While Wall Street business executives gripe about how much Dodd-Frank will hurt profits and CIOs work to develop creative ways to meet compliance demands, the regulator that will be responsible for most of the Dodd-Frank enforcement is trying to upgrade its systems and processes to handle the surge of data it will receive when all of the law's rules take shape.

The SEC will oversee many portions of Dodd-Frank, including hedge fund registration, increased reporting to improve transparency, and complaints and tips from the public. But it will have to handle these increased responsibilities with the same technology budget it had in 2010, a relatively miniscule $120 million. Most large Wall Street brokers spend north of $1 billion on their IT, and even medium-size banks spend $500 million annually on technology. Clearly, the SEC and its CIO, Thomas Bayer, have their hands full.

"From a data collection perspective, we are well prepared," reports Bayer, who knows that Dodd-Frank will mean a much larger volume of data for the SEC. "EDGAR is robust and it can handle the intake of the data," he adds of the commission's electronic filing system and database. "We have the collection of data under control. However, our analytics have to improve."

In fact, Bayer says, the SEC's analytics capabilities require immediate attention. "Historically, the SEC has under-invested in its analytical capabilities," he acknowledges. "As a result, we need to invest this year, and in future years, to build analytical and workflow tools to make the systems more efficient and effective going forward. The ability to quickly analyze market activity and patterns is essential."

The SEC found out just how lacking its analytical capabilities are when the Flash Crash hit May 6 last year. "We learned that our systems capability needs to be improved to analyze the data," Bayer says. "We are in the process of developing better technology, and that is part of our strategic plan. However, the ability to make such a large adjustment ... is very difficult. Improving the analytical capabilities is going to take a lot of investment."

According to Bayer, the SEC is utilizing off-the-shelf products to improve the analysis and workflow that is required to route data to investigators in a timely manner. "We have to improve the investigative capabilities of the SEC by improving the workflow," he says.

"We are using business process workflow tools that are available on the market," Bayer continues, adding that the SEC is using analytics software from SAS and Oracle's business process management suite. "We need to be able to get the data to the investigative groups quickly and automatically."

The SEC is also relying on knowledge management tools, based on Microsoft's SharePoint platform, so investigators can go to a single data repository. "On the enforcement side, we are using tools to manage case loads and provide a central body of knowledge," Bayer says. "Our investigators can go into a central database to cross reference other cases, and that is helping them be more effective."

The SEC's $120 million IT budget, however, leaves little room for ramping up analytics. "It's a no-brainer that without the necessary resources, our analytical capabilities are impacted," Bayer admits. "It is important that the analysis of data has to be automated. We have to invest in technology that helps make our investigators more efficient. We have done a lot of work to improve our capabilities and we have identified what needs to be done, but we can't do it without the resources."

Bayer's IT organization already has implemented some administrative IT systems, such as a purchasing system, to reduce costs for the regulator and is focusing on processes that can be automated to improve efficiency. And he points out that investing in good technology will help the SEC monitor financial institutions beyond Dodd-Frank.

"This is not just technology for Dodd-Frank," Bayer says. "As technology and the marketplace change, we need to invest in technology and people to oversee the markets that we cover. The institutions invest significant resources in technology and we have to keep pace. After all, we have to manage the EDGAR filer data on behalf of the public."