Consultants TowerGroup have launched a new consulting practice called “IT Value Management.” The new practice is designed specifically to help financial institutions ensure IT spending supports business strategies in ways that increase Return on Investment (ROI) rather than costs.
“With profits sorely challenged, global financial services firms entered 2003 with a strong focus on core business strategy and operational efficiency-and a directive to align technology investments closely with both,” says TowerGroup. Its own research suggests 2003 spending on financial services technology will total $333.7 billion globally, an increase of 2.3 per cent over IT spending in 2002.
“From our extensive research around technology investments and spending -as well as a number of recent consulting engagements – we realized that we are uniquely placed to help financial institutions ensure that technology initiatives have a clear business case and, most importantly, that they deliver ROI,” says Maureen Hesney, senior vice president of Research and Consulting, TowerGroup.
The “IT Value Management” Consulting practice will aim to combine TowerGroup’s in-depth knowledge of business processes in the financial services industry with its research into industry best practices – such as IT investment prioritization, project management initiatives and sourcing decisions.
“TowerGroup has helped numerous clients implement successful IT Value Management programs,” notes Greggory Kobelski, vice president of North American consulting for TowerGroup. “There are tangible benefits to securing enterprise-wide agreement on IT investments and then holding those projects accountable to deliver on the expected return. The two largest IT spending markets are North America at $123.6 billion and the European Union at $105.7 billion. The former is experiencing a 2.8 per cent growth rate as a result of a prolonged retail banking boom, while the latter is declining at just over 1 pe cent as technology budgets are cut in the wake of major losses in investment banking operations, accumulated overspending on technology and the divestitures of non-core businesses. These investments are significant, and TowerGroup can help financial institutions navigate their way through what continues to be very challenging environment.”
TowerGroup expects new technology investments in major geographies to range between 24 and 27 per cent of total IT spending. Expected growth in IT spending in other world regions will be fueled by a migration from proprietary to packaged applications as well as investments in the Internet channel, resulting in 35% of total IT spending being consumed by investments in new technologies.
The TowerGroup research is called “Global Financial Services IT Spending in 2003: It Was the Best of Times, It Was the Worst of Times.”