Merrill Lynch's John McKinley Jr.

Later this month, Chief Technology Officer John McKinley Jr., who heads Merrill Lynch & Co.'s global technology and services unit, will leave the New York brokerage after more than four years on the job. McKinley was instrumental in crafting many key outsourcing partnerships, rolling out Linux in the data center and helping the firm recover quickly after the Sept. 11 terrorist attacks.

In the coming weeks, McKinley says he'll be searching for a position in the technology sector, where he got his start. He also hasn't ruled out starting his own company. He spoke with Lucas Mearian about his experience at Merrill Lynch, team building and the future of Linux.


It's been a great run being at Merrill, almost four and a half years. I've been a CTO for about eight years, first with GE Capital and then with Merrill. I think it was a great experience, but I cut my teeth in the systems integration business, growing up at Ernst & Young. I really do want to get back to a frontline position, potentially an operating role in a technology company. The dialogues I'm having now are along those lines.
I really believe we're only into the second chapter of the technology story in terms of its impact on business. I really believe if you wait for a market space to be validated, the value-creation opportunity is gone. This is a sector that's not for the faint of heart, but there are still so many rich veins to mine in terms of opportunity that it's just too compelling to me.
There are a number of ones I'm looking at now across the gamut in the software space, the wireless space.
The most difficult thing the entire team did was rebuilding the firm after 9/11, establishing three new trading floors in six days [and] rebuilding wholesale portions of our global network. It required incredible creativity, but also heroism and commitment.
Ultimately, every experience you do has to be a growth experience. We're in a profession where 50 percent of skills are obsolete in three years. So if you're not constantly challenging yourself to grow and expand, you're doing yourself a huge disservice.The biggest litmus test for me is, Do I have a passion about the space that company is in? Do they have something that represents sustained competitive advantage? And is there a cultural fit?


Your biggest sustaining contribution to an organization is the talent base you developed over your tenure. We've got the best technology team on Wall Street. I think that mastering being a virtual organization is something we've worked hard at over the past few years, and it's something that will continue going forward. It just makes too much sense.It's all around looking at [business process outsourcing] opportunities, partnerships at the infrastructure level and next-generation ASP opportunities. For us, an example of our philosophy is the deal we brokered with Thomson Financial to put in all new broker technology. I think you'll see more plays of a similar nature going forward.


I'm a fan of leverage, and I think partnerships with world-class providers at the infrastructure level, at the application level and at the services layer all make a ton of sense. They'll certainly be the blades in my Swiss Army Knife going forward.
A lot of the best practices in managing a technology function can be stolen from the business playbook. Great organizations are value-based. People who share a common set of values, understand [how to] reward behaviors and understand what dials to turn in terms of progressing their own careers. Doing a few things well is a winning playbook.If we look back at the period of '97 to 2000 -- that technology exuberance era -- I think in our profession we were probably not very good portfolio managers. We wound up working on the A-list but also were working on the B-list and half the C-list. I think that leads to lackluster benefits. You spread your talent base [and] your resources too thinly.

I think the third thing is that it's all around focus on measurement and making sure you have the right infrastructure in place for everything, from service quality to fully understanding your unit cost of service delivery.

Ultimately, if you can't measure it, you can't improve it. Investing in your processes and your infrastructure supporting IT as a business is critical.


It's a vendor-agnostic technology which provides a lot of opportunity for tapping into innovation from multiple suppliers, but it's also about managing your cost base more effectively. I think that Linux is powerful because it scales up and scales down. You can get a scaled-down Linux kernel in a 400k footprint. At the same time, you can run 136,000 transactions on a Linux cluster.
To me, it's all around maintaining choice. The one thing I can guarantee is Linux will be an important tool at Merrill over the next 10 years.Ultimately, I like to have choice with Linux, and I think our vendors perform better when there's a better competitive dynamic. And I think Linux helps foster a sense of competitive dynamic among all my vendors.

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