SIA Technology Management Conference
Sell Side Pours Dollars Into Capacity, Connectivity | Market Data Needed--And Faster, Please | Hedge Fund Asset-Class Demands Raise Stakes for Servicers | SIA, BMA Quiet About Merger; Some Open Questions Remain | Matching People and Technology | Elsewhere in Town: Thain, Nazareth at the Big Board's Regulatory Show | Business Is Looking Up, Vendors Act Accordingly | Sybase: Can Breadth Trump Specialization? | Platform's Latest Version Goes Real-Time | Intel: Wanting to Be Noticed--Up to a Point | Smart Searches Find Their Way to Wall Street | Asset Manager Ixis Using Pyxis' mWholesaler | Vendors Combine Real-Time and Historical Analytics | Bracing for MiFID
Business Is Looking Up, Vendors Act Accordingly
Though still tempered by budget constraints, optimism about technology and innovation
June 19, 2006
If financial services technology can be said to be a growth business, it's of the steady-state variety. Securities firms' budgets for information systems, communications and related services and support are rising on average by 4 percent to 6 percent. That's a clear turnaround from the two to three years of austerity that followed the 2000-2001 tech bust, but those numbers may not quite hold up. Plans tend to get reined in as the year progresses and companies try to burnish their bottom lines. In short, it's no boom.
Yet the major suppliers of technology to the Wall Street and capital markets crowd are descending on this week's Securities Industry Association Technology Management Conference, which includes the biggest trade-show exhibition for the U.S. securities market, almost as if it's, well, 2000. (The consequences of the crash didn't fully set in for another year.)
Some are less optimistic--or balanced in
their evaluation of the environment--than others. "There is still
an overhang from the huge wave of technology spending" that rose at
double-digit rates in the late 1990s, observed William Hartnett,
general manager of strategy and solutions for Microsoft Corp.'s
U.S. financial services group, one of several supplier luminaries
interviewed by Securities Industry News as the annual SIA
extravaganza in New York approached. "Budgets for doing truly
innovative work are hard to come by," he said. "Projects have to be
funded with savings."
Eric Doyle, Intel Corp.'s director of financial services, said that the spending disciplines first applied in 2001, notably the requirement that there be an identifiable, usually short-term return on investment in technology, have become "a constant. It's 12 months or less in a lot of firms, but in financial services, speed means money. As long as you show performance gains and squeeze latency out of the system, it's a pretty easy ROI calculation. We love that kind of analysis because we're in the business of selling the technology that the financial services market is hungry for."
And that explains why Microsoft, Intel and their big-brand-name peers have never given up on the securities industry. If anything, they are turning their product development and marketing up a notch, reflecting both assumptions and hard evidence of a positive change in the technology cycle. Look no further than the splash that Microsoft will be making with its "trading platform of the future," currently in demonstration mode with partner Hewlett-Packard Co. (HP). Hartnett pointed out that even as the securities industry put the brakes on much of its discretionary expenditures, Microsoft was spending $20 billion to $25 billion on research and development over the last five years that contributed to the advances now being touted in spreadsheet management and high-performance computing. "That R&D spend represents a huge amount of innovation coming into the market that our partners and customers will be able to leverage," Hartnett added.
"We have seen a definite uptick over the last couple of years," said Eric Johnson, VP of financial services at database leader Sybase. "Now people are starting new projects, adding to existing ones--we also see it in our database business. There has been a lot of consolidation, the strong have survived, and now they are going out and instead of just asking IT vendors about cost reduction--I'm not saying that that's gone entirely--there is also a tendency on the growth side to say, for example, "What can risk analytics do to transform my business and make it more competitive?"
