Menu
Financial crisis: The tech innovations at risk

Financial crisis: The tech innovations at risk

Analytics, SOA, storage networking, and cloud computing providers face huge fallouts as financial customers wither

September 2008 will certainly go down as one of the blackest months in Wall Street history. Venerable financial institutions such as Lehman Brothers, Merrill Lynch, and AIG abruptly vanished or were radically overhauled. Investors lost loads of money -- in some cases, fortunes -- and ordinary taxpayers are now finding themselves funding an industry bailout that could cost a staggering US$700 billion, perhaps even more.

Also hit hard by the financial services industry meltdown are the tech vendors that depended on high-flying investment banks, brokerages, insurance companies, and related firms for revenue -- as well as to popularize and mainstream a variety of cutting-edge products and services to IT organizations across industries.

Now that most of the major investment banks and sundry financial services firms have either evaporated, transformed, or been absorbed by other companies, an untold number of vendors in fields ranging from business intelligence to cloud computing are sadly waving good-bye to many of their prime customers. "For some vendors it's undoubtedly going to be very painful," concludes Andrew Bartels, a research analyst at Forrester Research.

As October dawns, vendors that once served a seemingly reliable and stable market are now awakening to a starkly altered reality. "It may not be a new world, but it's certainly going to be a different one," says Jeanne Capachin, research vice president at Financial Insights, a research firm that serves the financial services industry.

With many vendors reliant on financial industry sales now struggling to navigate a radically transformed business landscape, customers in fields far removed from Wall Street will begin noticing market changes, primarily in the amount and types of available products and services, but perhaps also in the number of vendors they can turn to for solutions. "Given the important role the financial services industry played in the tech market, changes are bound to happen," Bartels says.

"This will mean, for many vendors, a need to refocus on customers in fields outside of financial services," says Vivek Mehra, head of the financial services practice at IT services company Keane.

Which technologies -- and providers -- are at risk?

The most obvious technology at risk from the financial services firms' meltdown is analytics, including business intelligence. Fewer customers with cutting-edge needs, combined with slowing revenue, may have the long-term effect of stifling innovation. "It's the chicken-and-egg scenario," Mehra says. "Without the financial services vendors around to drive advancements, innovation could suffer."

But a silver lining to this cloud may be that analytics developers will refocus on mainstream market needs while downplaying exotic and esoteric offerings, Mehra suggests.

And even BI and analytics vendors may be able to mount a near-term strategic comeback, Bartels says. However, to do so, they will have to work hard to make their offerings relevant to surviving financial services firms as well as to enterprises at large. Vendors will have to focus "on providing software that's seen as a 'must have' as opposed to a 'nice to have.'" Over the long run, such a trend could lead to BI and analytics software geared more toward real-world needs than the arcane requirements of investment traders. "For many vendors, it will mark a return to the real world," he says.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags SOAwall streethosted services

Featured

Slideshows

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Reseller News has honoured the leading female front runners of the New Zealand ICT industry at the 2019 Women in ICT Awards (WIICTA) in Auckland. The awards recognised standout individuals across six categories, spanning Entrepreneur, Rising Star, Shining Star, Community, Technical and Achievement. Photos by Gino Demeer.

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA
Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Show Comments