How To Do More With Less

But while post-2000 regulations—from the Sarbanes-Oxley Act for public transparency of corporate data to the Gramm-Leach-Bliley Act for safeguarding consumer privacy—are credited with driving a resurgence in spending for financial services projects, many observers say the prime motivator for such spending is nothing more exotic than plain old IT optimization. That means companies want to cram more and more applications, data and functionality onto the servers, storage and software they already own. In short: They want to get a whole lot more out of their IT with not-so-much-more IT spending.

While that doesn&'t bode all that well for product sales, reaching that holy grail will definitely require at least some billable hours for IT consultants and solution providers as well as in-house IT personnel.

Recent Gartner research, for example, estimates that the worldwide market for IT sales and services for financial services companies will grow to nearly $30 billion in 2009 from $21.9 billion last year, a compound annual growth rate of 8 percent for that period. In the United States alone, Gartner expects the market to grow to $13.7 billion in 2009 from $10.9 billion last year, a 6.4 percent growth rate.

“I see companies investing in new technologies but also taking a harder look at what&'s the most cost-beneficial way to do it. [They want to do it in a way] that leverages what they already have,” said Debbie Dove, a Minneapolis-area sales manager for Sirius Computer Solutions, a San Antonio, Texas-based solution provider. Sirius is a longtime IBM partner specializing in infrastructure, disaster recovery, security and server consolidation work.

While the company is a cross-industry infrastructure provider, it claims many customers in the financial segment. One of the solution provider&'s big businesses is updating, maintaining and loading up IBM mainframes with new tasks.

“We&'re actually seeing workload being added to mainframes—many companies are bringing things back into the fold after decentralizing and distributing them,” said Susan Griffin, a Sirius spokeswoman.

Again, compliance is a large motivator for this activity. But disaster recovery scenarios in the wake of Hurricanes Rita and Katrina also reinforced for customers, in the Gulf region and beyond, the value of highly reliable “big iron,” Griffin said.

Yacov Wrocherinsky, CEO of New York-based Infinity Info Systems, said about two-thirds of his company&'s revenue—mostly in the form of Sage Software and Microsoft CRM implementations—goes into the financial services sector. He says his company is on track to make $12 million in revenue this year, a 30 percent growth rate, and projects similar growth for next year.

“People are spending—but on smaller projects—and before they spend, they make sure it&'s going to work,” Wrocherinsky said.

Infinity Info is able to customize both Sage and Microsoft CRM to suit various sub-verticals within the financial services vertical—say for hedge funds or buy-side and sell-side analysts—where complying with various regulations is important.

“We create a series of vertical templates around CRM leveraging the R&D [that] Sage and Microsoft have done and tailoring it for our users,” Wrocherinsky said.

Making CRM solutions easier to use means that companies can quickly produce custom reports for investors, he said.

“From what we&'ve seen at both the enterprise and divisional level, people are tired of spending multi-millions on projects that have no results. The Siebel days are over,” Wrocherinsky said.

Siebel Systems, now owned by Oracle, gained fame, then notoriety, for selling costly, complex CRM systems into companies that ultimately found them difficult to use.

Susan Courneyer, research vice president for Gartner, said the key to success is in planning for financial services projects with an aim toward saving money and effort for clients.

“We&'re seeing a lot of consolidation of front office software” in the financial services segment, she said.

“We&'re not seeing dramatic growth, but there is demand for compliance. Many banks and institutions are still figuring out how to approach compliance, not only with spot solutions but with frameworks and enterprise content management that will make them better able to respond to future regulatory changes,” Courneyer said.

Ejaz Choudhry, vice president of business development for MX Consulting Services in Raynham, Mass., agreed. MX partners with Cisco Systems, Trend Micro, WatchGuard and other vendors to help customers in the financial industry maintain compliance and data security.

Choudhry sees spending within this sector opening up compared to the past three years, partly because of a strengthening economy and partly because some of the spadework needed for serious compliance projects has been done by now, at least by the larger companies in this vertical.

Among other things, he sees continued opportunities in e-mail security deployments and secure document-management solutions.

“Brokerage houses need e-mail and [instant messaging] to be secure,” Choudhry said. “Not only that, they need time stamps on everything.”

Another upcoming big boost is that many banking institutions have to move to two-step authentication per new regulations, he added.

Steve Chan, vice president of business development for ZipLip, a Mountain View, Calif.-based provider of secure e-mail management and archiving solutions, said depending on the architecture already in place within a prospective financial services account, that can be an easy or tough upgrade.

“If you&'ve done your plumbing right, it won&'t be a big deal,” he noted. Sirius&' Dove said that broad macroeconomic trends also are helping spur sales growth, but another big plus is the fact that many large financial institutions have gotten their major compliance issues taken care of and can focus again on using technology to hone competitive edge and fuel future growth. “They&'ve done the things they needed to get done and can now be proactive on new technology,” she said.

Other micro issues are also driving growth in the financial services market. Wrocherinsky said that the new release of Microsoft CRM 3.0, aka Microsoft Dynamics CRM, will give Microsoft the street cred that it so wants in CRM.

“They got it right this time,” Wrocherinsky said. “They&'ve taken out a lot of the clicks and navigation problems from the 1.0 and 1.2 releases, and they&'ve made it easier for partners to customize reusable objects for use within the CRM application. And ease-of-use barriers are low because the product retains the look and feel of the Microsoft Outlook mail client that is pretty much the de facto standard.”

Easy customization means that Infinity Info, as well as other partners focused on CRM deployments, can adapt the user interface for specific customers nearly on the fly for their asset allocations, contact lists, inflow/outflow, investor reports and other activities.