Sitting down with some of the best and brightest in our industry is always an enriching experience, and we had the privilege of doing just that in late 2024. Novigi conducted market research to better understand the unique data management requirements and challenges facing the superannuation industry. Data management has become a critical focus for the industry, with many organisations now prioritising data management maturity (DMM). Through these interviews, we gained a firsthand look at how different organisations are navigating this journey. We’ve come to understand their strategies, challenges, and progress as they unravel the spaghetti-like tangle of legacy data management, and step into a more structured, lasagna-like state of data management maturity.
David and Goliath travelling the same path
DMM is often treated like the utopian goal for growing organisations. And, unsurprisingly, our research indicated that the larger super funds and service providers (with one million or more customers) are closer to reaching this goal. We attribute this to clearer priorities and greater urgency to improve DMM in these organisations, due to the immense volumes of data for which they’re responsible. Our interviews also uncovered something less expected – smaller organisations are further down the path of DMM than we thought. Smaller funds and service providers are setting themselves up for success by engaging internal leadership, assessing internal capability, considering whether external assistance is required to reach the desired state of DMM, and aligning their goals with both technology and business focused teams. All of this to say – despite what the media might tell us, size doesn’t matter, especially when it comes to uplifting DMM.
The catalyst(s) for change
The interviews quickly highlighted that the reasons for increasing DMM deviated from the logic we had originally assumed. These were the top reasons noted by interviewees:
1. Cyber security was quoted as one of the most significant reasons for addressing DMM. 80% of interviewees quoted it as one of the essential three features they look for in a data management solution. One interviewee summarised it beautifully – “you can’t do anything without security”.
2. Regulatory pressure was something directly quoted by few but implied by many as a core reason for uplifting data management. APRA’s rapidly increasing interest in and oversight of data management by regulated entities looms large over organisations. Implementation of key regulations such as CPS 230 and CPS 234 was quoted as being a key driver for funds to increase DMM.
3. Trust in data is crucial for leadership to be able to use it in decision-making, as highlighted by all respondents. Leadership’s increasing demand for data has brought greater scrutiny of its quality and sources. As one interviewee commented, if leadership doesn’t “trust the data, they won’t use it.”
4. Improved reporting functions for clients and regulators was a huge pain point noted by many respondents. Internal and external reporting is a time consuming and highly manual process, rife with opportunity for human error and misinterpretation of data. One respondent commented, “We probably bleed in inefficiencies…We’ve provided 150 plus data extracts, and when you break them all down, they’re probably a lot of the same data”. Another respondent noted that they “often spend a lot of time clarifying [their] understanding of the data, versus what the data’s actually saying”.
The insight here is this – organisations are not necessarily upgrading their data management systems because they feel it’s the right thing to do. They’re doing it because of internal and external pressure to deliver accurate, secure data insights.
Getting from A to B
There are several ways to increase DMM, however, one of the fastest and most effective ways is through technology. There were three dominant tech approaches discussed in interviews:
1. Adopt an “off-the-shelf” DMS from one of the large providers (such as Snowflake, DataBricks, etc), and tailor it to suit their needs (like the Novigi DMP).
2. Make the most of the systems they already have. Only 10% of interviewees commented that their organisations do not have a DMS, nor are they looking to implement one. These organisations stated that the decision to continue using the systems they already have (mostly data warehouses), was driven by cost, internal politics and internal capacity to adapt systems.
3. A direction is yet to be determined. 60% of respondents without a DMS were unsure as to whether their organisations were looking to implement a DMS. These organisations are in the trenches, navigating internal politics and tech solutions that are likely to remain in use for longer (many respondents were evidently burnt by rapidly outdated tech).
While tech approaches vary, it’s clear that “off-the-shelf” DMS with some tailoring has rapidly become industry preference.
The road ahead
Achieving the desired level of DMM is a complex matter, as we’ve learnt through these interviews. Roadblocks abound, including:
1. Data management maturity overhauls are a big undertaking, even for well-oiled organisations with great cultures. Political, cultural and prioritisation issues are likely to occur, which can make the business case for change a challenging undertaking.
2. Investment in DMM is low. Organisations are often loath to allocate resources to these sorts of multi-year projects.
3. Data literacy is still highly variable among leadership, which increases decision-making friction and comprehension of solutions even more challenging.
What is clear is that awareness of the importance of data management maturity is improving. Likewise, it’s become increasingly apparent that there’s a lot of work to be done across funds and service providers of all sizes. “Moving from spaghetti to lasagna”, as one interviewee described the data management maturation process, requires insight, the right tech, and cross-organisational buy-in. This is a path that funds and service providers alike must tread, because higher levels of data management maturity is one of the best ways we can improve member outcomes. It’s a journey that we’re all on, and one that we must undertake together.
This article was produced as part of The Quarterly – Q2 FY25
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Key Contributors:
Kevin Fernandez is General Manager, Market Strategy and Propositions at Novigi, and is based in the Melbourne office.
Sophie Coianiz is an analyst in the Market Strategy and Propositions team at Novigi, and is based in the Sydney office.