EDGAR, a modernization model

EDGAR, a modernization model


After successfully retiring the legacy filing system at the Securities and Exchange Commission last month, Rick Heroux has a word of advice for federal agencies and departments facing even bigger projects.

'Reassess your modernization lifecycle, which should contain systems engineering and systems development work,' said Heroux, project manager for SEC's Electronic Data Gathering, Analysis and Retrieval system.

Systems engineering should look at requirements and business process re-engineering, and current and future operations concepts, he said. That should work in tandem with systems development for a successful modernization plan.

Lighter load

EDGAR is designed to reduce the filing burden on companies required to submit financial data to SEC. The commission retired its legacy financial filing system on April 20, completing the $22.5 million modernization that began in 1997.

Heroux led a team of 120 contract employees and four SEC colleagues for more than three years, often putting in 10-hour workdays, and working weekends and holidays.

Positive pressure and the potential impact
of the EDGAR modernization kept the team motivated, SEC's Rick Heroux says.
'People on the project were self-starters and highly motivated, and we all meshed well,'
he said. 'The workload and tangible results proved to be huge motivating factors for us.'

Heroux said he believes in learning from other departments' mistakes. As a master's student in science and information technology at Strayer University in 1998, he wrote his thesis on federal modernization flops.

He probed 10 common areas of failure, which included lack of a development lifecycle, huge cost overruns, heavy schedule slippage, overlooking best business practices and ignoring General Accounting Office guidance.

Armed with this knowledge, Heroux made sure EDGAR modernization was based on a solid sequencing plan when the request for proposals was finalized in 1998.

'Sure, our requirements changed as we moved along, but we knew where to freeze them,' he said. 'We had a drop-dead date fixed, and we knew we just had to deliver at that point.'

Heroux never followed a particular philosophy to ensure success, but the visibility and oversight of the project kept up the pressure on the team.

'It was positive pressure,' Heroux said. 'And that only kept us motivated.'

For instance, throughout the modernization effort, the team knew they could not afford any outages on the legacy system.

'If the production does not continue, the users do not see the results, and that affects the market,' he said.

EDGAR disseminates information to more than 20 data dealers who post it online for the investment community.

In a recent unpublished study, Market Reactions to Electronic SEC Filings: Assessing the Impact of EDGAR, conducted at the State University of New York at Buffalo, researchers found there was evidence of abnormal market activity consistent with the release of information from EDGAR.

The activity was attributed to investors reviewing documents filed on EDGAR and making investment decisions based on them, Heroux said.

The team has begun working on its next big project: Release 8.0, which will integrate EDGAR with the Entities, Filings and Fees System.

The next big thing

SEC uses EFFS to calculate and keep track of fees owed by filers'such as public companies, mutual fund managers, investors, securities brokers and dealers.

Once a user files information with EDGAR, the data is forwarded to EFFS, which checks bank records to ensure the user can support the filing.

'We hope to be done by August,' he said.

But the agency recently lost a key player on the modernization team to an organization that pays better, Heroux said.

'There's no pay parity when compared to agencies such as the Office of Thrift Supervision and Federal Deposit Insurance Corp.,' Heroux said.


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