The emergence of new data, combined with traditional data, has created an opportunity for companies across all industries to make more informed business decisions and find ways to uncover a competitive edge. However, effectively unlocking these data-driven insights still remains a challenge for many. On June 7, 2022, S&P Global Market Intelligence held an interactive webinar to discuss alternative data, data trends, delivery mechanisms and more. This blog summarizes some of the highlights of the panel discussion.

Listen to the full webinar here.

Panelists from S&P Global Market Intelligence:

• Moderator: Claire Lahoud, Head of Business Services and Data Management Solutions for Developing Markets
• David Coluccio, Managing Director, Head of Channels
• Michael Patton, Vice President, Company Information Services
• John Schirripa, Vice President, Head of Channels

Session Highlights:

About Alternative Data

• What is alternative data? It's anything that's not traditional data, which is standardized corporate and government financial information that has supported investment decision-making historically. Alternative data, on the other hand, can include many different things, such as geolocation details, social and sentiment data, weather data, credit card transactions and more. The datasets are all differentiated, although some are more actionable than others.  
• How fast is it growing? About three years ago, the alternative data industry was valued at around $1 billion. It's now three times that size and projected to keep growing exponentially.  
• Why is growth exploding? Technology has a lot to do with it, and the digital transformation we’re going through that’s making it easier to draw insights from data to support better decision-making. Firms are looking to have streamlined data management practices with everything centralized in a single, golden copy-type warehouse for easy dissemination. New and emerging technology can be attached to the data in a seamless way to utilize visualization, statistical and artificial intelligence (AI) tools to perform sophisticated analytics. So, it’s the perfect storm where you have the data, tools and technology.
• What’s the role of data scientists? The quant role that has traditionally been the domain of hedge funds has become mainstream, and these specialists are demanding more and different types of data. They’re able link, co-mingle and analyze it in many new ways to generate valuable insights. The growth of this talent pool will continue to drive innovation.

How to Find Useful Alternative Datasets

• Start with a problem statement. This will define the type of data you’ll need and narrow the universe for your search.
• Find data that complements what’s already being used. Look for data that adds to what’s already in place, is easy to understand and will be usable in the workflow that you're looking to power.
• See if the data can be structured and has history. This will make it easier to co-mingle with other data.

Trends with Alternative Data

• Mining textual data, such as earnings announcements, transcripts and annual reports. While these documents have been around for years, technology is now being leveraged to gauge management sentiment, identify specific topics being covered and uncover themes within and across documents, all at scale. S&P Global Market Intelligence’s Machine Readable Filings is this type of offering. A real-life example of a highly actionable insight from this offering was a filing by Apple that referenced chip shortages that would delay iPhone sales. The first news outlet to catch this picked it up about six days later, while it could be found with Machine Readable Filings about 10 minutes after the filing was delivered, and had a direct impact on the stock price.
• Linking datasets. Users can tie this textual data from an earnings call transcript to earnings estimates or ownership data, generating additional insight. Also, for the Apple example, adding weather data can broaden the story by showing potential further disruptions on global shipping, while adding ESG data can pinpoint suppliers facing future problems if they don’t have a sustainability strategy in place.
• Tagging. Speakers can be tagged with a unique person ID that enables an analyst who is asking a question to be identified. It’s then possible to look at the types of questions this analyst has asked historically and link that to an earnings estimates database to see if a stock was downgraded/upgraded if a negative/positive question was posed.
• Using AI. We acquired Kensho many years ago, a company with AI technology. The one thing the company lacked, however, was data. After the acquisition, the firm’s analysts were able to train their models on all our data. They developed capabilities to link entities that don't have IDs with a product called NERD, named entity recognition and disambiguation, which is now embedded in our transcripts offering. NERD goes through the text of a document, identifies companies mentioned and assigns an S&P Global Company ID. A user can now easily follow a particular company through multiple documents to track developments.

How to Get Quality Data

• Go directly to the source where possible. As you get further away, there are more concerns.
• We utilize our quantamental research team. They do a quick analysis of alternative third-party providers we may be considering. They look at the coverage and history, plus do backtesting to identify gaps. This is very informative and, as a result, we have only brought on bring on about 5% of the data providers we have evaluated.

About the Cloud

• Skepticism about the cloud has diminished. Firms are starting to see the power and efficiencies that can be derived by moving data to the cloud. Today, it’s not if we will move to the cloud, but when.
• Partnering with leading cloud providers. We've been working with a firm called Snowflake that many of our clients use and created a hosted and managed instance of our data, so users don’t need to worry about the data loading and storage aspects. Clients are also putting their own data there and creating a centralized data repository in a cloud environment. This enables users to take advantage of the scalability of computing by using a wide range of analytical tools to uncover insights. As other providers mature their offerings and our clients start to work with them, we’ll create additional partnerships to provide choices and be where our clients want to go.
• Leveraging new capabilities coming to market. As more firms move to the cloud, new companies are emerging to make it easier for firms to move data from on-premise to the cloud and do queries y and analysis. It’s an exciting time and we’ll see lots of innovation around cloud-based services moving forward.  

The Benefits of Digital Transformation

• Using a hosted and managed environment saves time and costs. Users don't need to download files, extract the data and put it into their own data warehouse, since data providers handle that process. That saves money on data storage and other technology-related overhead and time spent on data management. Firms can focus on what they do best.
• Analysts can access data faster. This is critical as competition for that next great insight heats up.
• It’s enhancing the combination of data, delivery and tools. Our goal at S&P Global Market Intelligence is to take differentiated data, our own or that offered by third parties, structure and link it so it provides more value to clients, and then deliver that through multiple channels. This could be an FTP site, API, the cloud or whatever new technology is going to come out in the future. Initiatives like this are leveraging automation, creating efficiencies and helping companies take their businesses to an entirely new level.

Listen to the full webinar here.

Visit Marketplace and see our alternative data offerings that are structured, linked and available through multiple delivery options.