European asset managers expect IT spending to remain flat for the next two years, with most investment focused on the front office, according to research published by Tiger Consultants.
The survey, conducted among 37 European asset managers, finds that 80% of firms intend to focus on improvements to front office systems in 2004, underlining that the investment process remains at the forefront of market differentiation.
While the survey detected an improvement in external STP levels over previous years, reflecting improvements in post-trade processing, mechanisms for checking pre-trade compliance remain under-resourced, with almost one-in-three not having a single system for auditing front office trades.
Despite the continuing trend to reduce IT budgets and focus on general cost reductions, asset managers remain unimpressed by the purported benefits of outsourcing. Four in five of the sample regard outsourcing IT functions as potentially increasing the overall IT spend. Seventy-five per cent of firms said they had no intention of outsourcing performance and client reporting operations for instance.
The report finds satisfaction levels with packaged software improving - 70% of equity dealers are now happy with the performance of third-party systems, compared with only 50% in 2002. However, 85% of equity fund managers and fixed income managers still rely on spreadsheets, and only 57% can track client opportunities direct from their desks.