Many financial firms talk about technology innovation. After all, innovation is a powerful way to show your clients that your firm is leading the way. But most innovation talk is, well, just talk.
At State Street Corp., however, innovation talk is taken seriously. Christopher Perretta, EVP and CIO, recently appointed a chief scientist to oversee technology research and development within the firm. "We want to look at new technology that can really help us drive performance," Perretta says. "We want our developers to make the technology work in the lab, and once it works we see how we can operationalize it."
As in most large IT organizations, Perretta acknowledges, there are always side projects going on. "There are always skunk works projects run by different factions in IT," he says. But at State Street, they're not frowned upon.
"The reception from our clients about the chief scientist has been very positive," notes Perretta, who appointed David Saul to the position in May. Saul, who joined State Street in 1992, previously was the chief information security officer.
Moreover, the IT staff is also supportive of the move. "Our staff is really excited about the appointment of the chief scientist," Perretta adds. "There really needs to be a career path for those who really love technology. They may not want to become a manager, but they really excel at developing technology. And in a world where you are constantly looking to streamline or trim budgets, this gives people something to be excited about. That is important."
Noting that consumer devices such as Apple's iPad currently are driving technology innovation, Perretta, like all CIOs, says he is competing with consumer technology in a corporate environment. "When I started in my career, we used to steal stuff at work to play with at home," Perretta jokes. "Today you bring stuff from home to play with it at work. The consumer space has responded so much faster to technology than the commercial space."
The changing workforce - younger workers who are more comfortable with smart phones, social networking and web-based everything - are driving adoption of new technologies in corporate America, Perretta suggests. "The workforce is changing, but in this environment, I want to be careful that I don't compete with the consumer technology space, because I will lose," he says.
There is no way a corporate IT organization can keep up with the pace of change in consumer technology, Perretta insists. "So I ask people to give a commercial use case for new technology," such as adding workplace social networking or enabling iPhones for corporate use, he explains.
Yet State Street has found ways to incorporate some consumer technology ideas into the corporation's technology fabric. For all workers at State Street, Perretta says, IT has been focused on improving flexible work environments, to allow some employees to work at home occasionally or even full time. "More people want to work from home," he says. "That's fine, but how do I improve collaboration? ... If I can make it possible for a flex worker to be productive, connected - often with very complex processes - and I can deploy technology in that environment, we have succeeded."
But there is a methodology and discipline to rolling out newer technologies, according to Perretta. "When we are evaluating projects, I often ask about immediate benefits to the technology, and if we can show an immediate benefit - without taking three years to deploy the technology - we move on it quickly," he relates.
Many of the collaboration technologies used to empower flex workers fit into that category, Perretta says. "The use case has to resonate with the business," he asserts. For example, "I should be able to contact someone within 10 seconds no matter where they are" using IP telephony and instant messaging. "That makes sense for the business."
Aiming for the Clouds
On the corporate computing level, one new technology at the top of Perretta's list is cloud computing. State Street, like many financial firms, already has been experimenting with the cloud in hopes that the output of cloud-based technology matches the hype. "Cloud is the real thing, but we want to be careful with cloud because we don't want to overpromise," explains Perretta. "We already can demonstrate the required levels of security and the needed scalability on the cloud today, … and we are ready to show our cloud model to board members to show them the benefits."
Not only does Perretta think cloud is a legitimate tech-nology with large potential benefits, but IT developers at State Street are also excited about adding cloud-based technologies to their toolbox. "We provisioned a server
from bare metal to operational in five minutes," Perretta says. "This got people really excited. Previously, it could take six weeks. Developers are excited about it. Developers want it. The business wants it. Everyone wants it."
Perretta is cautious, however, about moving too quickly into the cloud. "We have to be confident in knowing the way cloud works so we can deliver services to clients," he says. "We need to know how cloud will fail, because it will fail, just like any other technology, but it will fail in different ways than older computing models. Over time we need to understand the operating characteristics."
Also, cloud projects cannot operate completely outside the traditional corporate IT infrastructure at State Street, Perretta stresses. "Part of the challenge will be integrating the traditional, real-world technology as we know it today into the cloud," he comments. "You can't just go and take all of the new stuff on the cloud without factoring in the older technology" that may be on systems that cannot be easily moved to a cloud architecture."
"But I think we are going to move as fast as we can to take advantage of cloud," Perretta adds, "because it is really that compelling."
Managing a Global Operation
Besides managing the chief scientist and the skunk works developers, Perretta oversees the global IT operation for all of State Street, including State Street Global Advisors, State Street Global Markets and State Street Global Services. That amounts to more than more than 5,300 employees and contractors around the world with major offices in eastern Massachusetts; New York; London; Edinburgh, Scotland; and most recently China, where there are more than 500 developers and growing.
Fortunately, to help him keep the technology backbone of State Street running, Perretta has a crew of CIOs and other managers who run the technology in each of the divisions. Each business unit has its own CIO. "We line up delivery capacity with each unit, and each CIO is responsible for delivering business services to that unit," he reports. In addition, there are senior managers who run shared services that span the enterprise, such as security, infrastructure and communications.
In China, Perretta has a direct report who manages the operation from on the ground. "China has been one of the fastest growth areas for development," Perretta says. "We have relationships with the universities there, and we have a pipeline of talent coming in. The economy is much different there, so the attrition is much higher. In China, companies are competing for employees, similar to how it was here in the early 2000s."
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio