In December, Fergie Williams, CIO of HSBC for the last two years handed over to his successor, Rumi Contractor.
During his tenure as head of IT at the bank, Williams was on a mission to show how IT can add business value through the use of technology, rather than just being a cost. He also reorganised IT operations and introduced ‘deliver and delight’ 90-day challenges (of which more later).
Williams says he is happy to retire and feels he has left the IT department in good shape. “Although IT adds business value, generally the users don’t see the millions of highly automated transactions per-day that it handles,” he says.
“We now report to the company everyday to illustrate this through a quality and activity report to the CEO. This looks at service quality and business process. Customer problems can come from non-IT processes, like ATMs running out of cash, rather than an IT problem. It helps everyone to realise what is happening.”
"Although IT adds business value, generally the users don’t see the millions of highly automated transactions per day it handles"
-Fergie Williams, former CIO, HSBC
Openness and accountability make life easier for the CIO, according to Williams. For example, HSBC IT handles a huge number of bill payments. “If the quality score is 99.99 per cent, then that is quite dull and doesn’t mean anything to someone reading the report. So we look at the 250 primary services we operate – 248 can have run without incident. But where we have had a problem we are very open about the issues around it,” says Williams.
He has also launched an explicit cost challenge. “For IT operations we look at cost performance and expect a reduction in the unit rate of 10 per cent annually, apart from development costs.” IT is now in the top quarter of HSBC benchmarks for costs in Europe and in the top half in HSBC Group metrics on service. The business process control targets work well for IT. “This changes the perception of the role of IT,” says Williams.
Putting a business face on IT has been important. Two years ago IT operated as large monolithic units for the core businesses. “Each were doing their own development and the teams had no business face. The relationship managers we now have in place deal with the business – they are leading consultants and sales teams,” says Williams. “We looked at companies like EMC and IBM to see how they manage this relationship and did training with them. We have taken great care over getting the right skills and looking at alternative solutions. Collaboration and communication have been key, as has being sensible and willing to accept advice from somewhere else where appropriate. We are using collaborative tools, while at the same time keeping the autonomy of the business.”
Teams now have a good understanding of the needs of the business and they can source solutions from other HSBC businesses – so there is much more internal work being done collaboratively, rather than building everything from scratch.
Business management has become key so direct reports to senior executives know what they are doing has an impact on delivery to other areas of the business. Each has a relationship manager who has the skills to work on both sides, with a strong technical background and knowledge of the business as well.
“To use a well known phrase, it has been ‘education, education, education’,” says Williams. “IT needs to partner with the users and the CIO has a major role in this by injecting rational thinking into the business role. It is logical really. We look at what is happening and try to run the business as business people. We have an end-to-end view.”
Joined-up thinking in financial and IT operations is key, according to Williams. “There is a constant stream of business ideas, often prompted by vendors. But new ideas need collaboration between the different business blocks of the company. We think of the implications of new ideas in terms of skills and also what time scales are being used. You can’t keep chasing ideas. It would be chaos. It needs a strong understanding of the dynamics of new technology and also we need to see if the technology is likely to perform over a business lifecycle. For instance, for our core business this has to be 10 years and for risk management five years. It has to be sustainable and ongoing.”
HSBC’s IT operation does not have a futurist department as Williams believes they tend to become too academic. “Our staff must have a natural interest in the technology and their job – not in architecture and R&D. The technology is the least important bit, it is the function and the data that is really important, especially the data,” says Williams.
“HSBC’s data management discipline is very deep and sustained in the company. For example, we use one customer number across the group of businesses. Compliance regulations like Basel II put pressure on organisations to do this, but HSBC has the best UK customer data, according to IBM, because enforced good data management has been going on for at least 10 years. The basics have far more impact than anything technical, but they take much longer to achieve. We champion good behaviour by using a strict approach when people deviate. Good data management skills are a key asset – and in HSBC’s case a key asset for the success of the company.”
Passing the baton
Williams thinks that the CIO role is one of the most exciting on offer today. “I have done it for two fascinating years and you get an insight into everything. It is easy to be motivated because you have a strong sense of ownership over everything in the business and want every bit of it doing well,” he says. “In every senior meeting the CIO is responding to half of the issues raised – far more than anyone else and this is because IT is so fundamental. You have to know about everything and be well briefed in problems and issues – you need a very wide bandwidth.”
Rumi Contractor, who has been working alongside Williams for the last few months, is well qualified, and should have that wide bandwidth. He will take on the team of 5,000 across Europe and 3,500 in the UK, as well as the outsourced IT operations in India and China. He began his career at HSBC in New York in 1987, as an analyst/programmer, and has worked with various groups in New York, Hong Kong, London, Brazil and most recently in Pune, India – where he was CEO of HSBC Software Development India. Other past roles and responsibilities include head of IT and systems programming in Brazil, and CIO of HSBC South America.
With the excitement of the CIO role, there is also danger, fun and job satisfaction says Williams. “As a CIO there is, of course, the capability to screw up businesses faster, as well as delight faster and to deliver great value. Last year we introduced 90-day challenges, where we see a good opportunity and go for it. Our aim is to ‘deliver and delight’. This leads to rapid change and the reaction to it is brilliant. The staff love doing them because of the reaction they get.
“One involved our commercial customers, where the accumulation of forms they have to complete was really onerous. We redesigned the process and there was a 50 per cent increase through using a simple technology – the business was stunned. Another was a voice recognition system for corporate and commercial lending.Senior bankers hate tedious form filling, but using bluetooth and voice recognition software their forms can be completed while they are driving back from meetings. Not revolutionary but it makes life so much easier, so it delights,” says Williams.
"Good data management skills are a key asset – and in HSBC’s case a key asset to the success of the company"
– Fergie Williams, former CIO, HSBC
“I’m leaving things in pretty good shape. The three core UK business systems are doing well and are now looking at shared services and reuse across the group. The mantra is ‘do it once and share’. Obviously there are limits to this – we have three very different cultural environments, where you have to make continual judgements. For example the credit card business is totally different in North America to here, so the two regions need different approaches. But our wide business experience, and the relationship that IT has developed with the whole business over the last couple of years, means we are now in a great position to do that.”