RealTime IT News

Banks Shell Out The Bucks For Compliance

Despite the headaches that record-retention rules and compliance have caused, companies are still spending the money to play by the rules. Financial services businesses were the top spenders on computer servers last year, accounting for 25 percent of worldwide server sales.

The communications market came in No. 2, with 13.5 percent of global server revenue, while the government sector notched 11.5 percent, according to new research from Gartner.

Financial services firms, split into three camps -- investment services, banking and insurance -- spent $13.2 million in 2006, with communications shelling out $7.1 million and government coughing up $6 million for hardware.

The sums included upgrades and new machines, said Kiyomi Yamada, senior research analyst at Gartner.

Yamada said the financial services market is traditionally the investment leader for all IT spending, so it's not a shock that the banking, investment and insurance firms spent the most on hardware that triggers and manages transactions.

Yamada told internetnews.com that Sarbanes-Oxley, HIPAA, Sec 17a-4 and other regulations that order businesses to store data for long periods of time weighed heavily on the financial industry.

Banks, which typically shell out millions of dollars for large mainframes, spent the most; after all, storing more data typically involved buying more servers, storage arrays and other budget-busting components.

Will communications ever catch up to or eclipse financial services in server spending?

Yamada said no, noting that frequent mergers and acquisitions in the telecommunications market keep company numbers down, which means fewer customers for IBM, Sun Microsystems, and HP to engage in sales discussions.

"Communications is stable, but not so great," compared to financial services' IT spending, Yamada said.

However, she added that IPTV and so-called "quadruple-play" offerings, including broadband Internet, television and telephone with wireless, will ensure that server makers won't starve at the doors of communications carriers.

IBM was the leading global server seller, with a resounding 44.6 percent market share in 2006, compared to HP's 26.6 percent and Sun's distant 9.2 percent share.

However, Sun boasted the greatest growth rate at 26.3 percent. Yamada said Sun rebounded from a poor 2005 with solid sales of its Niagara multi-core machines, as well as its ability to tempt customers with its open source Solaris operating system and other software packages.