Spending to Continue

By Reuters  |  Posted 09-17-2008 Print Email

Spending to Continue

But while tech companies cannot escape the impact from the financial sector meltdown, analysts said they could benefit to a certain degree from work on integrating computer systems at banks like Bank of America.

Also, for the vendors a merger can often lead to a struggle that sees one end up with a larger business while another risks being squeezed out altogether.

For example, Bank of America uses SAP for its business software, while Salesforce.com has a contract with Merrill to provide a similar service to 25,000 of its employees.

Salesforce declined to comment on how it will be affected by the Merrill buy-out and Lehman bankruptcy.

The financial sector will continue to spend, according to analysts, although the focus may not be on buying new computer equipment but investments for projects to make systems work more efficiently and software to help decision making.

Virtualization software, which allows a single computer to act like multiple machines, remains a hot area of spending because it helps companies save money and get the most out of existing equipment. Virtualization leader VMware and Microsoft, which built virtualization technology into its new computer server software, are expected to benefit.

Another area of heavy investment is expected to be business intelligence or analytics software, which helps executives make decisions. Major corporate software providers like SAP, Oracle and Microsoft are trying to integrate those features into their business software.

"(Wall Street firms) still need to invest in the competitive tools to remain productive," said Sean O'Dowd, a senior analyst at Financial Insights.

O'Dowd notes that commercial banks tend to spend more on basic technology than investment banks, who invest more in high-growth, advanced technology. Specifically, Bank of America has a reputation for building its own technology versus buying from outside vendors.



 

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