Business Focus is a weekly column providing at-a-glance
statistics and commentary on spending priorities and trends in
particular sectors. This week we look at building
societies.
Spending on IT among large and small building societies mirrors
closely the wider UK business average, with larger building
societies spending an average of £8,897 annually per desktop, and
their smaller counterparts spending £3,137.
The equivalent figures across all business are £8,455 and
£3,132. But this level of spending is dramatically less than the
level of investment elsewhere in financial services.
Larger retail banks, which compete across many product lines
with building societies, are making nearly twice as much investment
in IT as larger building societies, spending nearly £15,000 each
year. Smaller retail banks are also spending £4,500 per desktop, or
over 40% more than building societies of an equivalent size.
Many smaller building societies outsource their IT rather than
manage it in-house, with some sourcing their technology needs from
their fellow mutuals.
Skipton Building Society has offered IT bureau operations for 12
years, after developing an integrated core banking system using
Jade, an object-oriented software language. Its primary market for
those services is other building societies, and late last year
Skipton signed its first complete IT management contract, with
Loughborough Building Society.
For the most part, however, small and large building societies
spend slightly more than the UK-wide business average on software
and IT services, but slightly less than others on IT staff.
This suggests that building societies tend to rely on
off-the-shelf packages more than most, particularly in comparison
with others in financial services, and prefer to outsource some
services while keeping in-house IT staffing to a minimum.
Stephen Peete, chief executive of Loughborough Building Society,
offered a clue to the thinking of smaller building societies when
he said last year that his decision to outsource IT to Skipton was
primarily driven by the risk involved in keeping technology
in-house.
Methodology
The analysis is based on Computer Weekly's database of more than
60,000 IT budget holders, twice yearly user IT expenditure surveys,
CBI/Kew senior executive surveys, government surveys, government
demographic data, HM Treasury economic forecasts and Cambridge
Econometrics industry sector forecasts.
Further details:
www.kewassociates.co.uk
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