Financial Regulation Will Boost IT Infrastructure Needs in 2010, Says Analyst
It will be the best and worst of times for IT vendors
targeting the financial-markets space, according to a new research report from
research firm Ovum. Government intervention will necessitate that companies add
new layers of IT infrastructure to handle regulation and compliance issues; at
the same time, though, the effects of the recession are still being felt, with
belt-tightening very much front-and-center for corporate
"This will create new IT opportunities for vendors in 2010,"
Daniel Mayo, analyst for Ovum's Financial Services Technology team, wrote in a
Feb. 1 statement. "However, vendors will need to deal with flat overall IT
market as IT cost management remains the order of the day."
Financial companies' strategies in 2010 will revolve around
renewed regulatory focus on issue such as liquidity and risk management,
necessitating in turn an embrace of analytics and business-intelligence software
platforms that allow those companies to respond to changes in compliance and
regulation requirements; in addition, the frequency of reports to regulatory
bodies will likely increase.
"This will require institutions to adopt a transformative
approach to governance, risk management and compliance, rather than attempt to
deal with demands on a one-on-one basis," Mayo added.
Compounding matters will be continued pressure on the part of
these companies to keep costs down, even as revenue growth likely returns with
an expanding economy.
While prices and the recession have affected potential
customers for business-intelligence platforms and other enterprise software, it
has also affected the vendors providing those products. In January, SAP
announced that it would offer a tiered pricing model for customer support, an apparent stand-down from the business-software maker's earlier plan to raise
its entire user base's maintenance fees.
On Dec. 1, SAP had announced that it would delay a decision
on increasing customers' maintenance fees until January, following negative
feedback from its customer base. In a Jan. 14 conference call, SAP CEO Leo
Apotheker suggested that its customers had been facing "strong pricing
pressures" thanks to the recessionary environment.
At the same time, seeking a new customer base for their applications, companies such as SAP and Oracle have been targeting their business-intelligence software at SMBs (small and midsize businesses) in addition to the enterprise; according to this rationale, the scalable nature of these BI modules and other programs allows them to be flexibly deployed for small in addition to large companies.