AXA INVESTMENT MANAGERS Investit Conference – Data Management

Identifying the Business Case for a Reference Data Project V MALAVAL Global Head of Data Management

2

AGENDA

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

The two key questions before starting the business case

2

Business rationale for a Reference Data Initiative in AXA IM

1

Getting buy-in from top management and the business

3

3

Business rationale for a Reference Data initiative AXA IM Challenges

Business model Focusing on investment performance via specialization and resource sharing

Specialized investment teams focused on specific investment areas where we can add real value for our clients

Teams are supported by shared resources (research, strategy, IT, Trading)

AXA IM Business Model

Fixed Income

Structured Finance

AXA Rosenberg

AXA Framlington

Equity Conviction/Talents

AXA Private Equity

AXA REIM

Hedge Funds

SALES, MARKETING AND

CLIENT SERVICES

AXA INVESTMENT MANAGERS (HOLDING)Finance, Risk Management, Legal, Audit, Compliance, Human Resources, Communications & Brand

SHARED RESOURCESInvestment Strategy, Trading, Operations, Projects, IT

INVESTMENT SOLUTIONS

INSURANCE INVESTMENT

Current Operating Model

Current Operating Model Based on vertical siloed applications :

Reference Data is embedded in Business Applications

No data ownership

Inaccurate, inconsistent & redundant data

Data access is complex

Decalog

Organisation & systems can not be in line with expected

level of Time to Market

LTOM vision Implement flexible & modular platforms

more adapted to AXA IM multi expert model

Is only achievable by the delivery of consistent data in a timely manner : The AXA IM DATA BACKBONE

LTOM*

“One fits size all” model is over

4

Business rationale for a Reference Data initiative Which data needs to be sourced centrally ?

An Asset Management company can be seen like a DATA factory It is key to show that all business processes even in different departments are using the same

core reference data

Stockbrokers Private banks Advisors Banks

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The rationale for centralising Reference Data Which data needs to be sourced centrally ?

Distribution

DistributionPartners

InvestmentsAnd Operations

Sales & Service

Products, Valuation,

Performance,Investment

Commentary

WirehousesRegional FirmsIndependent AdvisorsBanks

Advisors

Sales Desk

Wholesalers

Content Production &Management

TransferAgent

Client

ShareholderServices

OnlineAdvisorService

ClientAccountServices

Subscriptions, Redemptions,

Transfers & Exchanges (Mutual Funds,

Managed Accounts)

InvestmentManagement

Sales Analysis &Strategies

ManagedAccountPlatform

Benchmarks Security analytics Security master Market data Position & cash External product data Performance returns

Counterparty data Settlement instructions Security data Fund accounting data Net asset values Position keeping data, cash Custodian feeds Client/account master Benchmark returns Historic performance

returns

Product master & categorization

Client & account master Positions, transactions, net

asset values, performance Fund flows / sales data Competitive analysis Prospective clients

Investment Data needs Operations Data needs Distribution needs

Common Data Subject Areas Product master Positions Transactions Security master

Benchmarks Net assets Performance returns Client & account master

6

AGENDA

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

The two key questions before starting the business case

2

Business rationale for a Reference Data Initiative in AXA IM

1

Getting buy-in from top management and the business

3

7

Two questions before starting the business case 1. Why is it so hard to invest in a reference data initiative ?

A certain project is expected to produce benefits, but will require capital investment

That same capital could be invested elsewhere, potentially producing a different set of benefits

How do I decide which project or projects to invest in?

His/Her Dilemma

“Things are working well today !” “I will be the last to benefit” “This service is not adapted to my

business” ”It will be quicker doing it myself”

And listening the business, choice becomes difficult…

LET’S TAKE TWO MINUTES IN THE CEO’S SHOES ?

A long term project Complicated planning A costly exercise High Risk

Looking at a Data Management, he/she sees :

8

Two questions before starting the Business Case 2. Why is it so hard to sell a reference data program ?

LET’S TAKE TWO MINUTES IN THE PROGRAM MANAGER’S SHOES ?

CEO

Corporate management, risk, profitability

Drivers

Demonstrate expected ROI to executives in a language they

understand and believe

What you need to do

• Explain & educate • Convince through external testimonials • Provide ROI & NPV study

How

BUSINESS

Time to market, leverage, data access, ownership

Drivers

Demonstrate added value by delivering “quick wins” in the

early phase of the project

What you need to do

• Stick to appropriate level of detail • Solve issues as they arise • Convince by quick win approach

How

TEAM

Recognition, proximity to business

Drivers

Demonstrate data management team is useful in the whole

company

What you need to do

• Educate & motivate your team to push the key messages on the ground • Focus them on added value tasks & encourage development of specialist skills

How

Challenge : Convince different players and understand intangible drivers

9

AGENDA

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

LegalAgreementEmployee

Client&

Third partyNet Asset Value

DataManagement

Holding&

Transaction

Securities&

Market data Portfolio&

Product

The two key questions before starting the business case

2

Business rationale for a Reference Data Initiative in AXA IM

1

Getting buy-in from top management and the business

3

10

First step : MANAGE EXPECTATIONS Explain where the main benefits are

Near- term realizable

Longer term realizable

In business Cross business

Size of circle indicates relative

importance

Quick win approach

Better regulatory compliance

Greater organizational efficiency

Enhanced management information

Trade failure/STP improvements

Improved revenue generation, cross selling and customer retention

2 years IT investment avoidance • Data feed rationalisation • Potential for application de-commissioning

Priority drivers for near- term cost adoption

• Efficient Corporate management

• Improved quality of the data

• Revenue generation and client retention

• Minimizing regulatory risk

• Cost reduction

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Second step : BE STRATEGIC Link the reference data initiative to your company strategy

Our company strategy : Be the preferred asset manager for our client, having a multi expertise offering This business model, to be flexible, will be supported by dedicated front office platforms and new risk management tools

Not centralising core reference data will imply duplication of data, data quality issues, an increase in manual processes and additional costs

The reference data initiative is seen as the “Glue which holds things together”

A Multi Expert Business Model Supported by a flexible Operating Model

Don’t sell the initiative alone! It is part of global review of your Organizational architecture.

Fixed Income

Structured Finance

AXA Rosenberg

AXA Framlington

Equity Conviction/Talents

AXA Private Equity

AXA REIM

Hedge Funds

SALES, MARKETING AND

CLIENT SERVICES

AXA INVESTMENT MANAGERS (HOLDING)Finance, Risk Management, Legal, Audit, Compliance, Human Resources, Communications & Brand

SHARED RESOURCESInvestment Strategy, Trading, Operations, Projects, IT

INVESTMENT SOLUTIONS

INSURANCE INVESTMENT

Human Resources ( Peoplesoft )

Profitability Analysis (FRISBE)

Procurement (ARIBA)

Communications

CRM

Communications OM

Support Functions OMs

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Sales, Client Services OMs

Decision Making Tools(Market Outlook, Risk exposure …)

Manufacturing OMs

OSSM OM

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Risk Management (VAR, Counterparty Risk …)

Order Capture

Trade Compliance

Trading & Stock lending

Trade Flow ManagementPortf Controls : NAV Validation, Corp. Actions …

Third parties

EQ FI SF

IS HF P/E

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Third Step : CHOOSE YOUR ROUTE Select the approach suitable to your company culture

Top-down Strong top management mandate Program is seen as mandatory

Advantages

Strong sponsorship LT direction clearly designed Changes are more readily adopted

Disadvantages Takes more time Need to resell the initiative

2 PRACTICES : TOP- DOWN & BOTTOM-UP APPROACH

Bottom-up Quick win model , where business

sees measurable results

Advantages Practitioner involvement and ownership Better time to market delivery Business value

Disadvantages Lack of executive-level authority and

direction Possibility of fragmented solution Inconsistent sponsorship

Any strategic/LT decisions & priorities are taken at the Management Board level But daily support has to be found at business level with :

Delivery of some quick wins (10 were undertaken in 2006, 4 completed in 2007) First deliverables are launched with our Business Champions (Sharing vision, High

profile service) Usage of prototype and proof of concept period to convince that service is better

We use both approaches

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Fourth Step : CONVINCE The ROI study

Different scenarios can be studied. In AXA IM, we worked on three different options : Build an in-house data management platform, buy a software solution or outsource

Estimates were done on a five year period Savings should be measurable and credible to top management We used an external organization to validate our figures and approach

Payback : 5Y Payback : 3,5Y Payback : 3Y

In House Software package Outsource Final CEO decision taken in December 2006 is to invest in an internal data management team, supported by a software solution

20 to 25%

System retirement

10 to 20%

Improved data quality Focus on added value tasks

15 to 20%

Common & shared distribution layers Higher standards

15 to 20%10 to 15% %

Automation & optimization of data feeds Reduction of bespoke databases

Common source sharing Standardization of interfaces

AXA IMReduction

Drivers

20 to 25%

System retirement

10 to 20%

Improved data quality Focus on added value tasks

15 to 20%

Common & shared distribution layers Higher standards

15 to 20%10 to 15% %

Automation & optimization of data feeds Reduction of bespoke databases

Common source sharing Standardization of interfaces

AXA IMReduction

Drivers

14

Fifth Step : IMPLEMENT THE VISION The key building blocs

Data Management key Implementation

Enablers

Platform selection & implementation

Clear strategic plan for business and partners

RO

I

Time

Validate the Business case

Change management : Define & implement new business processes

Define quick win, & LT roadmap

Q3 07 Q2 08Q4 07 Q2 09Q4 08Key Activities Q2 07

SMF implementation –ThinkFolio Pilot

SmartCo Implementation

Development

of all Data sets for ThinkFolio DMT

UAT phase

Production

UAT Tests

Q4 09

ThinkFolio fed by SMF

SMF implementation –

All DMT Deployment

Sophis/Sesame deployment

Capstone Suite deployment

Other DMT Deployment (TBC) Decalog retirement

CTP implementation –Client View Pilot

CTP Master fileIn production

Client View CRM connected

Axa Rosenberg CRM connected

CTPimplementation –

All CRM Deployment

Finance systems connected

Axa REIM CRM connected

SFD CRM connected

GAT

E 3

Appr

oval

July

Service Approach

(KPIs, SLA)

15

2006

2007 - 08

2009

Resource Team Building Resource estimates Define the service framework

• Define a LT resource plan • Role and responsibilities need to be clarified • Start producing simple KPIs

Business Case ROI study

• Identification areas of key savings • Makes the initiative credible • Necessity to resell the business case again

Sixth Step : MAKE IT HAPPEN The AXA IM phases

Vision Set up the vision & key principles

• Will help to stay the course • Set up the principles to push alignment inside the company

Delivery Start with your business champions

• A end to end approach : Delivery of a central repository with distribution to business applications. • Quick win (small delivery, local administration)

Processes Adapt the processes

• Integration of change management on business processes is part of the reference data initiative

Manufacturing Pursue full data distribution

• Central data repositories are in place. • Need to push the data • System retirement can start

Full Data Services Internal SLAs in place

• Internal SLAs have been built and agreed • KPIs understood by the business are in place

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Getting buy-in for the business case What’s the magic formula ?

Even if plans are big, show manageable deliverables

Calculate the ROI and transform your project as something incontrovertible

Formulate an approach to sell the business case and put it into practice

Educate business to recognize the importance of data by linking it to company strategy

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Conclusion

Time

Func

tiona

lity

Adoption

Extension

Ongoing Optimization

Enablement

2006

2007

2009

Sell business benefits • Take the time to communicate • Keep it simple

Gain & Maintain Top management support • Sell, and resell the business case

• Deliver quick wins, but adhere to the deadlines

• Explain that business value will take time

Start now and use a phased approach

• Prepare a ROI Study • Anticipate business process change • Select your data management

architecture • Define your service led approach

(simple metrics & SLA implementation )

Be excellent

2008