Coming on the heels of a busy year in which it ramped up for decimalization and rolled out a large client relationship management system, Merrill Lynch's corporate and institutional client group has now shifted its focus to its 2001 technology agenda. To find out what's on tap for the coming year, WS&T senior editor Robert Sales recently conducted a one-on-one interview with Chris Corrado, the group's chief technology officer.
WS&T: As CTO of Merrill Lynch's corporate and institutional client group, what are your core areas of oversight?
CHRIS CORRADO (CC): I support debt trading and sales, equity trading and sales, and all of the middle and back-office functions that support those businesses-as well as investment banking.
WS&T: How many employees do you have responsibilities for worldwide?
CC: If you add employees plus consultants, it's approximately 2,800 globally.
WS&T: What are the major technology challenges that your group is going to face in the year 2001?
CC: There are 10 main areas that we're focused on in terms of objectives ... They are all pretty much equally important, but the first objective is cost re-engineering. Given the size and the complexity of Merrill, we want to do everything we can to make sure that the cost ratios are in line with what we'd expect to see, given where the businesses are heading in the future. So, wringing out as much costs as possible out of the operations-to increase operational efficiency-is important to us.
The second objective would be to maintain our service quality .... We are looking to the outside more and more to bring product in-as opposed to building everything from the inside. And, as a consequence of outsourcing, the complexity of our services actually increases in many ways .... So creating better processes, better tools and better tracking mechanisms, to ensure high quality of service, is important-especially considering the importance of the reliability of our systems.
There are also a slew-some of which are fairly proprietary-of very specific strategic initiatives within each business area. So debt has several, equity has several, and our SSD business-which is what I'll call broadly our middle, back office, settlement and clearing and financing business-has several. And so does our banking business. So each one of those kind of operates relatively independent of one another, in terms of some specific initiatives for them.
Moreover, within what I'll call the strategic planning area, we have some key things that cross all businesses. For example, data standardization. We are standardizing our customer data, client data and what I'll call organizational hierarchy. So each business currently taps into a common data store, that services all the businesses within the institutional area. This is something actually we plan on extending beyond the institutional area, as well.
In addition to that, our technical infrastructure-meaning the non-applications piece of what we deliver-cuts across all businesses to get economies of scale. So, for example, we are creating a managed services architecture for storage, servers, data and our desktop .... So we're taking our major infrastructural components and turning them into services that service all businesses.
Given the complexity and age of some of the legacy systems that we've had, we're also focusing on platform convergence. That entails decommissioning systems and having less applications that service more products globally, to reduce the complexity of our environment and therefore the costs of running it .... Within that platform convergence is what I call database decommissioning-converging to common DBMS platform, as opposed to having several. Most companies within investment banking .... converged on Sybase several years ago, for various reasons.
WS&T: So what relational database management system is Merrill Lynch converging on, and why?
CC: Oracle .... Their interfaces and connectivity to other generic products that serve the corporate areas-the general ledger and things like that-are more seamless than Sybase's offering. Sybase carved out a great niche within the financial services industry-particularly in the investment banking community-and kind of stayed within that. But Oracle was broader from the start, and integrated very well with these products that serve non-financial services areas, which are also important to our business.
WS&T: Are there any other technology initiatives that you expect to work on in the upcoming year?
CC: Yes, we have some mandated initiatives. They include T+1, decimalization and the enhancement of our continuance and recovery program.
WS&T: Speaking of T+1 and decimalization, how much of your budget in 2001 is going to be allocated to tackling industry initiatives?
CC: Well, decimalization we've been working on for some time now, obviously. Last year, we focused on that fairly significantly. I wouldn't say it was a significant expenditure, but operationally it was important to get it right. And that continues, but that's not a hard problem for us this year. It's really the tail end of what we already started.
T+1, on the other hand, is the exact opposite. Although, obviously, some products in the fixed-income area settle that way, there are a whole slew of products that don't. So we're in the process of building a real-time architecture to support ... T+0, as opposed to T+1. And if we get T+0 right, we're obviously in good shape to meet the industry's T+1 requirement. That's important, but obviously that's going to take a while ... We have a lot of external dependencies, and I'm probably more worried about those than what we have to do internally.