The recent Worldwide IT Trends & Benchmark Report from Meta Group reveals a new IT reality in which cautious technology spending has fundamentally altered how organizations invest their IT dollars. However, this new steady state of information technology has done little to suppress the enthusiasm for IT in the financial services sector, an industry which now leads many of its peers in terms of traditional IT intensity measures.

Financial services IT spending in 2005 is projected to increase by seven percent – with smaller (under $10B) financial services companies accounting for the majority of that growth. Companies over $10B have projections of 4% or less spending growth in 2004. Overall spending projections across all industries is 4 to 5% on average. Meta Group analysts confirm that such benchmarking is a critical measure for financial services executives with far reaching implications on organizational health, agility and scalability.

"The smart financial services executive knows where his/her organization falls along the IT spending bell curve," stated Dr. Howard Rubin., report co-author. "S/he understands not only how the financial services sector compares to other relevant vertical industries, but how the individual organization measures up against financial peers. Today's most successful executives are using these benchmark figures to identify, validate and support right IT investment decisions while mitigating risks associated with investing in wrong technologies."

Dr. Rubin went on to say, "beyond the numbers, there are some significant trends emerging within the financial services sector. Currently, there is a great deal of focus around cost transparency which has led nearly two-thirds of the major financial services companies polled to develop IT product catalogs as well as an increased focus on effective chargeback for services. This has also driven demand for benchmarking information at a unit cost level."

According to Meta Group, there are five critical categories by which industry IT intensity can be measured. While IT spending growth is the measure most often highlighted, analysts argue that it is also the measure that provides the least contextual information regarding the role that IT plays within a given industry or organization. For more contextual relevance Meta Group examines IT spending as a percentage of revenue and as a percentage of operational expense.

In both cases, the financial services industry is well above overall averages, with projected IT spending of six percent of revenue in 2005, compared to an average of just over four percent and projected spend of 13 percent of operational expenses, compared to an average of five percent. The latter figure is particularly telling as it means that next year, the financial services sector will devote a higher proportion of its business investments to IT than any other industry surveyed in the report.

ISTCL can provide tailored IT and business consulting services to the financial services industry. Whether you are looking to secure access to your network, develop new financial applications, upgrade or Web-enable your current applications, integrate back-office systems, develop customer relationship management (CRM) programs, improve data flow and capture across your organization, redesign business processes, or outsource part or all of your I.T. infrastructure, ISTCL's consultants have the experience to help you leverage your assets and improve your bottom line results.

For more information about how ISTCL can help your organization, contact us.

Toll-Free Phone: 1.800.457.4123
General Email: Jessica Bouchard

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