IT budgets rebound but software spending downturn continues

IT budgets rebound but software spending downturn continues

IT budgets and staffing levels in the wholesale financial markets are set to stage a mild recovery in 2004, but with much of the new spend directed internally the outlook for struggling software houses remains challenging, projects Finextra's annual 'Financial Technology Strategies' report.

The survey of 65 financial market participants analyses the wholesale industry's business, technology, and spending plans for the year ahead. It finds that the budgetary constraints of the past few years are slowly being loosened as more organisations report a rise in IT budgets. This corresponds with a renewed focus on revenue generation, and the displacement of cost containment as the most important driver of technology spending in 2004.

Much of the new spend is being directed at IT recruitment - with twice as many organisations reporting a planned rise in IT staffing levels for 2004 versus 2003 – and on IT infrastructure management. With cost-cutting moving down the agenda, projects connected with customer satisfaction, such as improving buy-side and sell-side communications, have earned a higher profile. Compliance-related issues such as fraud reduction, disaster recovery and operational risk still rate highly, but interest in big picture projects, such as STP and IT outsourcing, appears to have reached a plateau.

The net rise in technology spending may provide some cheer to suppliers of third party software, but with one-in-five organisations surveyed by Finextra planning further budget cuts, 2004 looks set to be another tough year.

The full survey is being launched at Finexpo 2004, Finextra's annual City Technology Strategies conference and exhibition, which is taking place on Thursday 29 January at Cabot Hall in Canary Wharf, London.

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