IT spending on business continuity planing (BCP) technology by the US securities industry increased 57% from 2001 to 2003 to $2.5 billion, but investment will rise only marginally in 2005 and is likely to decline in 2006-2007, according to research by TowerGroup.
The research suggests that BCP spending will grow a marginal 1.4% over 2004-2005 and will decline 1.3% in 2006 - as long as threats to the global financial system do not significantly escalate in this period.
TowerGroup says the figures indicate that the rapid ramp-up in preparedness is now over and firms do not have plans to increase spending in the BCP arena in coming years.
Dushyant Shahrawat, senior analyst in the securities & capital markets practice at TowerGroup and author of the research, says the research shows that the US securities industry is more adequately prepared to face disasters than it has been at any time in the past: "Most firms are operationally resilient, indicating the success of the considerable effort undertaken after 9/11."
Overall, BCP is evolving from an IT-centric, technology-intensive function focused on "getting the application back up" to a more comprehensive process of ensuring all business functions and departments are restored during a disruption.
Although some firms have created large central departments with BCP responsibility following 9/11, TowerGroup says broker dealers and buy-side firms should create centralised guidelines that map to industry benchmarks - and then decentralise BCP efforts so they are incorporated within a firm's regular decision-making process.
Shahrawat says: "There is also newfound recognition that BCP is not a one-time fix or set goal for the industry, but a long-term process like total quality management. This realisation is important, as it means BCP is being ingrained and 'institutionalised' into the industry's regular decision making process."