2002 Deloitte Consulting. All rights reserved.

AFICIONADOS
Chief Information Offcers:
Shaping The Future of Financial Services
AFICIONADOS
Chief Information Offcers:
Shaping The Future of Financial Services
ITS MORE THAN
JUST A CAR

Say the word afcionado and people
think of passion. For things like
cigars. Or wine. Or even vintage
cars.
But no matter what the source of
their passion, afcionados approach
their specialties with enthusiasm
bordering on obsession. They delight
in their chosen felds and they pur-
sue a level of intimate understanding
that would boggle the minds of
casual observers.
So it is with CIOs in the fnancial
services industry. Afcionados. Men
and women who are driving funda-
mental changes in the very structures
of their businesses. Having evolved
from yesterdays technology suppli-
ers to todays information services
brokers, CIOs are bringing fresh
passion, power and purpose to their
work.
And passion is needed. The role has
changed and CIOs are at a critical
juncture. A combination of fnan-
cial and organizational savvy with a
innovative approach to technology
will differentiate the strategists from
the managers.
TABLE OF CONTENTS
Passion Under Pressure.........................................................................1
The CIO as a Broker/Dealer .................................................................3
How. How. How. How. .........................................................................5
Organizational concertina ................................................................7
How can I miss you when you wont go away? ....................................8
Optimum minimum ........................................................................9
Meet Miss Alignment .......................................................................10
Dear occupant .................................................................................11
Between a rock and a hard place.........................................................12
Mind the gap....................................................................................13
Ch-ch-ch-ch-changes ......................................................................14
Passion, Power and Purpose..................................................................15
1 2
Passion
Under
Pressure
Its hard to say which came frst
for todays fnancial services CIOs
the passion or the pressure. But
whichever way you look at it, both
are pretty intense. On the passion
side, the opportunities for innovation
are limitless. For CIOs who revel in
building a better mousetrap, there is
an endless supply of tools and enough
mice to last a lifetime.
But the pressure has been enormous,
too. Merger integration. Straight-
through processing. Strategic
cost reduction. Retail branch
refresh. Technology optimization.
Consolidation of customer touch
points. Resilience. Continuous
improvement and six sigma. Plus in
many cases, failure in delivering true
value relative to historically large IT
spend.
It is against this backdrop that CIOs
have had to build organizations that
can respond to change, create value,
and enable the strategic intent of the
enterprises in which they operate.
It would be hard enough to do all of
this in the best of times, but throw in
an economy thats going down the
toilet and, well, that calls for passion
under pressure.
3 4
The CIO as
Broker/Dealer
A CHANGING ROLE
Traditionally, the CIO has been
seen as a provider, or dealer of
technology services. Be it applica-
tion development or changes to the
technology infrastructure, the CIO
has mobilized in-house resources to
facilitate business and technology
demands.
Times have changed. CIOs now have
a myriad of different options open to
them in terms of meeting the tech-
nology demands of the organization.
From outsourcing to shared services
and off shoring, the CIO is now
placed in the role of a broker of
technology capabilities, selecting the
best option for the specifc job.
This new broker role enables the
CIO to be far more fexible in meet-
ing business demand. A CIO can
assess the technology capabilities
of their organization based on this
new mix of fxed and variable cost
options. This maximizes the oppor-
tunity to create a fexible, nimble
technology organization which can
quickly match fuctuating levels of
business demand.
And so to the broker/dealer. How
do you go about shrinking and
growing your organization? How
do you manage the risks associated
with outsourcing? And the old
favorites, such as the proliferation
of applications and underperforming
technology investments, have not
gone away. So, with the changing
role what is the agenda?
5 6
When passion, power and purpose
converge, a fnancial services CIO
has the opportunity to dramatically
upgrade not only the performance
of the IT organization, but also the
performance of the entire enterprise
surrounding it. The former just hap-
pens to be the most direct path to the
latter.
CIO afcionados in the fnancial
services industry face four key ques-
tions.
q How do we become client-
focused and value-based?
q How do we create break-
throughs in operational
excellence?
q How do we effciently handle
the basics . . . keeping the lights
on?
q How do we reposition for cost-
effective and cost-competitive
performance?
Because none of these questions
can be addressed without affecting
the others, CIOs also face the deli-
cate task of managing the interplay
among the conficting priorities and
technical requirements inherent in
each. From the growing pressures to
outsource and reduce costs on one
hand to the escalating demands for
resilience and business continuity
on the other, CIOs are juggling an
increasingly complex set of variables
with the enterprise itself at stake.
The business of fnancial services
and the business of IT are rapidly
becoming indistinguishable from one
another. And CIOs are straddling this
convergence.
HOW. HOW. HOW. HOW.
THE AFICIONADOS AGENDA
Keep the
lights on
Operational
Excellence
Cost effective /
cost
competitive
provider
Client focused
&
value based
CRM
Cost
Reduction
IT Value Outsourcing
Optimizing
IT
Organization
Integration
Architectures
Resilient
Infrastructure
Platform
Consolidation
The
CIO
Agenda
7 8
How can you create an IT organi-
zational model that can shrink and
grow, like a concertina, in response to
business demands without having
to restructure your organization every
other month? Focus on these three
things.
Resources. Get the mix right.
Identify potential resources both
internal and external for all the
required roles in your organization.
Rely on external resources, especially
in roles that do not create competitive
advantage, so you can respond more
effectively to changing investment
appetites.
Structure. Use your resources
strategically to identify where you
should operate with shared services
and where decentralization would be
more effective. The organizational
model you choose can infuence how
easy it is to shrink and grow your
IT organization. A structure which
creates numerous organizational
divisions has the potential for process
breaks and service disruption.
Governance. Work proactively to
build business confdence through
increased transparency. Design
your governance to involve senior
executives. Look hard at the decision
making style you utilize in the gov-
ernance model. There are a number
of decision making styles that can be
used ranging from business domi-
nated to IT Monarchy. Tailor the
style to suit the type of decision to be
made. Remember governance is key
to successful alignment of your busi-
ness and your IT organization.

As you look for the right combina-
tion of resources, structure and
governance, keep in mind how a
concertina can expand and contract
in response to changing pressures and
needs. Its a good model for an IT
organization.
Done right, outsourcing creates the
possibility of agility and freedom in
a world where little is predictable
except change. But done wrong,
outsourcing can become a set of rusty
handcuffs or maybe even a ball and
chain. As you consider outsourcing
as an option for reducing fxed costs
and refocusing internal resources,
here are four things to keep in mind.
Financing. Think creatively
about how outsourcing deals are
fnanced. There are many recent
examples of innovative fnancing
solutions, such as securitization,
that are generating additional value
on top of the traditional benefts
associated with outsourcing.

Challenge core vs. non-core. While
the core/non-core distinction makes
intuitive sense, it doesnt always hold
up in practice. Better to focus on
outsourcing those functions that are
modular and easy to specify.
Going offshore. Traditional risks
associated with off-shoring have been
dramatically reduced in recent years.
Offshore fnancial services opera-
tions represent an opportunity to
crack into new markets and provide
services to other institutions in the
region.
Collaboration. Would you believe
it? Some alliances and joint ventures
are actually working effectively now,
especially when partners both have
an equity stake. One key to success is
the availability of mature technology
that enables coordination across the
extended enterprise.
ORGANIZATIONAL CONCERTINA
OPTIMIZING YOUR IT ORGANIZATION
HOW CAN I MISS YOU WHEN YOU
WONT GO AWAY?
THE POWER AND POSSIBILITY OF OUTSOURCING
VIEWPOINT #2 VIEWPOINT #1
9 10
In some industries the concept of
optimum minimum is quickly
taking hold as a best practice for
resource planning. It asks: What is
the least you can do without sacrifcing
performance, competitive advantage or
incurring undue future risk?
How can you use optimum
minimum to create a sustainable and
competitive IT operating model that
delivers value across the enterprise?
One that is sustainable, fexible and
effective? Heres how to break it
down:
Short term. Quick wins require
minimal investment and produce
rapid results. Look to contractor
spend and procurement of bought-in
goods and services. Cap investments
to reduce capital expenditures, as
well as demands on application
development resource.
Medium term. Streamlining
your IT cost base takes more time
and money, but produces more
substantial savings. These initiatives
typically involve organizational
and process changes such as
centralizing data centers and server
farms, rationalizing duplicated IT
functions, and headcount reductions.
Long term. Creating a competitive
cost IT operating model involves
substantive, long-range programs
to fundamentally change the
economics that drive your cost base.
Things like reducing applications
and data architectures through
standardization and rationalization.
Or major shifts in the HR and
IT ownership models involving
outsourcing and off-shoring.
The biggest impediment companies
have to creating and measuring value
through IT investments is misalign-
ment between their technology
project portfolios and their overall
business strategy.

As you look for ways to get things on
the right track, the frst thing to focus
on is transparency. Transparency
enables your leadership team to know
whos doing what, what its really
costing, and what value your invest-
ments are generating. And when
transparency is in place, you can
fnally get a good look at your entire
project portfolio.

Which brings up the time-honored
issue of alignment. Simply put, align-
ment is about making sure your
project portfolios match up with your
companys objectives and strategies.
Without it, your company simply
will not achieve superior returns on
its technology investments. But with
it, you may even be able to reduce
your overall IT spending without
sacrifcing competitive advantage or
exposing yourself to unnecessary risk.

But dont go thinking that off-the-
shelf tools like EVA or Balanced
Scorecard will do the whole trick
and meet the need for transparency.
Because unlocking the value of IT is
way more complicated than plugging
numbers into a formula. The key
is an operating model that makes it
obvious how business decisions get
translated into the currency of IT.
OPTIMUM MINIMUM
A FRESH WAY TO THINK ABOUT
STRATEGIC COST REDUCTION
MEET MISS ALIGNMENT
FINDING THE VALUE IN IT
VIEWPOINT #4 VIEWPOINT #3
11 12
When it comes to effective CRM
initiatives, the analogy these days is
to think globally and act locally.
That means think enterprise-wide,
but implement solutions in bite-size,
modular chunks to meet specifc cus-
tomer management needs.
Until recently, you really didnt have
this luxury. Your only choice was to
slog through monolithic enterprise
solutions that could take years to
implement.
Now there are modular architectures
and solutions you can choose from
that give you the fexibility to really
act locally. The cost of entry is
lower, the customization potential is
higher, and the speed to value is what
youve been looking for all along.
And dont forget, the way in which
you implement CRM is just as
important as the technology you
choose.
q Make sure you have a plan for
data and channel integration
issues.
q Choose vendors who under-
stand the industry workfow as
well as the legacy data issues.
q Develop a business case to sup-
port the investment and break
the integration down into 100-
day wins.
q Never lose sight of the purpose
of CRM: to make your sales
people more effective.
CIOs today truly have the opportu-
nity to build customized, modular
solutions that create strategic advan-
tage . . . and thats where you should
focus your CRM energy.
CIOs today fnd themselves strug-
gling to cope with the proliferation
of computing systems under their
control. Despite limited staff and
tighter budgets, your IT organiza-
tion must keep all systems on track
- managing an increasingly complex
infrastructure while also provid-
ing higher service levels and greater
security. And to top it all off, there
are increasing pressures to outsource
and be done with it. The voices are
loud, the short-term savings are real
and the pressures are more intense
than ever.

The good news is most IT
Organizations have the skills to
undertake signifcant consolidation
efforts in-house. Organizations are
exploring the concept of managed
services which will require a major
change in how you think about and
implement services. Not everyone
will be happy - demands for new
systems and increased availability,
resilience and recovery have to be
grounded in a true understanding of
benefts delivered. And youre going
to have to entertain alternative models
with much more cost-effective profles,
while accepting business trade offs that
you can live with.
Effective consolidation will require
the IT organization to embark on
a journey of ruthless simplifcation
(standardization) and virtualization in
order to drive up levels of utilization
across all assets (hardware and soft-
ware, people and information)
What can you do now?
q Wage war on JBOD (Just a
Bunch Of Disks). Device-
attached storage is one of the
largest impediments to achieving
a low cost fexible structure.
q Avoid multiyear contracts for
commodity resources like storage
and bandwidth.
q Legacy applications - wrap them,
kill them or deconstruct them.
Put the game plan together and
leverage new technologies where
you can.
DEAR OCCUPANT
GETTING MORE VALUE FROM CRM
BETWEEN A ROCK AND
A HARD PLACE
BREAKTHROUGHS IN PLATFORM CONSOLIDATION
VIEWPOINT #6 VIEWPOINT #5
13 14
While business continuity planning
has always been on the minds of
CIOs, the events of September 11th
catapulted the issue to the top of
every executives agenda. And in the
aftermath of the attacks, CIOs are
realizing that some of the greatest vul-
nerabilities lie outside traditional data
center recovery.
The real challenge is to develop and
implement a comprehensive Business
Continuity Management program
that supports corporate risk toler-
ance across the extended enterprise.
Success depends on:
q Developing plans at a process,
not a department level.
q Focusing on people within
the organization - they are a
critical element of your ability
to recover.
q Actively involving business
partners in the planning pro-
cess.
q Ensuring business continuity
planning is a key agenda item
for senior executives.
So when youre thinking about
resilience and business continuity,
dont focus exclusively on the boxes.
This is not about putting in an extra
roomful of servers across the river. Its
about people. Its about intellectual
property. Its about making sure your
extended IT organization is prepared
from top to bottom
You know the problem: a prolifera-
tion of platforms, ubiquitous legacy
systems, new products, new architec-
tures and evolving business processes
all left over from the e-boom. And
now theres an onslaught of new tech-
nologies from web services to grid
computing and more.
Getting it under control demands
integration architectures. Heres
some of their key characteristics:
q Loosely coupled and service based
so the complexity of underly-
ing implementations is hidden.
q Business process aware with
business activity monitoring to
manage, optimize and provide
visibility into business pro-
cesses such as STP.
q Provides data management and
are designed for maintenance
to provide consistent view
of information and provide
standards-based interfacing
approaches.
q Incorporates architectural
governance, through process
discipline and life cycle man-
agement to achieve business
benefts.
You know all this, right? But until
now, you probably havent been able
to get it done in a cost-effective way.
So heres the good news: the core
technologies have fnally matured to
make integration possible. The major
software vendors have stopped fght-
ing with each other and have begun
searching for common ground. And
the economics are beginning to make
sense as individual business units are
actively encouraged to share costs.
These new realities mean integration
architectures can start working for
you now.
MIND THE GAP
RESILIENT INFRASTRUCTURE AND
BUSINESS CONTINUITY
CH-CH-CH-CH-CHANGES
THE ROLE OF INTEGRATION ARCHITECTURES
VIEWPOINT #8 VIEWPOINT #7
15 16
What a great time to be a CIO to be
powerfully leading the way as the line
between the business of fnancial ser-
vices and the business of information
technology blurs. Indeed, the deci-
sions you make as a CIO today really
are decisions about the future of the
institution you serve and represent.
And even as you work to capture
more value from earlier investments,
the demands for tangible returns and
competitive advantage from new
projects will only increase. Armed
with practical knowledge about what
works and supported by a host
of new technologies and practices
CIOs are bringing new passion,
new power and new purpose to an
industry in transition.
This book presents eight important
threads that are emerging as priorities
for CIO Afcionados in the fnancial
services industry. Wed love to hear
your thoughts about them and
about other key initiatives you con-
sider important.
For more information please contact:
Americas : Peter Spenser
pmspenser@dc.com
(212) 618 4501
Europe : John Reeve
jreeve@dc.com
+44 207 303 3000
Asia Pacifc : Jenny Sutton
jsutton@dc.com
+81 3 5521 5555
Hidenori Kuroki
hkuroki@dc.com
+81 3 5521 5555
Passion,
Power
and
Purpose
Global Offce Address:
1633 Broadway, 35th Floor, New York, NY 10019-6754
www.dc.com