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September 22, 2008

Beep, Beep, Ka-Ching

Diane Lieberman

I’ll admit to being a little distracted several times over the last few days as I sat down to write my blog with my Treo beeping constantly to alert me to the latest breaking news on the financial crisis. OK, maybe more than a little distracted. Admittedly, being older, and perhaps wiser, and certainly more conservative than I was in 2000, I did not feel quite as frantic as I did during the last “crisis,” having made the decision to pull out of the markets back in March when the gyrations in the Dow were already starting to keep me up at night. But I sure am worried.

It’s nearly impossible not be distracted. As consumers, we worry about our savings, our homes, our families’ futures, our healthcare costs, our buying power. As “corporate citizens,” we worry about our job security, our organizations’ valuations and liquidity, our funding and grants, our customers’ financial health, our ongoing ability to invest, and how the restructuring of the global financial services market will affect our organizations going forward.

On the eve of the annual High Performance on Wall Street conference (Sept. 22 at the Roosevelt Hotel in NY), it’s ironic that the words “high performance” and “Wall Street” can be perceived as an oxymoron this week. Is it possible, though, that the very financial crisis we’re in may bode well for increased investment in HPC? I sure hope so. Given the likelihood of regulatory changes for the financial services market, along with the obvious need for better risk assessment and management, higher productivity, greater cost-efficiency and more advanced global economic modeling, it seems all of the right drivers are there.

In fact, HPCwire reported in June on the results of a Microsoft survey, “High-Performance Computing Capital Markets Survey 2008,” which indicated, “capital markets firms in the last 12 months have faced increased demands to run real-time market risk analysis (25 percent), middle-office risk analytics (34 percent) and portfolio-related calculations, such as rebalancing and hedging strategies (42 percent). At the same time, Wall Street firms are turning to their growing HPC resources to assist with these activities, with companies reporting ‘a lot or some’ demand for HPC….”

Will the budgets be there? I don’t have a crystal ball, and it’s not clear how a likely reduction in IT spending by the financial services market will affect other commercial spending, let alone academia and government. As reported in Wall Street & Technology yesterday, “Matt Bienfang, senior research director of TowerGroup, has already estimated the impact that Lehman’s bankruptcy and Merrill’s pending acquisition by Bank of America will have on overall IT spending by Wall Street. ‘Between Bear, Lehman and Merrill you’re talking about 4-5 percent of the entire industry spend on technology,’ he notes. ‘All in all, we’re forecasting the ripples of this on the sell side will cause a 12-15 percent decline on overall IT spending,’ Bienfang says.”

What do you think? Will HPC weather this crisis better than IT overall? I’ll look forward to your comments here on the blog, and to seeing the results of the next Tabor Research Buyer Trends Report (email greg@taborresearch.com for more info on this), and to speaking with as many financial services execs as I can at High Performance on Wall Street next Monday. If they come.