Hundreds of IT executives from Wall Street's largest financial firms converged on the US Securities Industry Association's (SIA) Technology Management Conference this week, looking for better ways to make the most out of what they already have.
With IT budgets still constrained, SIA President Marc Lackritz told a packed hall that the securities industry has changed from bleeding edge to fast follower on the technology front, with most IT dollars going for business continuity, risk management and applications that help integrate and consolidate systems.
Lackritz touted statistics from research firm TowerGroup that showed IT spending in the financial services industry shrank from US$25.3 billion in 2001 to $21.9 billion this year. The most tightfisted IT shops saw the best returns on their investments, while technology executives who did spend money were careful to match it to specific business needs. "In that context, spending less may not be a had thing," he said.
Amir Abouelnaga, a program manager for Northrup Grumman's information services group, said he was attending the conference to explore the use of open standards such as XML in a data mining system for a large number of disparate databases used to house government contracts. "We want to reduce overhead to administer contracts," Abouelnaga said, explaining that by comparing contracts his company could more quickly discover best practices.
Donald Haile, president of Boston-based Fidelity Investment System, said he's dealing with the challenge of managing 14 mainframes, 1,500 switches, more than 500 routers and an "abundance" of servers: 9,000 in three data centers.
Haile said a recent effort by his IT team to discover redundancies throughout the company revealed many of them in his core infrastructure and desktop environment. "Understanding cost drivers is critical," said Haile, who plans to consolidate systems in order to pay for new applications he hopes will allow him to boost production efficiency. Production costs currently eat up up 65 percent of his budget; the rest goes toward development.
Production "is a mother lode that we can tap for efficiencies," he said.
One way Haile hopes to reduce costs is to use Linux on blade servers for compute-intensive environments, a change he said could lower server costs by at least 25 percent. Haile isn't yet ready to consider Linux for his production environment because the operating system still needs to prove that it's robust enough.
That sentiment was echoed by Dennis Mooradian, chairman and CEO of Wells Fargo Investments. Mooradian fired a volley of criticisms at IT managers, reminding them that "technology is not the business" and that untested technology is never worth the risk. "Don't risk your career with a start-up's technology that's not been tested. Focus on stuff that's been tested somewhere else."
He also advised taking a look-before-leaping approach to outsourcing. Otherwise, IT managers might find themselves in the hands of "two guys in a garage with a couple of laptops."
Mooradian was not at a loss for words when it came to advice for technology executives. He told a packed room that he'd never seen an IT project come in on time and budget, and said that if anything, technology managers should pad projected project costs and never low-ball business managers.
And even though IT spending, by his estimates, has continued to grow sequentially in the financial services industry during the past five quarters, Mooradian said it would continue to be difficult to get "money out of the CEO for projects."