BFSI sector sees change in IT buying pattern

by Abhinna Shreshtha    Jun 09, 2010

Conventionally, companies in the BFSI sector are organized into various business groups namely retail, corporate, loans, etc and work in a highly compartmentalized manner. The departments normally work independently as individual companies and with their own IT budget. This has been a sore point of management for the technology department.

The CIO is expected to deploy different solutions for each of these functions keeping their specific and customized needs in mind. This gives rise to duplication of data and applications within the company and further increases a strain on finances. Currently, most companies that constitute the BFSI sector are operating in this manner. However, with the global recession, awareness has set in on the disadvantages of this method and technology purchases have started getting centralized.

"The recession did three things for the BFSI sector — it made business heads aware of the errors of purchasing IT solutions on an individual basis for different departments, it made IT investments more centralized and CIOs more conservative. It made them start thinking about consolidating their infrastructure," opines V. Babji, SVP and global head (IT infrastructure management services) of 3i Infotech.

Driving this consolidation is the acceptance of virtualization as a tool and across functions. While currently, adoption is limited to servers with storage virtualization to a certain extent. Interest in other forms, such as network and desktop virtualization, has not really picked up. Babji believes this may change soon.

"We have seen a lot of discussions happening around desktop virtualization. It will definitely happen, though organizations will need to identify which divisions will benefit the most by it. For example, credit card operations can definitely opt for desktop virtualization, whereas the more transaction intensive operations such as retail, loans, etc. may not qualify for it," he said.

The scenario is a bit bleak when it comes to virtualizing the network, feels Babji. In his opinion there is no significant information available about the Return on Investment (RoI) when it comes to network virtualization. The question is whether one views network optimization as a responsibility of the service provider or the end user.

The BFSI sector will see a shift in the way it normally goes about buying technology. The shift will be in the form of consolidated spends. Though this trend is still at a nascent stage, it will create cost arbitrage opportunities for the tech department.