Global buy-side spending on research technology is set to rise from $586m in 2007 to $1.1bn by 2010 - a compound annual growth rate (CAGR) of 22% - according to the latest TowerGroup research.
During this period, buy-side spending on research technology by firms in North Amrica will more than double from $372m to $692m, while European buy-side firms' spending will increase by 20% from $144m to $257m, says TowerGroup.
Asian spending will also rise substantially - from $70m in 2007 to $125m in 2010 - but will remain at one-fifth that of US buy-side firms.
Buy-side research has become a complicated process that aggregates internal analysis, broker research, independent research, outsourced analysis and the use of other research tools, says TowerGroup. As a result, investment managers are demanding increased automation to better manage research operations and integrate information from multiple sources.
IT will play an increasingly crucial role within both buy-side and brokerage research departments over the next five years as firms look to adopt tool and technology that automate the research process.
TowerGroup says advances in Web-based technology - such as XML-based tagging, application service providers, Web 2.0 and portal technology - "will have enormous application to automating the research business".
The implementation of Web technology to automate research processes will alter the cost structure of research departments as manual processes are replaced by automated research systems. Brokerage firms will also be able to reduce costs incurred in providing research, says TowerGroup.