LEHMAN BROTHERS' approach to one of its most-difficult IT strategies - outsourcing - offers an example of how CIO Jonathan Beyman leads: Get the right people in place, challenge them and then let them do their jobs and hold them accountable for results.
Outsourcing, he acknowledges, can be a disruptive force in a company, and it isn't one that comes easy to managers. "Left to their own devices, people would rather not do it," Beyman says.
But about two-and-a-half years ago, Lehman's leadership decided it had an opportunity to lower operating costs. "We decided we had to figure out a way to take advantage of what is essentially a global arbitrage in terms of labor rates," says Beyman, noting that Lehman was by no means early to outsourcing. Beyman used the budgeting process to force managers to consider outsourcing, operating under the basic tenet that Lehman needed to "drive productivity, and be better, faster and cheaper than we were before."
Beyman notes that the brokerage business is process-driven, with multiple systems that are mission critical and have to be operated and maintained at high availability, but don't give the firm a competitive advantage. They are simply things a firm must do. "If that's the case, then you've got to find ways to do things cheaper," he says.
Once Lehman embraced the idea of outsourcing, the IT group went at it aggressively. That involved about 80 pilot projects with different vendors in different sites over a span of six months. "We wanted to evaluate the vendors and see who we could work with and who did well," Beyman says.
The firm settled on two primary vendors and one secondary vendor in India that handle a lot of maintenance work and also small project development and infrastructure support. Beyman says Lehman isn't "handing off gigantic chunks of real complex systems," but it does have more than 400 people through Indian vendors working on Lehman's systems.
Outsourcing brought cost savings, Beyman says, but major layoffs also brought a lot of pain and disruption. "It was internally painful and, culturally, there are a lot of issues to get through," he says. "Lehman is not a place that lays people off willy-nilly." Beyman visited staff around the world to face their questions. "There were places that the questions were pretty tough and pretty angry," he says. "It was a raw kind of emotion. This was a thing that scared people. At the end of the day we navigated through the rocks and shoals."
Beyman has spent 16 years at Lehman - a tenure interrupted only briefly during the dot-com boom, when he had a stint as CIO of Cendant Corp. During that time, he's learned to work with the heads of business units to understand their objectives and goals. Within the IT group, he focuses on putting the right people in the right seats and getting lots out them, forcing decisions, driving productivity and getting things done.
"The biggest challenge is always to make sure that you're not resting on your laurels," he says. He likens technology in an organization to an addiction. "Whatever you provided yesterday isn't good enough for tomorrow, so you've got to keep driving forward and make the firm and IT organization better and better," he says. "You never get done."