The executive vice-president and CIO of State Street, Chris Perretta, explains how the bank has responded to the pressures brought by the crisis and how the IT function is changing shape. Writer Michelle Price

The ever-evident importance and expanding cost base of the IT estate continues to cast the IT function in a stronger and stronger light. But with the budgetary constraints imposed by the crisis, CIOs such as Chris Perretta, State Street's IT chief, are under increasing pressure to justify their IT choices. "Now, more than ever, I am chartered with giving visibility into those investments and the discussion about what we do is given more scrutiny," he says. "It is a big piece of the operating expense and you get visibility when you're 20% of the operating expense."

First, Mr Perretta and his team have had to take a much more formalised approach to the technology investment process. "From a management process perspective, we spent a lot of time building out a management session to understand which programmes to initiate and what the commercial outcomes will be as a result." The majority of IT projects are revenue-oriented, relating to new products or productivity gains, he says.

In the constrained budgetary environment, however, the team has had to closely scrutinise its investment portfolio to be sure that the end customer, as Mr Perretta describes the bank's 28,000 staff, will derive genuine benefits. "We had to have a much more laser-like focus on outcomes and treat every day in the shop like an investment." As well as constraints, the crunch has brought lessons, he says. "Another realisation was that the way we build things actually matters. In the past, in the 'go-go' years, you did what you had to do to meet the market demand. But if you're really shrewd and insightful about how the market is going, you can build solutions that are much more powerful and adaptable."

Another area of increasing focus is the aggressive rate at which the bank consumes technology. As with many financial services firms, this is simply not sustainable. "If we keep using IT at the current consumption rate, that number will get too big in the future - so we're working very hard to look at that." The State Street IT team has experimented with a range of technologies to mitigate the expanding IT footprint, including virtualisation. But the most eye-catching innovation has been the move to host more of the bank's applications on new mainframe technology, reducing the extent to which the institution is dependent on energy-hungry servers.

Keeping abreast of new methods of deploying both cutting-edge and - in the case of the mainframe - long-established technologies is not easy for the man occupying the hyper-busy top job. Mr Perretta says that he tries, however, to cultivate a working environment in which innovators are encouraged and rewarded, but snuffing out dead-end ideas is just as critical. "It is OK to have an idea and push it, but you need to find a way to kill things so that they don't get out of hand and you have to make it OK from a career perspective to kill things. This is not an easy cultural barrier to get over," he says.

Breaking boundaries

Increasingly, however, Mr Perretta finds the limits of the IT function itself are becoming blurred in an operational environment that has grown so tech dependent. This is especially the case in the front office where the sophistication of the technology has surpassed the limits defined by the business model: in these hyper-advanced pockets of the financial services industry, the technology is the business model.

"I am a bit of a zealot: I don't make the distinction," he says. "We add up the IT budget and I am not sure that is even meaningful in our business, because it is just a competency: our guys are commercial guys and they happen to have a technical competency." While there will always remain big traditional pure technology projects - such as core banking overhauls - there is a growing cadre of IT staff who have effectively transcended the technical job to a occupy a role that sits amid the convergence of IT, process, and product design. "These are the most valuable people in the shop. Our head of architecture, for example, really looks at the world in terms of what's happening in the marketplace and he marries that with what's possible technologically."

As this trend advances in the financial services industry, it poses a more fundamental question for how banks internally conceptualise and measure their IT function, suggests Mr Perretta: "We circle all the IT guys and we add up the number of what we have spent: does that make sense?"

Career history

2007 - CIO, State Street

1996 - CIO, General Electric Commercial Finance

1983 - employed at Anderson Consulting (now Accenture)

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