Even though I wasn't looking for any special geographic influence in a recent analysis of bank IT spending habits, it became clear that the good news I was collecting was mostly from banks in the Midwest. In fact, 47 percent of the surveyed audience did business in the Heartland of America.That in turn got me thinking about other aspects of banking in the news today. All the bad news was coming from the West (Countrywide, IndyMac and WaMu), and from the East (Bear Stearns, Lehman Brothers, Merrill Lynch, Wachovia, AIG, Goldman Sachs and Morgan Stanley. No bad news from Chicago, the financial capitol of the Heartland. And no bad news from Stephens Inc., the investment banking firm that one might imagine fell asleep on the train in NYC and woke up in Little Rock where it decided to establish its business.
Soon I was daydreaming, something I do a lot of since the only other living things in my office are a Ficus tree and a gold fish, and I realized what a peaceful and homey place the Midwest is. For example, on what other major street in a major city can you buy a box of popcorn right out of the popper? And where else can you come out of a swanky hotel like the Drake and walk to the beach? And where else but at Gene & Georgetti's can you go for the best steak you ever ate and be treated as if you are family and just returned from the war?
Reading the comments from my Midwest clients gives one a huge dose of financial comfort. These guys are the salt of the earth. They're not on anyone's list, good or bad. Statistically, they represent 96 percent of the entire banking industry ($59 million to $2 billion), but all you read about are the bad guys. Even if all the big boys collapse and become pawns of the federal government, you'll be able to rely on community banks in the Heartland to serve your banking needs.
I wouldn't dare speak for them so I documented their exact words. Stay tuned for a strong dose of reality where straight talk abounds. Technology is alive and well in the Heartland. That means spending is in line with intelligent assessments of needs. Never before have I heard "ROI" mentioned so much by CIOs.
Here's a simple calculation that might tell the true story about spending on new apps: The average increase in IT budgets is right at 10 percent. If you believe my hypothetical calculation that every IT budget has to grow by 7 percent just to stay even, then there's only 3 percent that will be allocated to new apps. Add that 3 percent plus X percent that some vendors are counting on as a result of robust salesmanship and strong growth banks, and you come up with the reasons vendors are projecting organic revenue gains of 5 percent to 7 percent for 2008, and even 2009. Not a great revenue projection, but anything in the positive arena is good news during the nemesis of a weak, getting weaker, economy.