The Haziness of Semantics
This week the EDM Council and the Object Management Group (OMG) hosted an event called "Demystifying Financial Services Semantics.” According Richard Soley, OMG's chairman and CEO, the event was originally supposed to be attended by about 50 people. By the day of the event, Soley says that number had risen to 200.
This is proof, he says, that technologists are talking about semantics, and business leaders are starting to pay attention, too. I wrote an article for the April issue of Waters that looks at semantic databases and tools, in addition to the creation of semantic taxonomy and ontology, which is what OMG seeks to address.
Semantic taxonomy and ontology are common definitions and meanings for things like agreeing on what a derivative is, what a swap is, and what comprises them. Buy-Side Technology's sibling publication Inside Reference Data has been covering this effort extensively and is worth a look.
Technology Implications
So what does semantics mean for CIOs and their teams? So far, the adoption of semantics by the financial services industry—as opposed to industries like defense and national intelligence—is more theoretical and in the experimental phase.
State Street's chief scientist, David Saul, and Bank of America's chief data officer, John Bottega, among others, say semantic technology is most applicable to and would most benefit risk analysis and reporting, and Big Data. But right now it is in the proof-of-concept phase as the vendor community and internal IT staffs wrap their heads around it.
As Xenomorph Software CEO Brian Sentance—who attended the OMG event—noted in a recent blog post, industry participants have many examples of the theoretical benefits of semantic technology and taxonomies, but fall short on actual proof of them, as well as their cost-effectiveness.
I spoke with Gartner managing vice president Joe Bugajski, who has been following semantics for more than a decade. He says the potential is limitless, but until it is proven that it can help the investment process, it will remain theoretical rather than reality.
"We need real business cases," Bugajski says. Right now, we're not there. But that doesn’t mean we never will be.
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