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A business case for investment in technology

There have been a number of reports published estimating the technology spend on I.T. in the next year. These reports are not unusual as they tend to appear either nearing year end or as a result of regulatory change of whatever the economic condition is at the time. In these times such reports are grasped by vendors sometimes more in hope than expectation. None the less IT spend is vitally important aspect for the financial markets and the degree of system development can indicate the confidence in the market and the firm in preparing for the future.

As we all know regulatory change has been the prime motivator to spend on IT for years. This is clearly a no brainer for the Board to sanction the expenditure, if it means their firm can comply. Other no brainers for the Board come with endorsements from internal/external audit that push through budgets and investment (If we can call it that) for the IT department. Whether it involves internal development or the purchase of an external system, the use of regulatory and audit requirements are easy to use prompts for budgets.

Despite the regulatory and audit needs that have dominated expenditure for what seems, decades, One has to wonder; what about genuine business needed system developments, where the business can increase its business, revenues and profits?

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Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 June, 2012, 13:52Be the first to give this comment the thumbs up 0 likes

Excellent question. I know at least one answer to it that lies in the vendor selection process: The buyer announces the project as a compliance initiative (e.g. FPS). All bidders bid for a solution (e.g. XYZ product + extensions + customizations), implementation of which will lead to compliance. Inevitably, some bidders can't persuade the buyer that their bid can meet the compliance deadline and drop out of the race. Of the handful of remaining bidders who can demonstrate capability to meet the deadline, only a handful are able to show how their bid can add business value (e.g. move reconciliation functionality from mainframe to new, open system, thus cutting costs and improving profits) in the course of achieving compliance. Most often, the contract is awarded to one among this handful of bidders, and the stage is set for the buyer to achieve improved business results through a project that is conceptualized and funded as a compliance initiative. I've seen this happen on many occasions, one of which I've used while providing the above examples. This is perhaps how, even in highly regulated industries like banking, technology does often bolster business results.