EDM Vendors See Increase in RFPs and Product Development Focus on Data Availability

NEW YORK - Enterprise data management (EDM) software vendors have started to experience a significant increase in requests for proposals (RFPs), reflecting the maturing market and increased recognition of vendor products, officials tell Inside Reference Data.

While many EDM projects were postponed during the financial crisis, the market picked up last year, resulting in record years for some software vendors.

New York-based Mike Meriton, CEO of enterprise data management vendor GoldenSource, says the market paused for six to nine months during the financial crisis, but it has come a long way since the first use of the phrase 'enterprise data management' in 2005. "I think there has been a significant increase in RFPs and that is a tell-tale sign of early mass adoption," he says, adding that the EDM market is where enterprise resource planning was in the early 1990s.

This market potential was also what Fidelity Ventures saw when assessing the industry before investing in Asset Control in 2007. New York-based Phil Lynch, CEO of Asset Control, who was a venture partner at Fidelity at the time, says the expectation that this market would be maturing was key to Fidelity's investment.

"We saw that there was a lot of potential, and the market has now moved on," he says, explaining that customers now recognize it is not a good use of their time and money to build EDM systems in-house.

In fact, the client discussion used to be about convincing firms to buy a vendor product instead of building internally. Boston-based Fritz McCormick, senior analyst at Aite Group, says recent activity suggests a maturity in the market-place. "All the governance and process work within firms and industry-wide efforts towards collaboration seem to have made their mark. Increased take-up of vendor offerings is the most visible sign of this maturity," he says.

Emergence of EDM Stars

According to an Inside Reference Data poll, around 60% of market participants would currently consider one to three EDM vendors to be top players in the market, while only 10% of voters said there are more than seven strong vendors in this space.

Asset Control's Lynch says the vendor often meets the competitors in RFP processes, and more and more companies are being invited to the growing number of RFP processes. "The increase in competition is also an indication that the market has matured," he says.

Meanwhile, the market in general experienced an uptick last year, with renewed interest from banks and new regions emerging on the EDM agenda. London-based Jason du Preez, global business manager, enterprise platform at Thomson Reuters, says 2009 was a very good year for the EDM industry. "The major driver is risk management, but we're also seeing projects motivated by compliance, data quality and data rationalization," he says.

Following the turbulent economic environment, banks were no longer seen as the top buyers of EDM systems, and many vendors were more successful with selling to asset managers and insurance companies. This is now changing again. "Banks are definitely back in the game. We saw them coming into the game in the second half of last year, and we see that continuing," says Lynch.

In addition, Asia is becoming a much bigger focus. "As Asian firms expand to invest beyond country borders, they see the need to put in new investment systems, and they realize they need a robust data infrastructure to compete and respond quickly to the business opportunities," he says.

GoldenSource has also experienced a breakthrough in Asia in the last year, signing its first customers in mainland China and Australia.

Still, the market has yet to see full mass adoption. GoldenSource's Meriton says that although there has been an exciting increase in RFPs, and the market is starting to look at third-party solutions, EDM activities are still most often executed by tactical in-house development. "When looking at other technology revolutions, a market typically needs five to 10 years to reach a stage of full mass adoption. This isn't too far ahead given the pace at which vendor-provided EDM platforms are progressing." he says.

Innovation on the Cards

The general trend towards improved recognition of vendor platforms is set to further drive innovation in the EDM market. "Last year we really established ourselves as the market leader, but we always have to invest heavily in our product to stay ahead," says Lynch.

Development activities at Asset Control will be focused on optimizing the platform to handle growing volumes of data, improving data distribution and capabilities on the entity data side.

Lynch, who says data distribution is a key focus area, adds: "Clients are saying they need to get closer to the business, and we need to make it easier for them to do that." This is something Asset Control has been researching for the past two years, and the data distribution piece is planned as an add-on to the platform.

At GoldenSource, there is a similar focus on innovation. In terms of development, Meriton says the key themes are faster, better and cheaper data management. The aim is for the platform to be able to bring in data faster and find ways to quality assure it better. Meriton says the speed of the platform is becoming more instant, but to make use of this development clients would also have to put an end to batch processing.

In addition, there is a recognition that all data is interrelated, and this is also relevant to the GoldenSource innovation agenda. "An interrelated 360-degree view of data is becoming a demand for customers requiring answers to complex risk and compliance issues," he says.