copyright 2008 idc. reproduction is forbidden unless authorized. all rights reserved. from it...

Copyright 2008 IDC. Reproduction is forbidden unless authorized. All rights reserved.

From IT Initiative to Business Strategy

Ricardo VillateResearch and Consulting Vice President

IDC Latin America

IT Trends in the LA Financial Services Industry

© 2008 IDC

Financial InsightsFinancial Insights

IDC company Established in 2002, from the merge of Meridien Research

and IDC's Financial Services Advisory Business

A Global Financial Services Research and Advisory Firm

© 2008 IDC

AgendaAgenda

• Finance industry in LA

• Top 10 Strategic Initiatives in banks

• Innovation

• Security

• Virtualization

• Customer Centricity

• Conclusions

© 2008 IDC

Latin America Financial Services Spending CycleLatin America Financial Services Spending Cycle

2001-2006: Growth at all costs

2006-2009: Growth but rationalized Investment

and improve efficiency and security

2009 - : Customer centric initiatives and improve efficiency

© 2008 IDC

Finance Industry in Latin America

© 2008 IDC

Finance industry proportion in Latin AmericaIT investments in the region will reach US$8.6 B in 2008Finance industry proportion in Latin AmericaIT investments in the region will reach US$8.6 B in 2008

54%

17%

5%

4%

6%

1%

5%

RLA = 7%

2008

Latin America IT Market = $ 54 Billion

Projected Growth 2008= 10.7%

2008

Total IT Market in FSI = $ 8,6 Billions

Projected Growth 2008 = 9,6%

16% of total IT Market

Source: Worldwide Black Book v. Q3 2007

Source: IDC LA 2008

© 2008 IDC

Typical FSI in Latin AmericaTypical FSI in Latin America

Average IT investment grows 9,6% in ’08 vs ’07

Up55%

Down25%

Same20%IT budget is going

75% PCPC penetration internally: 1.33 Employees per PC

1 serverserver for every 17 PCs or 22 employees

500 to750 GB of data storeddata stored per employee

1 in every 2 has deployed IP telephonyIP telephony

On average, 65% of employees have supported emailemail

CEO75%

COO12%

CFO13%CIO reports into

Growth55%

Cost red.24%

Reengin.21%

Agile13%Strategic focus on

Sources: IDC Latin America IT Spending Trends, 2008: IDC Latin America CIO Priorities, 2008;: Latin America Unified Communications Research, 2008

© 2008 IDC

FSI Spending in Latin America 2008FSI Spending in Latin America 2008

Hardware32%

Software21%

Services47%

Total IT Spending in Finance Industry = $ 8,6 Bn

Sources: Latin America Vertical Market Spending Patterns; Latin America Semiannual IT Services Tracker

Consulting, Integration & Development

34%

Deployment, Support & Education

33%

Outsourcing33%

Development & Deployment

Tools37%

Applications23%

Infrastructure40%

Pc's & Peripherals

45%

Networking29%

Servers & Storage

26%

© 2008 IDC Sources: Latin America Vertical Market Spending Patterns; Latin America Semiannual IT Services Tracker

Finance Industry IT marketGrowth in Latin AmericaFinance Industry IT marketGrowth in Latin America

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2007 2008 2009

Gro

wth

Venezuela

Argentina

Peru

Brazil

Chile

Colombia

Mexico

RLA

© 2008 IDC

Build vs. Buy in Latin America FSIBuild vs. Buy in Latin America FSI

0% 20% 40% 60% 80% 100%

Business Process Mgmt.

App. Integration Server

Sys. And NW Mgmt.

Business Intelligence

CRM

ERP

Mobile Enterprise

Collaboration

Security

Internal Development Custom External Dev.

Packaged SW Outsourcing

46% of all Latin American financial companies in Latin America prefer to buy point technologies ‘off-the-shelf’ rather than integrated solutions

Likewise, from 36% to 65% prefer to develop their software rather than buy or hire an expert

This is because Latin America idiosyncrasy is one of ‘do-it-yourself’

It is higher for southern countries like Brazil, Argentina, Chile

Note: N = 107; single response – respondents are companies that say they will invest in said solution during 2008

QUESTION: Of the following IT solutions [you said you would invest in during 2008], please specify what type of IT Investments your organization will make:

© 2008 IDC

Disappointed with the returnon our investiment on IT

Mixed record with ourinformation technology

investment

Significant source ofcompetitive advantage

Steady contributor to ourongoing operation

effectiviness

CEO´s opinion of overall impact of IT on their companyCEO´s opinion of overall impact of IT on their company

Source: IDC LA Feb 2008CEO Priorities Survey n= 29

© 2008 IDC

CIOs may be Underestimating how Strategic IT is for the CEOCIOs may be Underestimating how Strategic IT is for the CEO

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Business IT

4 - Significant Impact

3 - Moderate Impact

2 - Minor Impact

1 - No Impact

Q: On a scale of 1 to 4, where 1 is 'no impact at all' and 4 is 'significant impact', to what degree is IT supporting the Top Business Initiative for your CEO?

© 2008 IDC

Store/branch office performance

Supply chain efficiency/improvement

Business performance monitoring

Product (or service) innovation/development

Efficiency improvement

Sales productivity/performance improvement

Customer care/customer service enhancement

Business initiatives that are leading the CEO's agenda in 2008 Business initiatives that are leading the CEO's agenda in 2008

Source: IDC LA Feb 2008CEO Priorities Survey n= 29

© 2008 IDC

Top 10 Strategic Initiatives in banks

© 2008 IDC

Global top 10 strategic priorities in banking – WW and Latin AmericaGlobal top 10 strategic priorities in banking – WW and Latin America

1. Information management: moving to

information life-cycle management

2. Technology refresh: quest for dynamic IT

3. Data security

4. Business process management (BPM)

5. Credit risk management: back to basics

6. Predictive analytics: building on a strong

foundation

7. Mobility: the next big thing?

8. Core banking renewal: gaining momentum

9. Green: conservation as competitive advantage

10. Channels: getting to customer centricity

1. Contingency, security and fraud

2. Architecture revision: dynamic IT

3. Risk management and compliance

4. Infra-structure consolidation and improvement

5. IT governance

6. Customer centricity, channels, increase loyalty

7. Operation centralization: global processes

8. Consumer credit/credit card/mortgage

9. Selective sourcing

10. Workflow-BPM - Digitalization

© 2008 IDC

0% 10% 20% 30% 40% 50% 60% 70%

Internet/Portal/Web

Dynamic IT Infrastructure.

Improvement of back-end operations

On-line collaboration between Bus

Manage growth of stored information

Real-time business performance monitoring

Mobility

Data integration

Compliance with regulatory requirements

Increase efficiency of existing IT infrastructure

LA banks major drivers for IT spending in 2008 LA banks major drivers for IT spending in 2008

Source: IDC LA Feb 2008 IT Investment Trends n= 56

© 2008 IDC

Security in LA FSI

© 2008 IDC

LA FSI overall level of confidence in their company's enterprise securityLA FSI overall level of confidence in their company's enterprise security

60%

10%

14%

19%

1 to 19 20 - 39 100 - 299 500 or more

Confident63%

Very confident

26%

Somewhat confident

11%

Source: IDC LA April 08Security Investment Priorities n= 27

How many serious IS security attacks has your company had in the last 12 months?

Level of confidence in the IS security in their companies

© 2008 IDC

0% 5% 10% 15% 20% 25% 30% 35%

Spoofing of corporate identity in an attack oncustomers

Flaw in network infrastructure

A denial-of-service attack

Other

Flaw in an operating system

Internal exposure

Flaw in a Web application

Attacks that caused the main problems in the past 12 months in LA FSIAttacks that caused the main problems in the past 12 months in LA FSI


© 2008 IDC

0% 10% 20% 30% 40% 50% 60% 70% 80%

Lack of IT security experts within company

Difficulty of securing Web applications

Network management

Outsourcing security

Business exec. underestimate security

Mobility

Complexity of security solutions

Complying with regulations

Increasing sophistication of attacks

Employees underestimate security

Top security challenges LA FSI will face over the next 12 months Top security challenges LA FSI will face over the next 12 months


© 2008 IDC

Reporting andmeasurement

Security awareness andtraining

Regulatory compliance

Governance

IT Infrastructureimprovement

Top security initiatives for 2008 Top security initiatives for 2008


© 2008 IDC

Virtualization in LA FSI

© 2008 IDC

Service-Oriented

Architecture

Why Blades, Virtualization, and SOA Change the Economics of ComputingWhy Blades, Virtualization, and SOA Change the Economics of Computing

Virtual platform: Exploiting available physical resources and payment options to best serve a variable workload

EII: Delivering meaningful information from many sources to many consumers

SOA: Delivering IT functionality as reusable, interoperable, location-independent services

Autonomic: Self-managing, self-healing, self-tuning, self-securing

Dynamic IT: Giving users all the resources they need at the time they are needed, at a cost that is related to the business value delivered

VirtualPlatform/

Grid

EnterpriseInformationIntegration

AutonomicComputing

Dynamic IT:Enabling

Deployment ofConcurrentInitiatives

© 2008 IDC

Medium and Large Companies Reported a Virtualized 22% of their Server Installed BaseMedium and Large Companies Reported a Virtualized 22% of their Server Installed Base

Source: Latin America Investment Priorities Infrastructure Virtualization, 2008

Percentage of virtualized servers:

69%

8%

39%

11%

12%

6%7%

3%10%

x86 RISC EPIC

1% to 25% 26% to 50% 51% to 75% 76% to 99 100%

Question: Thinking of all the individual physical servers that you have installed, approximately what percent are virtualized, meaning they are partitioned into multiple physical or logical servers?

N=120 N=31 N=13

# of VMs or Partitions:

82%

48%

15% 18% 12%

10%

46%

34%

9%

5%

4% 6%6%

x86

RISC

EPIC

None 1 2 3 4 5 +

Question: What is the average number of partitions or virtual machines that you have on your virtualized servers?

N=120

N=31

N=13

None: Means they are using physical

partitioning

© 2008 IDC

0% 10% 20% 30% 40% 50% 60% 70% 80%

None

In-house Expertise

Technical Issues

Chargeback

Perceived as Risky

Costs/Budget

Tools/Management

Licensing costs

InstitutionalResistance/Issues

Skepticism

Vendor Support

LA

Virtualization Perceived as an “Easy to Implement” TechnologyVirtualization Perceived as an “Easy to Implement” Technology

Question: In order of importance please rank the 3 major challenges you faced in implementingimplementing virtual servers in your organization? [MULTIPLE RESPONSE]

2008 N=122

WW Results:

0% 10% 20% 30% 40% 50% 60%

None

In-house Expertise

Technical Issues

Chargeback

Time

Costs/Budget

Tools/Management

ImmatureTechnology

InstitutionalResistance/Issues

Vendor Support

2005 2006 2007

2007 N=405

Percent of Responses

Source: Latin America Investment Priorities Infrastructure Virtualization, 2008 / IDC WW Virtualization Study, 2006

© 2008 IDC

Customer Analysis/Control of the BudgetCustomer Analysis/Control of the Budget Drive BI InvestmentDrive BI InvestmentCustomer Analysis/Control of the BudgetCustomer Analysis/Control of the Budget Drive BI InvestmentDrive BI Investment

What is the main driver for your organization to invest in Business Intelligence (BI) Solutions in 2007?Base=Will invest in Business Intelligence within the next 12 months, Only Financial Sector N=37

Source: IDC Latin America IT Investment Trends, Software, 2007

35%

3%

18%

47%

0% 10% 20% 30% 40% 50%

Implementcentralization ofcompany data

currently in silos

Use predictiveanalysis for

inventory/pricingmanagement

Implement balancescorecard

Betteranalysis/control of

the budget

Latin America

© 2008 IDC

Implement New Customer Service Implement New Customer Service ProcessesProcesses Drive CRM Investment Drive CRM InvestmentImplement New Customer Service Implement New Customer Service ProcessesProcesses Drive CRM Investment Drive CRM Investment

22%

23%

51%

17%

0% 10% 20% 30% 40% 50% 60%

Manage sales funnel/pipeline with newprocess/metrics

Better manage cross-selling/marketingcampaigns

Implement new customer serviceprocesses

Create/strengthen contact center

What is the main driver for your organization to invest in CRM Solutions in 2007?Base=Will invest in CRM within the next 12 months, Only Financial Sector N=30

Source: IDC Latin America IT Investment Trends, Software, 2007

Latin America

© 2008 IDC

Innovation is Essential but EvasiveInnovation is Essential but Evasive

1.9

2.0

2.6

3.1

3.3

3.7

3.8

4.2

4.5

4.9IT should participate in innovation

Innovation will be essential for our survival

IT is too busy to innovate

There are people dedicated to innovation

Innovation is gaining momentum in the bank

Innovation is widely discussed in the company

IT is demanded to generate innovation

We wait others to innovate first

There are IT budget dedicated to innovation

We use collaborative innovation

Please indicate if you agree or not with the following statements: 1 = Disagree 5 = Agree

Source: IDC Brasil n= 35 Aug 07Brazil Business Needs and Its Impact on IT

© 2008 IDC

Innovation vs investment plans 2008 – banks in Brazil

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Thin client

Smart cards

Full outsourcing

Digitalization

Client segmentation

VoiP

Digital certification

Virtualization

Teleconference

Biometry

Green IT

SOA

Mobile payment

IPTV

Mobile banking

Web 2.0

Investment plans

Innovation

Innovation vs investment plans – banks

Source: IDC Brasil n= 35 Aug 07Brazil Business Needs and Its Impact on IT

© 2008 IDC

Factors for FS companies to considerFactors for FS companies to consider

Risk Management More Important

2007-2010 A More Challenging Market

Reduce Back Office Costs

Sourcing remains important and will continue to rise for non customer related issues.

New IT-enabled revenue sources

Alternative channels showing signs of success

Clients are organizing themselves around community structures (eg MySpace, YouTube, Okurt).

© 2008 IDC

Customer centricity initiatives:Once again, the customer is kingCustomer centricity initiatives:Once again, the customer is king

Most FIs Still Lack a Single View of Their Customer

Drive Retention and New Customer Initiatives

On the Rise: Segmentation to Reach “Market of One”

© 2008 IDC

Financial Insights opinionFinancial Insights opinion

Although heavy IT investors Banks Vary Significantly in the Effectiveness of their IT Spend

FI s struggle to link IT investments to Business Value

Track records have not been great

FI want more out of IT for the same or less spend and will continue to invest selectively in long-term strategic initiatives.

copyright 2008 idc. reproduction is forbidden unless authorized. all rights reserved. from it...

Documents