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Capital Markets Spending in 2007: Back Office Finally Gets Respect

Capital Markets Spending in 2007: Back Office Finally Gets Respect

Amplified budgets have led to increased IT spending in the capital markets. Spending jumped from a 3% increase from ‘04 to ‘05 to a 35% increase from ‘05 to ‘06.
By Adam Honoré

Boston, MA, June 18, 2007 – A new report from Aite Group, LLC reveals the estimated direction of IT budgets and the top priorities for budget allocation among CIOs. Titled Capital Markets Spending in 2007: Back Office Finally Gets Respect, the report is based on a survey of 13 sell-side institutions and 12 hedge funds geared toward determining where IT dollars would be spent this year. It also covers hiring trends, key enterprise system implementations, and spending priorities among business groups.

The report shows that IT spending in the capital markets is on the rise, having jumped 35% from 2005 to 2006, and shows no sign of tapering off in the near future. IT objectives are changing with the expanding budgets. Creating operational efficiencies has become a top priority, followed by growth. Compliance, which had been a top priority in the past, now ties with risk management in third place, and cost reduction ranks last among the top-five IT priorities. In selecting vendors, Software-Oriented Architectures (SOA) has moved up the priority list and is second only to the ability to show proven implementations.

"Following several years of ad hoc spending associated with being compliant and competitive, 2007 appears to be turning into a year at least partially dedicated to cleaning up the integration mess," says Adam Honoré, senior analyst at Aite Group and author of the report. "Investments made in years past have left firms with operational inefficiencies and 2007 seems to mark the beginning of a back-office clean-up."

This 27-page Impact Report contains 22 figures and tables. Clients of Aite Group's Wealth Management and Institutional Securities & Investments services can download the report.