An Oracle White Paper July Capital Markets Technology Spending: Tight Budgets, High Expectations

Transcription

1 An Oracle White Paper July Capital Markets Technology Spending: Tight Budgets, High Expectations

2 With 2009 behind us, technologists expect cautious optimism for Markets have rebounded somewhat, mergers have been completed, and deep cuts have been made. Still on the rebound, technologists will open their budget coffers only a little this year. This article looks at where capital markets firms plan to direct their technology efforts in 2010 and how much they plan to spend. It also considers what stakeholders take part in the decision-making process and how they plan to build their infrastructure. For 2009, cost reduction dominated the business objective roadmap, followed by risk management. What a difference a year makes. For 2010, the overall top objective as ranked by the accumulated total of the top three objectives is business agility (ranked last in the 2009 survey), followed closely by operational efficiency (see FIGURE 1 on page 1). Figure 1: Top Three Business Objectives 2

3 This year, operational efficiency actually received more number-one priority votes, but scored lowest among top-three priorities. Cost reduction actually moved from first to sixth place overall, though several firms focused on that as their top objective. Business agility and operational efficiency became critical this year as firms returned to initiatives around expanding asset classes and geographic coverage for The business group expecting to receive the most attention overall is asset management (see FIGURE 2 on page 2), though institutional sales and trading actually received the most top-priority votes. Compliance ranks high as the number-three priority for most CIOs. While retail brokerage also received a strong number-one ranking, that number is skewed by participating firms that only conduct retail brokerage business. Figure 2: Top Three Business Groups for Technology Priorities 3

4 For 2010, Aite Group changed our survey s technology solutions options to better reflect spending initiatives. Despite the changes, the top two spots for top-five initiatives remain ranked the same as in previous years. In 2009, respondents ranked the middle office number one and risk management number two. Execution management systems (a component of the middle office) and risk management continue to rank one and two respectively for 2010 (see FIGURE 3 on page 3). Global trading and settlement moves up two spots to number three for Client reporting debuted at number four this year, and information security at number six. Compliance dropped the most, from third place in 2009 to 11th place in Retail tools like wealth management solutions, broker workstations, and mobility efforts rank toward the bottom of the priority list. Once again, imaging and document management come in last. Figure 3: Top Five 2010 Technology Priorities 4

5 For the second year in our survey, Aite Group asked technologists what they hoped to cut from their budgets. In 2009, business intelligence solutions were at the top of that list. Market data processing takes the top spot for 2010 (see FIGURE 4 on page 4), a nine-spot increase over 2009 feedback. Aite Group found that the majority of interest in this area relates directly to terminal usage, primarily for Bloomberg and Thomson Reuters. Beyond terminals, many firms are moving to direct exchange feeds and/or reducing the network footprint of moving market data around through colocation efforts. For the second year in a row, wealth management solution providers may find a tough market for their products. Broker workstations and mobile solutions round out the top four spots for Figure 4: 2010 Spending Reductions In order to cut budgets, CIOs expect to squeeze their vendors in Renegotiating with existing vendors is the top spending reduction strategy, with vendor negotiations ranking number three. Technology upgrades in both architecture and systems also appear to be high on the list of cost reduction strategies. In hiring and infrastructure, we see that play out in systems upgrades and which engineering skills are considered sought-after or dispensable. Improving allocation processes and embracing open source also rank high on the list. Despite all the Software as a Service (SaaS) talk, leveraging the capability with the intent to reduce cost ranks low with CIOs. Vendors with a core message of being the low-cost provider or demonstrating an ability to reduce headcount probably want to change their marketing messages as well. 5

6 Conclusion Aite Group expects 2010 to be filled with emerging opportunities. New markets are opening to electronic trading; firms are opening their doors to new asset classes; and retail firms are changing their sales and service offerings and, in some cases, rebranding their efforts. The confluence of all of this activity leads us to some key recommendations for vendors: Focus on three areas in roadmaps: performance, usability, and workflow. CIOs are looking for ways to reduce their operational risk through better business processes. Look for opportunities to partner with internal development. Highlight application programming interfaces (APIs), Web services and other tools internal technologists can leverage for a hybrid approach between off-the-shelf and internally developed applications. Expect to be squeezed on contract negotiations. Try giving up functionality or creative usage opportunities before giving up revenue. Highlight risk and compliance attributes. Capital markets technology executives have the difficult challenge of controlling costs in a technology arms race around electronic trading as well as ensuring that their firms stay competitive. Key recommendations for CIOs include the following: Do your homework on development options. Know the open source opportunities, vendor landscape and hybrid development options. Measure the value of internal development against commoditized processes. Should the firm really support something that provides zero competitive differentiation and can be found off-theshelf from 10 vendors? Understand the vendor microstructure. Who are the key channel partners? What are the top items on their product roadmap? With whom do they integrate? Work with industry groups to standardize common problems and create commoditized solutions. 6

7 2010 Capital Markets Technology Spending: Tight Budgets, High Expectations July 2010 Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA U.S.A. Worldwide Inquiries: Phone: Fax: oracle.com Copyright 2010, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. AMD, Opteron, the AMD logo, and the AMD Opteron logo are trademarks or registered trademarks of Advanced Micro Devices. Intel and Intel Xeon are trademarks or registered trademarks of Intel Corporation. All SPARC trademarks are used under license and are trademarks or registered trademarks of SPARC International, Inc. UNIX is a registered trademark licensed through X/Open Company, Ltd. 0710