The most significant change in the business priorities for financial services CIOs is the rising importance of "faster innovation," and business activity monitoring (BAM) is the most significant technology for achieving this goal, according to Gartner, Inc. BAM drives this innovation by detecting events, filtering them and triggering business process management (BPM) solutions.

In the Gartner report "Hype Cycle for Investment Services, 2006," Gartner analysts identify technologies that are special to investment services in some way, because they are unique to this industry or because they are applied in a different manner within this marketplace.

"Business activity monitoring is the only technology in the Gartner Hype Cycle rated as high impact (enables new ways of performing vertical applications that will result in significantly increased revenue or cost savings for an enterprise) and capable of reaching maturity in less than two years," said David Furlonger, managing vice president at Gartner.

"The investment services industry is in the forefront of adoption of BAM and, in particular, low-latency complex event processing (CEP), given the need of some investment services firms such as hedge funds and others that perform a high volume of automated trading to analyze high volumes of streaming market data and transactional flows, often with sub-second latency," said Mary Knox, research director at Gartner.

While approximately 25 percent of investment services firms have some form of BAM in production, these are often relatively simple implementations involving single event streams and less-time-critical applications. "High growth in electronic trading, burgeoning volumes, sources and need for analysis of market data streams, and regulatory compliance demands will drive rapid adoption of more-sophisticated BAM and low-latency CEP," Ms. Knox said.

As the investment services sector continues to undergo a massive change, investment services firms with the power to invest strategically in new architectures, messaging standards, applications and processes will grow faster than midsize firms (which will disappear) or small firms (which must exploit technology tactically to establish superiority in specialist niches).

"Global investment services firms will no longer be magnified versions of small investment services firms; they will have distinctly different business models, and their IT decisions will reflect this disparity," Furlonger said. "Sometimes, this will mean that the emerging technologies they choose will be quite different; for example, grid computing may only be a realistic option for large investment services firms. Other times, it will mean that they access the same technologies in different ways; for example, business process outsourcing (BPO) deals and business process networks may give small firms access to technologies they could never build in house."

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