Wall Street & Technology editors teamed with TowerGroup analysts to highlight IT leaders who are making the biggest differences for their companies. The common thread: They've made technology an indispensible part of their businesses.
When Citadel Investment Group's 300-plus IT team held an off-site meeting in early September at a downtown Milwaukee conference center, CIO Tom Miglis set some ground rules in the hope of sparking fresh ideas: Work on a problem outside your daily duties; team up with people you normally wouldn't work with; and, perhaps most important - as anyone who's done the whole off-site, brainstorming thing knows - spend no more than 30 seconds complaining, explains Miglis, CIO and a senior managing partner for Citadel, the Chicago-based hedge fund that's one of the industry's largest and most-influential, especially when it comes to using information technology. It's typical of Miglis' focus at Citadel: people-oriented, though not in a soft-and-fuzzy way, and with an intensely practical focus on finding new revenue opportunities and solving Citadel's business problems using technology.
Citadel's IT staff is small by the standards of Wall Street firms, but it's about half of Citadel's total employment. "Technology drives the business," says Miglis, a C.P.A. who learned IT in the 1980s building systems to support the booming mortgage business at Salomon Brothers, where he was also a trader for a stint, and then CIO.
Citadel puts its fresh-from-college computer science hires through finance, accounting and options-theory classes right alongside the finance and quant jocks it hires to become traders. It's part of an effort to create a firm that's equal parts trading knowledge and technology-driven advantage. "Very early on they're in the same room working as peers," Miglis says. "It's not, 'I'm more special than you because I'm a trader.'" Walking into a meeting, Miglis thinks it should be hard to tell which side a person came from. It's an emphasis that starts with CEO Ken Griffin, who, when he started trading from his dorm room as a Harvard College sophomore in 1987, split his time between trading and writing software to enable and analyze trades.
Citadel builds nearly all of its applications in-house. "We don't buy because we're looking for a solution that isn't a generic solution," Miglis says. Yet the foundation components aren't necessarily cutting-edge - the C++ programming language, Sybase databases, Unix and some Linux operating systems predominate - because performance and stability are as much cornerstones of the IT strategy as creativity. Citadel is exploring some limited outsourcing, such as testing and support, but application development won't be outsourced. Not only is it too difficult to communicate needs to an outsourcer, Citadel, which is fiercely secretive about its technology and strategy, sees no upside in teaching outsiders anything about the hedge fund game.
Citadel is in the midst of one project to build a new positions and transactions database to provide deeper and broader data, on a more round-the-clock basis, and let the firm handle what Miglis describes as "unlimited amounts of volume" without adding people. He offers the description a bit reluctantly, with almost a touch of embarrassment, since he knows he has no plans of explaining with any precision how his team will deliver on such a bold-sounding goal.
Miglis seems to take as much pride in the fact that his group is completely killing the old system as he does in building the new. That's painstaking, unglamorous work, since it takes tracing all the "tentacle" applications that reach into that database and rewriting them. "It's 10 times harder to retire a system than to build one," he says. But without doing so, IT systems tend to drift persistently away from the very best answer to business needs. Among critical IT systems, Miglis says, "The five-year-old stuff is on its way out."
Citadel funds such initiatives because it sees technology not as a cost, but as a revenue generator - the lens through which it spots opportunities others don't, and the means by which it capitalizes on opportunities faster and with fewer people than its competitors. Says Miglis: "In some ways, and I don't want to say this too boldly, we're a technology firm that trades."
Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio