Shifting Tech Strategy

By Kim S. Nash  |  Posted 2002-09-15 Print this article Print

When Washington Mutual acquires another bank, there is no question about whose technology will prevail. But the clear expectation-setting seems to inspire loyalty, not resentment.

Shifting Tech Strategy

The shift in core business strategy has provoked shifts in technology strategy. Gross replaced Liane Wilson, Washington Mutual's 16-year veteran chief information officer, in May 2001. Gross plans to upgrade some key platforms—getting off OS/2 and onto Windows XP, for example. A proprietary loss-management system written in Smalltalk will be rewritten and expanded. Newer technologies, such as customer relationship management applications and storage area networks, also are in the plans.

The idea is to change the technology group from a service bureau to a business partner. The kind of self-starting spirit that Gross envisions is new for Washington Mutual's technology department. Whether the 113-year-old company, built on a no-frills approach to technology, can pull it off depends on that crucial third variable: the people. Gross has created 11 new senior technology positions since he's been there and filled seven of them with outsiders.

While the old systems department was geared to gather and synthesize data from a string of acquired companies, the group is now organized to serve lines of business. So-called "business solutions providers" are technology managers who report to Gross but are aligned with each major business unit—home loans and insurance, banking and financial services, and so on. That way, a technology expert is included in business discussions, to help guide decisions early on. "They are there when the glimmer in someone's eye comes about," Gross says.

The bank also is looking to fill 182 technology jobs, many of which are the result of Washington Mutual rearranging an outsourcing deal with IBM Global Services. The original 1996 deal with IBM—10 years, $533 million—called for the vendor to manage desktops, network services, help desk, software distribution and project management, among other tasks.

The contract hasn't been canceled, but many of IBM's tasks are being returned to Washington Mutual because, Gross says, the bank wanted a more flexible arrangement that left it, not IBM, to set strategy. "Things that we look forward to using from IBM are commoditized services" such as desktop support, he explains. "But other things that are sensitive and closer to customer interaction, we are going to in-source." For example, Washington Mutual is launching projects in data warehousing, e-commerce, help desk, and server design and implementation.

Along with new development, the technology group is now focused on finding operational efficiencies. Though Washington Mutual has been relatively staid in its computer platforms, the company runs varying versions of similar software, says John Seddon, senior vice president of the newly created enterprise program office. Seddon, a former consultant at IBM and KPMG, was hired in July, in part to oversee bankwide project management. One goal: install Windows XP, then get all eight locations that process mortgage loans on the same release of the same lending application.

Standardizing packages across Washington Mutual, even as it embarks on many new projects, will make the bank more efficient, Seddon says. "There are 50,000 employees out there using technology," he says. "There's a lot of opportunity there."

It's never easy, of course, to get a group of users to accept changes in the technology to which they've grown accustomed. But given the experience his new company has gained through nearly three dozen acquisitions over 19 years, it's not surprising that Seddon sounds confident.

Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.

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