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By Michael Eggebrecht
CIOs at financial firms are turning their focus away from reducing costs and toward improving business agility and operational efficiency, according to research firm Aite Group’s annual technology spending study.
Last year, cost-cutting “dominated the business objective roadmap,” says the report. But this year, only 29 percent of respondents named it as one of their top three business objectives for 2010 IT spending -- good for sixth place. Business agility, on the other hand, was cited as the first, second or third priority by 67 percent, with operational efficiency close behind at 62 percent
“While new opportunities are expected in a multitude of financial services segments, technology development will generally include three key elements: performance, usability and workflow,” said Adam Honore, Aite research director and author of the study. “CIOs are keeping these three elements top-of-mind when reviewing their business objective roadmaps for the year ahead. By maintaining this focus, they hope to reduce their operational risk through better business processes.”
Aite surveyed 30 CIOs -- or the equivalent -- from a wide range of capital markets firms during October and November.
Risk management systems was the top answer when CIOs were asked to name their ten technology priorities, followed by information security, compliance solutions, execution management systems and client reporting systems.
Who are the key stakeholders in the firms’ IT decisions? Eighty-seven percent of the respondents said that the business lines have a significant say, followed by CEOs (83 percent), the IT department itself (80 percent), finance (77 percent) and operations (70 percent). Risk compliance was the fastest-growing influencer, with 41 percent of CIOs saying that group’s role in IT decisions was growing.
Regardless of which parties are involved in IT spending, there will be slightly more to spend, according to Aite. While Aite estimates that IT spending in the capital markets fell from $41.8 billion in 2008 to $39.3 billion last year, it expects that number to climb 6 percent this year -- a return to 2008 levels. Looking ahead, 48 percent of CIO participants said that their 2011 IT budget will be higher than this year’s, and 62 percent said that 2012’s budget will be higher.
While budget cutting has dipped in importance, it’s still a priority, and working out better deals is one of the ways CIOs plan to trim costs in 2010. Eighty-three percent of respondents said that renegotiating with existing vendors will be a somewhat important or very important cost-cutting measure over the next 24 months; 77 percent said that negotiating with new vendors will be key. And IT staffers will be happy to note that 70 percent of the CIOs said that cutting employees is not in the cards.
Another interesting finding: Cloud computing is not a priority for financial firms. Fifty percent of respondents said they have no plans for the cloud, and 33 percent are thinking about it; only 17 percent are currently implementing cloud computing or defining requirements.
“Capital markets firms fear being gamed if they run strategies in a public cloud,” says the report. “While private clouds have some minor traction, public clouds hold zero appeal to capital markets.”
On the other hand, 60 percent of CIOs have moderate or high interest in enterprisewide server upgrades, and 42 percent said that upgrading their firm’s version of Microsoft Office was at least a moderate priority, compared to 30 percent for Windows 7.
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