Leading fund management companies increase IT investment in business development

London - 27 September 2006

Investment management companies have substantially increased their IT spend since historic lows of 2003, recent findings from Investit's leading IT Value Survey have revealed. IT budgets are now directed towards business generation. Investment management companies are increasingly focusing their development effort on front office projects, in preference to their traditional efficiency targets in operations departments.

Investit's IT Value Survey is the only truly established survey to measure investment management companies' IT performance, defined as the service quality delivered by IT to the business. 28 large investment management companies participate in the Survey, representing £2.6 trillion of assets under management. And the Survey is not restricted to local data - the majority of member companies contribute global IT analyses. The IT Value Survey now has six years of data, allowing Investit to conduct significant trend analysis.

In 2003, the IT spend of investment management companies was at historic lows; 2003 saw a 10% fall in IT spend year-on-year. However, IT budget growth is now accelerating - 2004 saw a 6% rise, 2005 a 8% rise, and 2006 saw a 10% year-on-year rise, the largest increase since the IT Value Survey began in 2001.

Investit's analysis shows that investment management companies are, once again, investing in business growth. The historic ratio between business as usual spend and business development has now moved in favour of project spend – indicating a strong desire to invest in technology.

IT Value Survey data also shows IT spend is now moving out of the traditional heartland of supporting operational efficiencies, to supporting business development throughout the front office – portfolio management, and gathering and retaining assets. Further analysis on the drivers and key functional areas for this IT spend illustrates that among the frontline business areas benefiting will be sales and marketing, particularly with new CRM and client reporting systems, as well as supporting the portfolio managers themselves. This year, COOs and IT directors now see the support of OTC derivatives as their main priority - this didn't appear as an area of primary focus in the 2005 IT Value Survey results.

John Robertshaw, Investit Principal and the lead Consultant on the IT Value Survey, said:"This is the third year that the IT Value Survey has seen rising IT spend by investment managers. Our discussions with those managers who are members of the IT Value Survey, suggest a real turnaround in business priorities. It's a reflection of a more buoyant industry that IT projects are increasingly focused on the front office and business generation and retention, as opposed to the traditional processing areas in the back office."

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