Thinking Out Loud CTO David Kelley
David Kelley, a 17-year veteran of Merrill Lynch, has been one of five chief technology officers at the company since July 2002. In his current position, Kelley oversees technology for such corporate departments as human resources, finance, and communications and public affairs.
In Kelley's view, streamlining the huge number of disparate systems that have mushroomed in every corner of the company remains Merrill's greatest technology challenge. Many of these systems are the result of years of internal reorganization in which every new leadership team demanded customized versions of applications that suited their management and organizational styles. In the end, the hodgepodge of technology has hampered Merrill's productivity, Kelley says.
Merrill's former chief technology officer, John McKinley, a high-profile executive who left the company a year ago to become president and chief technology officer at AOL Technologies (see "You've Got Problems," January 2004), had made wiping out technology proliferation a priority. But while McKinley had some successes in this regard, Kelley says, his powerful position at the company gave him "a mythic quality" that separated IT from the business units and may have short-circuited McKinley's chances of achieving his goals. Now it's up to Kelley and his colleagues to get Merrill back on track.
CIO Insight: Is the situation in human resources150 different systems, each operating in its own fashion with its own interfacetypical for Merrill?
Kelley: HR encapsulates the problem. In virtually every department at Merrill, we have hundreds of disparate applications. Each reorganization produced more of them. Now the pressure is on at Merrill to become more efficient. So every one of these systems is under scrutiny. For example, the people I support in the corporate departmentsespecially in the executive committee and upper managementhave tended to operate independently in the past. They have their own ways of working and their own formats for accessing information. My job is to not affect their ability to get information in the way that is comfortable to them but to find common veins for information that can be the underlying applications.
Can you quantify what that would mean?
Instead of 500-plus applications, I'd love to bring it down to 50 core platforms. That would take $80 million to $100 million out of the IT budget.
How do you guard against the problem of renegade customized applications?
We have a procedure in place to do that now. You have to go through a rigorous process to get any project approved. You have to be able to articulate the rationale for it and the true payback before an investment committee in the business unit affected by the projecta committee made up of the business unit's CFO, COO and other heads. No more do-it-yourself. The big barometer used in the review is ROI, of course. But I don't think that's always the best approach, because it's actually easy to increase expenses and with some soft targets make it look like you're getting a return.
My approach to justifying a project is to make it profit-and-loss neutral. For instance, all of the work we're doing with human resources to install a centralized database is based on a one-year payback. And one of the ways we'll get this payback is outsourcing the maintenance to IBM. We can do that inexpensively and efficiently because we'll be operating on one Oracle application, instead of many different applications.
Didn't former CIO John McKinley try to eliminate the many separate technology silos he found at Merrill when he arrived in 1998?
Yes, but I could argue that when John got here, IT was in such low regard that he had to spend a lot of time creating an elevated role for IT; it was a drive for acceptance. In doing that, a distance was created with the business units. Now, under John Cummings [senior vice president and head of global technology and services], the acceptance for IT already exists and there is a greater partnership with the business units. It's decentralized centralization: IT is now much more closely aligned with the business units, but technology is also coordinated across the entire company.