57 percent growth seen in US Securities spending on business continuity

US securities industry annual spending on business continuity planning and related technologies rose considerably between 2001 and 2003 to $2.5 billion, an increase of $895 million or 57 percent, according to the TowerGroup, but the research and consulting firm expects spending to rise only marginally in 2005 and to decline in 2006-2007 due to greater economies of scale as firms complete building out their core business continuity infrastructure.

TowerGroup says that business continuity spending will grow a marginal 1.4 percent over 2004-2005 and will decline 1.3 percent in 2006 – assuming that threats to the global financial system do not significantly escalate in this period.

"TowerGroup's analysis of the US securities industry's IT spending on BCP indicates that the rapid ramp-up in preparedness is behind us," said Dushyant Shahrawat, senior analyst in the Securities & Capital Markets practice at TowerGroup and author of the research. "Further to this, firms do not have plans to grow their spending much in the BCP arena in coming years."

Additional highlights of the research include:
* Overall, business continuity is evolving from an IT-centric, technology-intensive function focused on "getting the application back up" to a more comprehensive process of ensuring business functions and departments are restored during a disruption - that is, "getting the entire business process back up." This involves a much broader and concerted focus on the application in question, accompanying technology, people operating the application, and the business process of which the application is a part.

* Since 9/11, the business continuity function at securities firms has been forced to undertake significantly greater responsibility, with a few firms creating large central departments with business continuity responsibility.
However, TowerGroup believes the right approach for broker/dealers and buy-side firms is to create centralised guidelines that map to industry benchmarks - and then to decentralise business continuity efforts to ensure that they are incorporated within the regular decision-making process at a business unit level.

"The good news is that the US securities industry stands more adequately prepared to face disasters, even of a considerable magnitude, than it has been at any time in the past," noted Shahrawat. "Our research into the specific plans of individual brokers and investment managers reveals that most firms are operationally resilient, indicating the success of the considerable effort undertaken after 9/11. There is also newfound recognition that business continuity 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 that business continuity is being ingrained and 'institutionalised' into the industry's regular decision making process."

www.towergroup.com

•Date: 25th March 2004 •Region: N.America •Type: Article •Topic: BC stats
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