It would not seem to bode well for IT spending in 2009 that State Street, one of the biggest purchasers with a $1.3 billion budget, announced last month it will "materially" limit the budget through cost cuts. But, as is so often the case, there is a silver lining. Speaking at a Merrill Lynch conference, CEO Ron Logue said State Street would achieve some of that savings through greater reliance on contractors. So internal IT jobs are looking less secure, but vendor prospects are looking up.
State Street's situation is emblematic for the industry. All estimates for IT spending are down for 2009, which is not surprising. But the discretionary spending most banks can cut is a very small slice of the overall pie. TowerGroup's Virginia Garcia, a senior research director, estimates that 90 percent of most IT budgets go to simply "keeping the lights on." She estimates that total IT spending by banks in 2009 will eke out 0.1 percent growth, down from 0.6 percent in 2008.