
Consistent data set is the number one business
objective
Internal consistency and ability to share data
between functions is essential
Mandatory objective and clear pathway to project
funding
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• Top Five CCP Issues

Evidence and implications
Options and Remediation
Measuring Success
Research and metrics needed to determine
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Four Implications - Summation
The issues and drivers can be grouped into four
broad categories.
Significant consensus on issues and drivers.
Challenge is how to reconcile short-term (no
immediate crisis) orientation with long-term
(building block for doing business) objectives.
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The Governance Mandate
In the Words of the Members "Keeping that
interest and sense of urgency" Need a champion
an active and influential executive
sponsor Senior level Board member to manage
selling business units and lobbying peers Cant
be driven by individual units because there is no
alignment on business agenda Priorities and
funding done by centralized strategic management
Vision came from top management this is the
way we will operate Must have senior management
attention for stability Reference data is back
on the senior management radar Senior
management recognized value otherwise this
project wouldnt have moved forward
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CCP Business Case Summary
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Ongoing Steps

• EDM Council Research
• Publish framework documents for composite,
  monetary, operational evaluation
• Publish strategy papers on business case details
  by objective, application area, business
  function, data type and industry segment
• Quantitative analysis of data management
  challenges and priorities (component-by-component)
  
• Collect and normalize metrics for benchmarking
  (i.e. costs to fix problems, root cause analysis,
  risks associated with implementation)
• Website Repository
• Collect and post sample heat maps, templates and
  guides
• Build network of member expertise
• Leverage Influence
• Create and verify requirements definition for
  standards bodies
• Push data manufacturing envelope with originators
  and vendors