By one measure, the Federal Deposit Insurance Corp. has a perfect record: Nobody has lost money on insured deposits since it was chartered by Franklin Roosevelt to help rebuild confidence in Depression-strapped banks. But in an era of bank consolidation, deregulation and globalization, the FDIC's technology organization was "drifting" and falling behind the times, says Chief Information Officer Michael Bartell.

The FDIC is a government agency, but receives its funding from fees paid by member banks and thrifts, and from interest on its holdings in U.S. Treasury securities. It insures about $3 trillion in deposits. As the number of U.S. banks has decreased through rampant merger activity, the market the FDIC serves has changed dramatically. There is now just a handful of huge institutions at one end, and thousands of much smaller community banks at the other.

Meanwhile, the agency's regulatory and risk-assessment job has grown more complex as banks have changed their mix of loan portfolios and moved into the brokerage and insurance industries, all of which affects the insurability of their deposits.

So FDIC Chairman Donald Powell mandated that IT better align itself with the agency's mission and become a more efficient steward of its $177 million annual budget in the process. Bartell's group is thus in the process of reducing its head count from 394 to 294 by August. In late March, the agency announced an outsourcing deal with Booz Allen Hamilton, IBM Corp., Lockheed Martin Corp. and a small firm called Pragmatics Inc. that could be worth up to $550 million over ten years.

Last year, Bartell retired almost 10 percent of the 365 applications he inherited, and he aims to sunset another 15 percent in 2005. There have been organizational changes, too, including the creation of a CIO council of business managers from across the agency and a capital planning process that allows him to work more closely with the chief financial officer and division directors.

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