IBM’s business is primarily financial services (two thirds). Marcel Origer, Director IBM Luxembourg says that there is a change in what customers are spending on. “In 2005 and 2006, after the complicated years (2002, 3, 4) customers did a technology refresh. They upgraded their capacity or replaced older equipment. The expectations for 2007 are strategic investment for new solutions.” When asked what people are spending on he listed compliance, regulatory, document management, information life cycle management and security. Yves Baguet Managing Director Technology, Clearstream and Deputy CEO Deutsche Börse Systems qualifies the issue of budgets even further by explaining that there are two types of companies. One is where IT is the product, and therefore highly strategic, and the key is to make business based on IT products. Clearstream is such a company, and those companies already have a big IT budget. “We seek budget optimisations and take action to keep that budget flat and doing more. Our objective is to push efficiency further. Our mission is to be state of the art. Our budget is established for a strategic positioning versus the competition.” The second type of company is where IT is an enabler, a supportive infrastructure. Here IT is seen as a cost. “The second type of company went through significant cost cutting in the recent past and has now started to increase its budget. Why? Because the technology is out of date or because they need to purchase a minimum of new technology to stay competitive.” “The market is stable for the moment with a positive outlook,” says Paul Arbab, Business Relationship Manager at Tata Consultancy Services (TCS). ”Budgets will continue to be dominated by regulatory projects such as MIFID, Basel II/AML/ Sarbones Oxley. Most companies have gotten past the analysis stage and are well into the implementation phase.” “Luxembourg is a niche market but is also opportunistic,” says Olivier Mortelmans, Partner at PricewaterhouseCoopers. He feels that regulations, globalisation and profits are driving the growth of budgets. “IT plays an important role because volumes are exploding, products are more complex and clients are dealing with more and more sophisticated products. Therefore, you need a more sophisticated solution. From a management point of view you want to reduce your fixed costs, some work can be more automated, and there is a constraint of profiles (talent). This can also drive IT spending.”
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Maurice Lam, Managing Partner at Deloitte feels that the IT market is already under a lot of pressure and is bound to get hotter both in terms of budgets and value. “On the supply side the big over-capacities of skilled IT specialists have disappeared, largely because of the 2000/1 downturn. On the demand side, companies have entered into globalisation mode.” “Moreover, the perception of IT business is gradually evolving as it is increasingly becoming a generator of value. We are seeing a progressive shift from cost centre to contributor to the process of value creation. We foresee a strategic alignment where IT has to serve new objectives. This concept can best be summarised under the label of IT service management, which requires a streamlining of the decision-making process and improved delivery process management.”
To what level are IT managers rising? All the experts agree that the IT manager is reaching new heights, but does that mean to board level? Baguet (Clearstream) feels that the level to which IT managers are rising also depends on the business model. The CIO is a member of the board in a company like Clearstream, where IT is the product. “Given the importance of IT at Deutsche Börse/Clearstream we have a CIO on the board. The CIO must be business aware and collaborative with his colleagues at the board level.” In the second model, where IT is an enabler, the IT might be under the level of the board and might be two persons: an IT manager (rather than a CIO) and a person responsible for the business. Raymond Schadeck, CEO at Ernst & Young says that budget is only a part of the driver in moving the CIO up the corporate food chain. In his opinion, the importance of compliance is so huge, especially with some companies, that IT becomes a boardroom issue. Companies are looking for, “differentiation through technology.” Also, IT officers used to be the head of the back office, but as IT becomes an integral part of the historic IT back office function which in turn is moving closer to the front office, IT today is becoming an integral part of strategy and differentiation. Technology itself is a factor driving IT up the corporate food chain. Verizon Business provides traditional (voice, data, Internet) telecom services