Financial services firms expect to invest most of their discretionary IT spending in hardware over the next 12 to 18 months.
Exclusive research for Computer Weekly among 120 senior IT directors from the UK financial services sector at the City IT Forum last month found that 64% saw hardware taking the largest part of their budget.
Improving network infrastructure, document management and workflow products and storage also look set to dominate spending, the survey found.
Mike North, principal consultant at insurance consultancy Winchester White, said many organisations in the sector were now reviewing their hardware technology.
"Companies are now thinking about replacing legacy system with platform-independent ones based on Java 2 Enterprise Edition or Microsoft .net," he said.
"They are looking to share data across other fields using technologies including XML. To do that they also need to replace hardware such as the iSeries and other mainframe technologies."
Gary Barnett, research director at Ovum, said tight budgetary restrictions were loosening and IT departments were looking to buy hardware that allowed them to reduce overall costs, for example by centralising storage.
The five biggest technology challenges ahead, according to the survey were:
- Managing infrastructure upgrades
- Data storage
- Voice over IP
- Web services
These were ranked above wireless integration, mobile computing and trading systems.
Barnett said there was growing interest in web services with the technology being used to link legacy applications without re-writing code. "Web services or a service-oriented architecture is a way of re-using assets. It is better than re-writing code which is expensive and hugely risky," he said.
The growth in online sales was also creating an upsurge in interest in web services, according to North. Web services were increasingly useful for enterprise application integration. "Internet sales systems still need to be integrated with billing and claims systems," he said.