Major merger work

Kurt Woetzel, CIO at The Bank of New York Mellon, talks about both the technological challenges and opportunities of bringing together $23 trillion in assets under one roof to form the world’s largest securities servicing company.

It’s been nearly one year since the merger closed between The Bank of New York Company, Inc. and Mellon Financial Corporation in July of 2007 – creating a financial powerhouse as the global leader in asset management and securities servicing.

While the newly formed company is already capitalizing on its unique market position as a result of the $16.5 billion dollar deal – the first quarter of ’08 already indicated 14 percent revenue growth compared to prior year’s first quarter – the heavy integration work behind the scenes is still in full force.

The technological handiwork to bring together the two legacy organizations falls largely in the hands of Woetzel, who is leading the process and technology components of the merger and oversees the 5,000 plus IT organization.

Primarily, Woetzel is looking to define the common key processes by taking the best from each legacy organization. “By the end of this year, we will have in place all of the final common processes we have around software development, architecture, infrastructure management, so we’ll be working under a common framework,” Woetzel projects.

Already deep into the integration, Woetzel has covered a lot of ground. Stepping back to look at the progress so far, he breaks it apart into two viewpoints – from the standpoint of bringing together a common process framework to support business and clients around the world, and from a technology standpoint of bringing together the necessary technology components to support the defined end-state.

On the technology front, Woetzel estimates they’re already 30 to 40 percent along in relation to the desired end-state of the technology stack and more than 50 percent along in bringing software development, architecture and infrastructure management under a common process framework.

While the organizational model is already solidified, there still remain widely variant timelines across the distinct business lines – with some already finalized and some that won’t be completed until ’09 – all incumbent upon the stance of each business line and the support for the end target state.

Regardless shareholders have already begun to witness the benefits from the newly joined company and have watched earnings per share climb since the merger.

“The company and our clients have seen a lot of positive benefit already out of the combined organization driven by the fact that we’ve really brought the best-of-breed solution,” Woetzel says. “Not just going to one technology platform or another, but bringing the combined capabilities of the new company together from the legacy companies, and offering that as a richer feature function capability than either individual company had before.”

Integration breakdown
So what was the key to integration success on such a massive scale? Defining everything upfront to hit the ground running.

One of the most important components of the integration was laying out a roadmap as early as possible. To form the roadmap, recommendations were taken into consideration from all the constituents, business lines and key technologists to help decide the appropriate technology stack and the best surviving processes for the company.

“Early on in the merger we defined a roadmap in selecting what we wanted to be – we being the new company and the various constituents, what targeted applications we wanted for each line of business, and what we wanted to have in place in support of the infrastructure for the new company,” Woetzel says. 

The next step was deciding how to approach the numerous projects inherent in a merger of such size. Woetzel followed three guidelines for prioritizing IT projects along the integration process: first, a client focus – heeding client demands and being able to offer the right products and services to the client community; second, selecting the technology able to support the scale and size of the business; and lastly, from a technological risk management perspective – determining whether they could manage and support the selected state.

Locking down the technology and making sure it could scale with the business was an obvious overriding priority. “Making sure that the end-state, the selected technology, could support that size and scale, and that the technology itself had some legs to it – it wasn’t at end-of-life – was another important factor that drove our decisions,” Woetzel explains.

Determining the desired collaboration architecture that was best for the company was another important factor. The Bank of New York Mellon has leaned heavily on collaboration tools and has been piloting lots of collaboration tools – everything from email to IM to blogs and video have been used in support of the integration, including a good amount of video conferencing to accommodate and connect such a large global organization with over 42,000 employees across 37 countries.

Of course, all the technology tools in the world are useless without the people behind it. “It’s all about the people at the end of the day that have the right focus, the right values, the drive and the vested interest to make it happen, to reach the goals that have been set by the executive team early on,” Woetzel says.

Woetzel also attests to the fertile ground for innovation created by the blending of the two companies. In fact, the bank has still been able to introduce a host of new products and services while going through the growing pains of the integration.

“This new unique business mix has created a bunch of interesting ideas that are at various stages of incubation and gestation, and around opportunities in the derivative space, in the area of 130/30 funds, which is a mutual fund structure, and areas such as how to enhance the service model in support of a particular business line,” Woetzel points out.

Going through the lengthy integration process has also provided insights on the existing key technology strengths of the firm. Woetzel has identified a transactional management strength and strong process orientation, particularly in developing large-scale applications to support the transaction business, along with a strength in information delivery and delivering a rich experience to the client community. 

While the company will continue to play on its strengths, Woetzel looks to the future with three primary focuses: global growth, seamless integration and financial strength – with a strong client focus underlying all three.

“Under each one of those is taking care of our customers very well from a quality-of-service standpoint, being the very best in service quality that’s out there in the market around the business we are in, day in and day out,” Woetzel commits. “So a global growth company with a high focus on integration, and pulling that integration off seamlessly in a company that exhibits financial strength, especially in the turmoil of the markets that you see today.”

Though the Bank of New York Mellon by nature largely managed to avoid any significant impact from the credit crisis, Woetzel uplifts the vital importance of transparency across every business strategy and technology’s invaluable role as an enabler around transparency. In particular, he calls out business intelligence and high-performance computing as examples of technologies that can help create more transparency around types of investment vehicles.

Technology has clearly already helped to sow the fruits of the foundation of the Bank of New York Mellon, and as Woetzel guides the remaining technology pieces before full-fledged integration, the bank finds itself in a very good place – largely without peers, with unparalleled technological scale and a unique market hold that will only strengthen as the integration nears completion.

About Kurt Woetzel
As CIO for The Bank of New York Mellon, Kurt Woetzel is responsible for the Company’s Information Technology organization worldwide. In this role, he oversees the technical infrastructure, software development and business processes of an IT organization that is supported by over 5,000 technology professionals.

Woetzel is also responsible for the Company’s Office of Innovation, where he directs Company resources and establishes processes in support of accelerating new product development and innovation across global markets.

He held the same position at The Bank of New York Company, Inc. prior to its merger with Mellon Financial Corporation in July 2007. Before that, Woetzel headed up the software development process at that company. In this capacity, he was responsible for developing the technical architecture governing the integration of numerous and complex, large-scale acquisitions involving extensive client portfolios.

About the company
The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and service their financial assets, operating in 37 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has more than $23 trillion in assets under custody and administration, more than $1.1 trillion in assets under management and services $12 trillion in outstanding debt.

The Bank of New York Mellon: Key Facts and Stats

• #1 global custodian with US $23.1 trillion in assets under custody and administration
• Top 5 asset manager in the U.S. and top 10 globally, with more than $1.1 trillion in assets under management
• Top 10 in wealth management with 81 offices in the US and UK
• #1 provider of corporate trust and depositary receipts services
• #1 provider of correspondent and government securities clearing and collateral management services globally
• Leading client service scores in asset servicing, wealth management, issuer, clearing and treasury services
• Operations in 37 countries worldwide across 6 continents
• Worldwide staff of 42,600

CIO tips… Woetzel offers some words of wisdom for completing a large-scale integration:

“Set your guiding principles around what’s going to drive your decisions in application selection as early as possible.”

“Ensure that you’ve covered all the stakeholders that needed to be part of that decision process early on.”

“Make sure that you’ve made your decisions and put in place your organizational model early on. Don’t let that design implementation linger. Do it before you even merge your organizations and have clarity around that design.”

“Have clarity around the guiding principles you use to make the decisions around the application suite or the infrastructure stack you want to go forward with.”

“Make the decisions on the organization and the folks that are going to be in those leadership positions early on. Don’t compromise the organizational design.”