The Seman)c Interoperability Problem Business Impact and Technical Solu)ons A Pragma)c Approach to Improving Data Integra)on David Frankel Consul)ng March, 2013 Agenda •  The Need for Smarter Systems •  A technique for Mi)ga)ng the Problem •  Applica)on of the Techniques 3/19/13 ©David Frankel Consul)ng 2013 2 Agenda •  The Need for Smarter Systems •  A technique for Mi)ga)ng the Problem •  Applica)on of the Techniques 3/19/13 ©David Frankel Consul)ng 2013 3 The Seman)c Interoperability Barrier A Business View •  Seman)c interoperability of data: The ability of mul/ple par/es to coordinate their func/on based on a shared understanding of the data that flows among them •  Business Drivers –  Value chains, outsourcing, M&A, industrial convergence, need for transparency e.g. for regula)on and risk management •  Data integra)on boQlenecks measurably impact global GDP –  Modest improvements have large economic ramifica)ons 3/19/13 ©David Frankel Consul)ng 2013 4 Seman)c Interoperability Technical Factors •  Legacy data used for unintended purposes •  Standards silos –  E.g. different standards with different architectures for trading front office and back office, electronic submission of financial statements, payment ini)a)on, etc. –  All of which have to integrate with tradi)onal rela)onal databases •  New data sources : mobile devices, sensors 3/19/13 ©David Frankel Consul)ng 2013 5 Legacy Gets Stretched Data Content Requirements Expand Product Processor
BIN
Banks Category Merchant Channel
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MCC Terminal Names
Data Design circa 1980
This graphic courtesy of Visa Inc.
3/19/13 ©David Frankel Consul)ng 2013 6 Standards Silos ISO 20222 3/19/13 FpML FIX TWIST ©David Frankel Consul)ng 2013 XBRL BIAN 7 Today’s Model-­‐Driven Data Integra)on Tools Field 1 Field 1 Field 2 Coupon Value Coupon Value Field 3 Field 4 Field 4 Field 5 Field 5 Field 6 Field 6 Expression: Format 2 Field 4 = Format 1 Field 5 * Format 2 Field 6 3/19/13 ©David Frankel Consul)ng 2013 8 What We Have Achieved to Date With Model-­‐Driven Integra)on Tools •  More rapid route to executable transforma)on –  ~20% improvement –  Modest improvement à Big economic return •  But only aier analyst figures out what maps to what –  Figuring that out is the remaining 80% of the boQleneck 3/19/13 ©David Frankel Consul)ng 2013 9 Another Challenge Finding Service Agents •  Many service agents from different sources •  Example: BIAN External Liquidity Risk Scenario Graphic created by James Odell 3/19/13 ©David Frankel Consul)ng 2013 10 Agenda •  The Need for Smarter Systems •  A technique for Mi)ga)ng the Problem •  Applica)on of the Techniques 3/19/13 ©David Frankel Consul)ng 2013 11 Improving Seman)c Interoperability •  Leveraging Seman)c Technology •  Chipping Away at a Large Problem •  Remember: –  Modest improvement à big impact •  Key challenge: Techniques must be non-­‐
disrup/ve –  Cannot require ISO 20022, XBRL, BIAN, Rela)onal models to change their structure 3/19/13 ©David Frankel Consul)ng 2013 12 Integra)on via Common Seman)c Anchoring Mechanism ISO 20222 Messages Business Vocabularies/Ontologies (Federated) XBRL Reports Amor)zed … Roll Over BIAN Services 3/19/13 An addi)onal, non-­‐disrup)ve dimension ©David Frankel Consul)ng 2013 CCTS Models 13 Making Seman)c Vocabularies and Ontologies Ac/onable Business Vocabulary/Ontology (e.g. FIBO) Amor)zed … Roll Over IT Data Structure (Rela)onal, ISO 20022, XBRL, etc.) Asset_RollOver What is the connec)on? … Amor)zed_Assessment : Instrument_Amt FairValue_Assessment : Instrument_Amt Asset Roll Over 3/19/13 ©David Frankel Consul)ng 2013 14 Seman)c Structure Based on ISO 11179 and UN/CEFACT Field Object Property Data Type Amor6zed_Assessment Asset Roll Over Amor)zed Assessment Instrument Amount FairValue_Assessment Asset Roll Over Fair Value Assessment Instrument Amount … URI Fair Value Assessment Business Vocabulary/Ontology … Asset Roll Over 3/19/13 ©David Frankel Consul)ng 2013 15 Refined Seman)c Structure Field Object Qualifier Term Object Property Term Qualifier Term Property Term DataType Qualifier Term CoreDataType Term Amor6zed_Assess
ment Asset Roll Over Amor)zed Assessment Instrument (Money) Amount FairValue_Assessm
ent Asset Roll Over Fair Value Assessment Instrument (Money) Amount … URI Fair Value Business Vocabulary/Ontology … Roll Over 3/19/13 ©David Frankel Consul)ng 2013 16 Seman)c Structure of a Service Service Opera6on Ac6on RollOver_Asset_Balance Ini)ate Object Property Asset Roll Over … URI Amor)zed Business Vocabulary/Ontology … Asset Roll Over 3/19/13 ©David Frankel Consul)ng 2013 17 Business Context Metadata •
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Geopoli)cal scope: The con)nent, economic region, country, or region for which the element is relevant Industry classifica)on: The industry or industries for which the element is relevant Product classificia)on: The product class(es) for which the element is relevant Official constraint: A legal requirement(s) associated with the element; e.g., an element could be required by Sarbanes-­‐Oxley System capability: Indicates that the element is there in order to address the limita)ons of a compu)ng system(s) Business process: The business process(es) with which the element is associated Business process role: The role(s) directly involved in the business process(es) that are relevant to the element, e.g. shipper Suppor)ng role: The role(s) indirectly involved in the business process; e.g., a data element in an order response from seller to buyer could be required by a third-­‐
party shipper … 3/19/13 ©David Frankel Consul)ng 2013 18 Seman)c Structure Metadata + Business Context Metadata Official Constraint: US GAAP FASB Update No. 2011-04
Amor)zed_Assessment : Instrument_Amount
Property
Qualifier
Property
Term
DataType
Qualifier
CoreDataType
Term
FairValue_Assessment : Instrument_Amount
Official Constraint: IFRS Fair Value Measurement
3/19/13 ©David Frankel Consul)ng 2013 19 Modeling Seman)c Structure Addi)onal Benefit Service: Create New Current Account Inventory Interpreta)on # 1 •  Ac)on: Create •  Object: Current Account •  Object Qualifier: New •  Property: Inventory 3/19/13 Interpreta)on # 2 •  Ac)on: Create •  Object: Current Account •  Property: Inventory •  Property Qualifier: New ©David Frankel Consul)ng 2013 20 Agenda •  The Need for Smarter Systems •  A technique for Mi)ga)ng the Problem •  Applica)on of the Techniques 3/19/13 ©David Frankel Consul)ng 2013 21 Toward a New Genera)on of Data Integra)on Tools Field 1 Field 2 Object Class Term: Order Object Class Qualifier: Sales Property Term: Coupon CoreDataType Term: Amount Product Classifica)on: Financial Coupon Value Field 1 Coupon Value Field 3 Field 4 Object Class Term: Order Object Class Qualifier: Sales Field 5 Property Term: Coupon CoreDataType Term: Amount Field 6 Product Classifica)on: Consumer Field 4 Coupon Field 5 Field 6 Coupon 3/19/13 ©David Frankel Consul)ng 2013 22 Integra)on via Common Seman)c Anchoring Mechanism ISO 20222 Messages Business Vocabularies/Ontologies (Federated) XBRL Reports Amor)zed … Roll Over BIAN Services 3/19/13 An addi)onal, non-­‐disrup)ve dimension ©David Frankel Consul)ng 2013 CCTS Models 23 Conclusion •  Large problem with business and technical causes •  New techniques promise modest yet significant return –  Not the only angle of aQack •  Implementa)ons under way –  BIAN and CCTS most advanced –  ISO 20022 and XBRL work in progress •  Applica)on to LEIs and standardized instrument IDs –  A new CoreDataType: LEI ? –  LEIs for product classifica)on and other business context metadata elements ? –  Further discussion to ensue… 3/19/13 ©David Frankel Consul)ng 2013 24 For More Informa)on www.DFrankelConsul)ng.com/ar)cles.html Or contact: David S. Frankel Email: david@DFrankelConsul)ng.com Mobile: +1 530-­‐519-­‐4135 3/19/13 ©David Frankel Consul)ng 2013 25 Backup The 22 UN/CEFACT Core Data Types 3/19/13 •
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©David Frankel Consul)ng 2013 Ordinal Percent Picture Quan)ty Rate Ra)o Sound Text Time Value Video 26 WordNet Copyright Slide number 16 quotes defini)ons from WordNet, the online dic)onary project of Princeton University. WordNet is freely available for this kind of reuse, as long as it is accompanied by a required copyright no)ce (see hQp://
wordnet.princeton.edu/wordnet/license/). Here is that copyright no)ce: WordNet 3.0 Copyright 2006 by Princeton University. All rights reserved. THIS SOFTWARE AND DATABASE IS PROVIDED "AS IS" AND PRINCETON UNIVERSITY MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED. BY WAY OF EXAMPLE, BUT NOT LIMITATION, PRINCETON UNIVERSITY MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANT-­‐ ABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR THAT THE USE OF THE LICENSED SOFTWARE, DATABASE OR DOCUMENTATION WILL NOT INFRINGE ANY THIRD PARTY PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER RIGHTS. WordNet is a registered trademark of Princeton Univiersity. 3/19/13 ©David Frankel Consul)ng 2013 27