The document summarizes the findings of a survey conducted by Longitude Research on behalf of State Street regarding data and analytics capabilities among alternative asset managers. It identifies companies as being at one of three stages - Data Starters, Data Movers, or Data Innovators - based on their infrastructure, insights generation, adaptability, compliance, skills, and governance capabilities. Data Innovators are characterized as having advanced, integrated infrastructure and the ability to generate insights across asset classes. Most companies report increasing investments in data and analytics but lack confidence in key capabilities like risk assessment and generating insights from large datasets. Cyber threats and increasing regulation are key challenges cited.

1. The Innovator’s Journey:
Pathways to Data Dexterity
State Street 2014 Data and Analytics Survey
Alternative Asset Managers
March 2015

2. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
State Street 2014 Data and Analytics Survey
2
About the Research
Alternative Asset Managers by Country (%)
On behalf of State Street, Longitude conducted a global survey of senior executives at investment
organizations during October and November 2014. We asked them to self-assess their confidence and
progress across six data capabilities, including infrastructure, insight, adaptability, compliance, talent and
governance. The 400 respondents were drawn from 11 countries and included insurance companies,
private and public pension funds, fund-of-funds, foundations, central banks, endowments, sovereign
wealth funds and supranationals. Twenty-nine alternative asset management companies participated in
the survey.
3 3
3
3
7
10
10
10
14
34
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3. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Our Analysis Identifies Alternative Asset Managers at Three
Different Stages on the Journey
3
Data Starters
Companies at an
early stage in their
data journey
Data Movers
Companies actively
moving toward better
data capabilities
Data Innovators
Companies with
advanced data
infrastructure,
expertise and high-
quality data
governance
34%
35%
31%
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4. Data
Starters
Data
Movers
Data
Innovators
Infrastructure
• Incompatible
legacy systems
• Most data in
separate silos
• Separate
platforms for
different asset
classes
• Aggregation,
visualization,
other data
management
capabilities
upgraded
• Improved data
integration across
investment
portfolio
• Infrastructure &
tools fully
upgraded
• Silos broken
down
• Seamless
integration of
unstructured data
Insight Generation
• Limited ability to
generate
performance and
risk analysis
• Fragmented view
by asset class
• Ability to conduct
scenario & stress
testing across
portfolios
• Integrated view of
risk &
performance
across multi-
asset portfolios
Adaptability
• Capabilities take
much time &
effort to adapt to
any changes in
investment
strategy
• Capabilities can
adapt quickly to
support new
products or
investment
strategies
Compliance
• Systems struggle
to keep up with
existing
regulatory
requirements
Skills
• Data team can
manage data
collection and
basic analytics
functions
Governance
• Basic data
policies and
processes in
place, but
governance is
patchy; little
standardization
• Data gaps,
errors
identified;
cleaning under
way
• Coherent,
agreed
framework for
data
governance
• Reduction in
time to market
for new product
additions, or
new asset
classes
• Systems fully
compliant with
existing
requirements,
but slow to
adapt to new
rules
• Team can
manage data
collection &
integration;
some
capabilities to
perform &
manage
analytics
• Rich, partly
integrated
performance &
risk analysis in
individual asset
classes
• Ability to analyze
performance &
risk of wide range
of alternative
assets
• Excellent data
quality and
traceability
back to source
• Reporting
systems adapt
quickly to new
requirements
across global
footprint
• Regular flow of
insights;
smooth
interaction with
fund managers
• Team has fully
optimized data
management;
advanced
Insight
generation
• Large degree of
standardization
across internal
databases;
external
providers
aligned
• Strong
leadership on
data
governance;
policies &
processes
entrenched
throughout
Note: Above sequencing is illustrative only; milestones may be reached simultaneously or in other sequences.
Our Survey Benchmarked Companies on Six Paths
to Innovation
4
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5. Why Data Innovators Are Pulling Ahead of the Competition
5
The Innovator’s Advantage
1. Robust, tightly integrated data
infrastructure
2. Ability to join dots on data yields
new insights
3. Adaptive architectures meet new
business needs faster
4. Global solutions that are ready
for regulatory change
5. World-class data and
analytical talent
6. A sophisticated approach to data
governance
Key Characteristics
Marking Innovators
Apart
• Innovators see data and analytics as the
single most important strategic priority
• They invest more in technology — and
translate this into a competitive advantage
• They can take regulatory compliance in
their stride, so technology investments
focus on value-adding activity
• They are exploring cutting-edge tools
including big data and advanced analytics,
and hiring data scientists to drive
innovation
Why Starters Get
Stuck, and Movers
Have Further to Go
• Legacy systems prevent organizations from
gaining an integrated view of investment
data
• Weak data governance leaves these
organizations vulnerable to problems with
data integrity and security
• More than half these organizations fear
their systems will not keep pace with new
regulatory requirements
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6. Investing in Data
6 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
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7. Alternatives Managers Are Investing More in Data and
Analytics
7 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Which of the following statements best describes your organization’s
investment in data and analytics capabilities in the past three years?
(% of alternative asset managers)
62%Of alternative managers
report growth of 5% or
more in the last three
years
10
7
45
38
0
Investment has increased each
year by more than 20%
Investment has increased each
year by between 10% and 20%
Investment has increased each
year by between 5% and 10%
Investment has been flat, or
increased by less than 5%
Investment has remained flat or
declined each year
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8. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Talent is the Priority – But Don’t Neglect the Fundamentals
8
But are investors giving
proper attention to the
fundamentals?
In which of the following areas do you intend to prioritize investment in the next 3
years? (% of alternative asset managers)
28
34
34
38
45
48
Data infrastructure
Data governance (e.g. clear policies,
processes and leadership)
Ability of data systems to keep pace with
regulatory requirements
Analysis and visualisation of data
Adaptability of your data systems to new needs
Quality and availability of data talent
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9. Data Strategy and Challenges
9 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
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10. Alternatives Managers Understand the
Value of Data
10 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
How do most senior leaders at your institution view the importance of
investment data and analytics relative to other major strategic priorities?
(% of insurance companies)
“Our investment in
data and analytics capabilities
are a source of competitive
advantage for us”
69%
17
59
24
It is a mid-level strategic priority
It is a high strategic priority (near the
top)
It is the most important strategic priority
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11. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Cyber Threats Are the Top Issue Requiring Changes to the
Data Strategy
11
Which of the following are most likely to require changes to the way your firm manages investment data
over the next 3 years? (% of alternatives asset managers)
10
21
21
21
24
24
28
31
34
38
Increased demands from regulators
Increased demands from internal staff
Increased demands from clients/investors
Expansion into new asset classes
Electronification of trading
More stringent risk management standards
Competitive pressure
Growing volume of trading data
Expansion into new regions
Increase in threats to cyber security
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12. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Over Half of Alternatives Managers Believe They Will
Struggle to Cope With More Regulation
12
55%
Which of the following statements best characterizes your expectations for regulatory reporting
requirements over the next 3 years? (% of alternative asset managers)
7
55
38
Reporting requirements will largely remain unchanged from today
Reporting requirements will increase, and our data capabilities will
struggle to cope
Reporting requirements will increase, but our data capabilities will cope
adequately
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13. 10
14
24
24
28
28
28
34
52
Cleaning data
Integrating legacy systems
Standardising data formats across departments
Accessing external data
Working with data from external providers
Reconciling older data from multiple departments
Integrating unstructured data
Working with data warehouses that are too slow
Cost of external data
Alternative Asset Managers Find Data is Costly and Hard to
Integrate
13 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
What are the toughest data integration challenges your
company faces? (% of alternative asset managers)
55%“” “The complexity of
managing our data
distracts key employees
from the areas where
they should be
focusing most.”
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14. Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Confidence Lags Across A Range of Important Data
Capabilities
14
Please Indicate the Level of Confidence You Have in Your Institution’s Current Data Capabilities in the
Following Specific Areas. (% of alternative asset managers with high confidence)
14
17
10
14
24
17
7
Reducing investment costs across your asset portfolio
Evaluating risk and performance across the entire portfolio
Optimising our electronic trading strategies
Extracting investable insights from a large volume of data
Managing multiple internal and external data streams in varying formats
Generating forward-looking insights from our data
Conducting comprehensive, accurate scenario and stress testing on our
investment portfolio
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15. How to Become a Data Innovator
 Break the “legacy trap” by replacing outdated systems that lock your data
in silos
 Learn how to exploit unstructured data to drive new sources of insight
 Integrate your analytics across the entire investment portfolio to spot new
investment opportunities and to identify hidden risks
 Embrace outsourced models and the cloud to become more flexible and
cost efficient
 Crack the compliance challenge with systems that can cope with global
regulatory changes
 Create compelling career opportunities for data scientists, and learn how to
knit them into existing teams
 Ensure data governance and security standards are understood by, and
entrenched throughout, the organization
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16. 16
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