It looks like even a tiny piece of the $32B Total IT budget of the US Banking Industry is more than enough to keep SANs growing even assuming a W-shaped recovery. Compare the overall growth of the SAN supplier industry to the overall decline in US IT spending from 4Q1999 to 4Q2001.
Despite the economic downturn and industry consolidation, competition is forcing banks to increase IT spending this year by an average of 4%, according to a report released today. Overall IT spending within the U.S. banking industry this year is forecast to total $32 billion.
At the largest banks, IT budgets this year will account for 20% to 25% of their overall budgets, with medium-size banks spending 12% to 15% of their budgets on IT, according to the report, from Cambridge, Mass.-based Celent Communications LLC. The report is based on a poll of CIOs and individual business units at 25 of the 100 largest banks in the U.S.
In contrast, overall IT spending in the U.S. dropped sharply from the fourth quarter of 1999 to the same period in 2001, according to a poll by Marcoccio Consulting. The results of the poll of 1,200 U.S. companies by the Westboro, Mass.-based consultancy showed that IT spending dropped 26%, from $307 billion to $227 billion during the period. As a total percentage of revenue, IT spending dropped from 27% to 15%, a 44% drop for financial services companies.
computerworld.com
US Banks
IT BUDGETS
CITIGROUP $5.1B
JP Morgan Chase 4.7B
Bank of America 3.3B
Wells Fargo 2.0B
Bank One 1.9B
Wachovia 1.1B
FleetBoston 0.9B
celent.com
A closer look at Citibank's plans..........
In what analysts estimate is a project worth more than $100 million, Citibank is switching out a decades-old set of back-office corporate banking systems in all of its overseas corporate offices to install a single platform, which will allow it to create a cross-border set of standard user interfaces and business processes
The switch to a single platform has already been completed in 11 countries -- Finland, Austria, Norway, Denmark, Luxembourg, the U.K., Poland, Singapore, Thailand, Korea and Malaysia -- but rollouts remain to be completed in more than 100 other countries. Begun in early 2000, the changeover is expected to continue through 2004.
The financial services firm said the project has paid for itself because the company has been able to avoid development costs related to a clunky legacy back-office system the bank developed in-house in the 1970s that had morphed into 58 disparate software platforms. The bank has charted an 18-month return on investment with the project.
"In the '70s, we were growing rapidly in countries around the world. To get up and running quickly, we'd use this system called COSMOS [Consolidated Online Modulated Operating System]," said Jeff Berg, executive director of program management at Citibank's New York-based parent, Citigroup Inc.
"As the bank grew, we did make a mistake in that we released the source code to each of the countries, and they changed it. Now we've ended up here 30 years later," Berg said.
By "here," Berg is referring to a platform that is proprietary to each country it's in and uses that nation's language, regulatory rules and business processes -- something Citibank can no longer do in a global economy........
"..............The conversions are quite exciting. Those are weekend kinds of efforts that usually occur around month's end," he said. "What we're finding is anytime you install a system like this, you have opportunities to reconsider your business processes. Because we're making the shift from a country to regional back-office system, it definitely gives us opportunity to create standardization."
For example, Berg said he expects Citibank to reduce the number of its data centers in Europe from 18 to about four using a standard platform provided by I-Flex Solutions Ltd. in Bangalore, India...........
computerworld.com
This EMC paper on Citibank-Singapore gives more color on what Citigroup is trying to accomplish in more than 100 countries. Downtime costs $24M per day or $1M per hour or $16.7k per minute. Even the 5 minutes of downtime a year allowed under 99.999% can cost $83.3K. Do you think they'll take a chance on any first generation switch or any other product?
Twenty-four hours of downtime at Citibank in Singapore’s Corporate Bank can cost the company in excess of $24 million...........
“.................We didn’t have the technical capability internally to implement SRDF,” says van der Lee. “EMC’s Professional Services added tremendous value. We adopted SRDF quickly and used it throughout our mainframe and midrange platforms.
With SRDF, we replicated our data in three data centers. Consolidation was as easy as switching off the old data center. We now operate out of the new one, which completes our goal to have only two hardware centers controlled by a central Command Center which is in a separate building.”
Van der Lee believes SRDF’s most important benefit is being able to meet rigid service availability requirements by the bank’s clearinghouses. The inability to meet these service levels can result in problems with local regulatory
authorities. “With EMC, we can meet the most stringent regulatory requirements,” he says. “With SRDF, we are up within two hours, which gives us a tremendous business advantage.”
emc.com |
