Briefing Report on XYZ Financial

(Deciding whether or not to hire a CIO)

Submitted by:

Olaolu Ogungbemile

Richa Malhotra

Ahmet Tozman

Masato Takao

Gorav Sharma

Anna Chernestrova

This report is submitted for the course

Network Enterprise MBA 501, Spring 2009

Instructor: Barbara Thomas

February 20, 2009

Company Description
XYZ Financial Services Company originated in 1962 as a small family-based financial
service company in Victoria, British Columbia. Through various acquisitions over the
years, XYZ has evolved into a nationwide financial services company, offering retail
and commercial banking, insurance and mortgage. Currently, XYZ Financial employs
35,000 people and generates annual revenues of 1.5 Billion dollars. The Bank is
known for its superior level of customer service and consistent focus on providing
services with dedication to help businesses grow in Canada.

The company is aiming to meet current market needs by using the latest
Information Systems tools to enhance the customer experience. XYZ has recently
acquired Colombia online brokerage firm, which will allow the organisation to
provide up to date information online regarding the clients’ investment portfolio,
current market trends and future forecasts. Technology will become a more
important part of the company’s operations as the bank’s present ERP system will
be integrated with the new online services. There will have to be an integration of
systems across all levels and all branches throughout the country.

Introduction

After 20 years of outstanding service, the leader of the IS department at XYZ

Financial Services Company is retiring. As a result, there is an urgent need to find a
suitable candidate to fill the position. The position can be filled in one of two ways;
XYZ could hire a CIO who will be a member of the board, or they can hire a
department head who will report directly to a designated member of the board.

Having the right person hired into the right position will be essential as the core
business of XYZ is currently undergoing some changes as a result of a significant
expansion. It will be imperative that XYZ hire an individual with a deeper
understanding of XYZ’s business structure and the current business environment
within the financial industry. This individual must be a good fit for the team and
possess key skills and abilities which will be highlighted in the next section of the
briefing paper.

Currently, within XYZ Financial Services, there are some internal issues at many
different levels. It is expected that the right candidate will play a significant role in
the resolution of some of the key business operational issues which XYZ now faces.
Issues

To ensure the continued success of XYZ Company, several key areas will have to be
further examined and improved where necessary. The rapid growth as well as the
current acquisition of an online stock brokerage company means that technology
has become a more integral part of day to day business functioning. As a result,
there are potential issues that must be resolved within several areas, especially in
the area of electronic security, customer service and the prioritization of projects
within the various departments.

In addition, the expansion of XYZ will require Senior Management to play an even
more crucial role in developing and maintaining effective decision making
processes. Management will be responsible for providing the necessary tools and
skills that are required to promote efficiency throughout all levels of the company.
One step that will have to be taken by the management will be to get the input of
employees at all levels of the company. Employee “buy-in” is essential to the
success of the implementation of any system as the employees are the front-line
users.

One final issue that has the potential to become a source of a competitive
advantage will be the differentiation of the company’s products and services that
can be accomplished through an innovative IT infrastructure.

These above mentioned areas are those that XYZ is currently facing and will be
described individually in greater detail in the following section of the report.

Security
As the core business of XYZ becomes more dependent upon the use of an advanced
Information Technology system, the concerns about security become greater. It will
be a high priority for XYZ to secure their IT infrastructure, to implement processes
and mechanisms that will safeguard the company’s corporate information and to
establish measures that will protect their client’s privacy and information.

The switch to an Information Technology-based corporate system has become an

integral part of the functioning of XYZ Financial. Therefore, it is of utmost
importance to secure their IT infrastructure from internal and external threats; such
as unauthorized employee access and hackers. This is especially true in the area of
their online brokerage service that allows clients to buy and sell stocks as well as to
update their portfolio and receive information regarding current market trends and
forecasts. If customers are unable to access these services for technical reasons or
feel that their information is vulnerable, they will find other service providers with a
more reliable system that can better guarantee their safety. As a result, XYZ will
immediately begin to lose revenue making the issue of security “mission critical” to
the organization.

As a financial services company, XYZ does not physically manufacture any products
and therefore the company’s competitive advantage relies solely upon the quality
and the safety of strategic corporate information and its intellectual properties.
Therefore, it is extremely important to protect this information by establishing and
maintaining concrete mechanisms and procedures. In order to achieve this, XYZ
Financial will have to secure their company intranet as well as the internal IT
system. Furthermore, XYZ will have to set-up clearance levels for all employees
based on their position within the company; allowing them to access only the
information required to effectively and efficiently perform their duties. This security
clearance will have to be safeguarded by the use of a multi-level identity
verification system that relies upon individualized passwords and biometrics.

Just as XYZ will be using a multi-level security system to protect its internal
corporate information, the same principal will be applied to securing the information
of individual clients. This will greatly reduce instances of fraudulent acts as well as
the theft of personal information. This is essential because of the company’s legal
obligation to protect the information of each client. In addition, the reputation of the
company is adversely affected by these fraudulent acts that occur as a result of
vulnerabilities within IT infrastructure.

Customer Service
For any company, the ability to attract new clients and retain old ones cannot be
understated, and this philosophy applies just as well to XYZ Financial Company. At
this point, we have had some difficulties and problems in this area and it is widely
believe that this problem should be tackled by an individual who possesses both
business and technical expertise. As Woetzel, K, 2006 suggested, the ability of
financial companies to implement innovative systems that allow their clients to
better manage their assets and portfolios will promote a positive reputation, leading
to higher customer loyalty. Implementing a Customer Relationship Management
system (CRM), will be beneficial for both XYZ and the clients that it serves. The
system will allow customer service representatives to collect and store information
regarding customer billing, complaints, issues, suggestions and preferences so that
this in turn can be used to provide tailored services to better serve individuals. From
the company’s perspective, the information gathered on the customers can be
further analysed and used as a marketing tool to target products and services to
select customers. There are certainly some technical challenges associated with
implementing such a system, but based on the size and the diversity of XYZ’s
services, it is an area of great importance.

Organisational Effectiveness and Efficiency

With the significant growth that has occurred in XYZ Financial and the current
expansion into new business areas, the ability of the organisation to make effective
decisions has become a major issues. In many instances, important information
regarding both financial and non-financial matters has been difficult to obtain when
needed.

An organisation’s ability to make effective decisions in a timely manner cannot be

understated in today’s competitive environment. As a result, many companies have
embraced Information Technology to enhance their decision making processes.
These companies have mainly focused on the area of Decision Support Systems
(DSS), which is viewed as a potential tool to improve business operations, “IT’s
ability to enhance intra-organizational communication and communication with
external agencies facilitates improvement in the quality of decision-making at top
management, middle management and operating levels” (Batra, S., 2006).

In order to achieve this, XYZ Financial will implement an Enterprise Resource

Planning System (ERP) which promises to improve both the transmission and quality
of information within the organisation. This will allow the company to integrate all
functional business areas, providing managements’ access to the same data and
information in real-time, which can then be analysed and further interpreted, to gain
the knowledge used to make better decisions.

With the ERP, the company could further improve its efficiencies. An integrated
system, across all functional business areas will offer an easier flow of required
information, possibly allowing staff to spend less time on certain processes while
focusing more on the value adding aspects of the business. This will allow the
company to reduce the number of staff required to perform particular tasks,
resulting in the reduction of cost.

Another aspect would be the outsourcing of business processes that offer no

additional value to the company and that may be too difficult or complex to be
handled within the organization. A survey conducted by Business Engine, concludes
that most failures in cost management were attributed to three management areas
in financial service companies, failure to align IT system with business, lack of
visibility and control, and less use of offshore outsourcing (Sraeel, 2004).

Prioritization of Projects
At present, XYZ is experiencing difficulty in regards to prioritization of projects, both
in IT and in other functional business areas as well. This situation is only likely to be
confounded by the changes within the company’s core business and the current
expansion. Many department heads decided upon projects that could potentially be
beneficial to individual departments, without considering the long and short term
strategic goals of the organisation as a whole. There will be a greater need for more
IT projects in the near future, which will affect all of XYZ; hence it will be crucial to
prioritize the development and the implementation of the projects based on the
order of importance. There are projects that are “mission critical” and if they are not
completed on time or are not completed properly, the organisation will start to lose
money. On the other hand, there are projects that are “nice to have” and are of
lesser importance to the company’s profitability. To solve this problem, it will be
important to look at this issue from both an IT and a business perspective.

Differentiation of Product and services

Over the past years, investors have discovered the convenience and the
independence of online financial investment. In a consumer survey held in 2000, by
American Banker/Gallup it was proved that the number of trades executed through
banks' online systems is on the upswing. (Ackermann, M., 2000) With the acquisition
of the Colombia online brokerage firm, XYZ will be allowing investors to quickly buy
securities in any market at a fraction of the cost. Whether the customer is an
experienced investor or a starter, they can invest independently and build their
personal portfolio with the tools and technical resources available from the
company.
As XYZ Financial undergoes the technological and business changes, it will be able
to differentiate itself from other financial services, potentially giving the company a
competitive advantage. The main issue, however, is how to quickly and efficiently
align Information technology with the new business strategy of the bank to provide
such services.

http://www.money-and-investing.com/Online-Investing-Directory-m.html

Banks Step Up Online Brokerage Offerings. By: Ackermann, Matt, American Banker,
00027561, 09/27/2000 Supplement, Vol. 165
Database: Business Source Complete Online Brokerage For Community Banks.
Community Banker, 15291332, Apr2000, Vol. 9, Issue 4
Database: Business Source Complete

Employee "buy-in"
When a company undergoes a merger or an acquisition, there are certain key issues
that must be considered. The acquisition of Colombia could create difficulties in the
following areas: the merger of staff and the business culture and the integration of
the business technology systems.
The merger of personnel from XYZ with the personnel from Colombia may cause
some difficulties due to the difference in organizational culture of both companies
as well as the differing technological systems being used. This may result in conflict
and resistance to change among some employees. In order for the acquisition to go
smoothly, management will have to anticipate some of the sources of frictions and
have a mechanism in place to curtail these issues.
In addition, the technological systems from both companies will have to be
integrated and streamlined as one new system. It is the frontline staff who will be
making use of the system and therefore, it will be vitally important to ensure that all
staff members are comfortable in working with all aspects of the technology and do
not become overwhelmed by all the changes. It will be important for XYZ to give all
staff the opportunity to provide input during the development and implementation
of the new systems so that they do not view the changes as being forced onto them
by upper management. There have been many cases where projects have failed
because of the lack of buy-in by the staff, as indicated in the study conducted by
Schraeder, Swamidass and Morrison, “evidence indicates that [employees] who
have been involved in decisions related to the change may react differently, by
being more supportive of the change, than those who were not involved.”

Recommendation

Based on the analysis of the issues as well as the current restructuring that XYZ is
facing, a CIO as well as a CTO should be hired within the XYZ firm. The recruitment
of a CIO as a leader of the IT department is necessary because of his or her
understanding of strategic business processes as well as the specific objectives that
XYZ intends to achieve through the use of technology. A CTO with great technical
knowledge and expertise will complement the role of the CIO because the core
business of the XYZ Company is now very much dependent on technology.

Why should XYZ Financial hire a CIO? The IT department has evolved over time,
amalgamating modern advancements in technology with significant business
implications. This has necessitated the creation of new roles within corporations as
IT has become an integral part of business functioning. “Over the past twenty five
years, the role of the senior IS manager has undergone a major transformation… In
1981 a new title for this emerging corporate IS leadership role was coined: the chief
information officer” (Syrmott & Gruber 1981).

A CIO will be vital when it comes to making significant business decisions that will
have a tremendous impact on XYZ Financial. The selected candidate will have to
have an understanding of how IT resources can be utilized to gain Business
Intelligence; which helps organizations understand their internal and external
weaknesses, make suitable decisions based on available data, reduce cost and use
company resource to generate optimal outcomes.
http://www.businessdictionary.com/definition/business-intelligence-BI.html As further
illustrated in Figure 1 (Marion, L., 2007) of the appendix, the CIO is one of the top
three Business Intelligence decision makers within corporations and the importance
of this role cannot be ignored.

As shown in Figure 2 of the appendix, CIOs spend a great deal of their time dealing
with non-technical issues (CIOInsight). One such issue is that of prioritization of IT-
related projects. The CIO will have to determine the value of the project as it relates
to the company’s strategic goals. The CIO will have to use soft business skills in the
area of effective communication and negotiation in order to maintain positive
relationships with various levels of management. A second important issue will be
dealing with employee buy-in during all the changes that XYZ is undergoing. The
CIO will have to be able to communicate supportively, employ effective motivational
strategies and address the concerns of the employees as best as possible.

The CIO’s ability to think from a strategic business approach will be essential to
solving the issues that XYZ are facing in regards to customer service and promoting
effectiveness and efficiency within the company. The CIO’s vision as to the
importance of the customers to the success of XYZ as well as how Information
Technology can be employed will be a driving force in reinforcing the strategic
company objectives.

Furthermore, the leadership position inherent in the role of CIO will be elemental l in
establishing and setting the IT governance policies and guidelines for XYZ Financial.
A close working relationship with the CTO will be crucial in dealing with the
technical aspects that are necessary to enhance the internal and external security
of the IT infrastructure.

Given that XYZ is undergoing a major shift in its core business areas and is facing
several issues in key areas, a business oriented CIO would be best suited for this
position. There is a growing trend within organizations wherein “many companies
want CIOs with deep experience in, not brief exposure to, business as well as
technology” (CIOInsight). The CIO will be required to bridge the gap between
information technology and the company’s strategic objectives using his or her
business and technical knowledge and experience.

Why should XYZ Financial hire a CTO? The role of CTO has become necessary
because of the magnitude of the changes that are occurring within the organization.
Technology will become a significant part of XYZ’s core business with the acquisition
of an online securities brokerage company. Due to the multitude of computerized
systems and processes that will be implemented, as well as the current expansion
of the organization, it will be crucial to find a CTO who will compliment the role of
the CIO. The selected candidate must demonstrate a proven history of expertise in
the field of technology, leadership skills and the ability to generate innovative
solutions.

Bibliography
Ackermann. M (2000) Banks Step up Online Brokerage Offerings. American Banker
[Internet] Business Source Complete. Vol.165.

AUTHOR???Community Banker. (2000) “Online brokerage for Community Banks”.

Business Source Complete.Vol. 9. Issue 4.

Batra, S., (2006) Impact of Information Technology on Organizational Effectiveness:

A Conceptual Framework Incorporating Organizational Flexibility. Global Journal of
Flexible Systems Management [Internet], 7 (1&2), pp. 15-25. Available from:
<Business Source Complete-Database> [Accessed February 16th, 2009].

Brown, C., (1993) The Successful CIO: Integrating Organizational and Individual
Perspectives. [Internet]. pp.400-404. Available from : <Association for Computing
Machinery- Database> [Accessed February 15th, 2009].
McNurlin, B.C., Sprague, R and Bui, T. (2008). “Information Systems Management in
Practice”. 8th Ed. Prentice Hall.

Schraeder, M., Swamidass, P.M. & Morrison, R. 2006, "Employee Involvement,

Attitudes and Reactions to Technology Changes", Journal of Leadership &
Organizational Studies (Baker College), vol. 12, no. 3, pp. 85-100.

Sraeel, H. (2004) “Bank Technology News”, Business source Complete, Vol. 17, Issue
8, p8-8.
Synnott, W.R. and Gruber, W.H., (1981) Information Resource Management.
Wiley, New York.
Woetzel, K. (2006) “Operations Management” Business Source Complete. Vol.12,
Issue 2, p9-9

http://www.businessdictionary.com/definition/business-intelligence-BI.html

www.cioinsight.com CIO Priorities in Flux, CIO Insight

www.cioinsight.com Demand for Hybrid CIOs Is on the Rise, CIO Insight

http://itmanagement.earthweb.com/entdev/print.php/3693261 Taking
Control of Your Firm’s Intelligence App. Marion, L., (2007)

Enns, H., & Huff, L.,(1999) CIO Influence Behaviors: Antecedents, Consequences,
and Moderators. [Internet] pp.194-197 Available from : <Association for Computing
Machinery- Database> [Accessed February 15th, 2009].
 APPENDIX

Qualifications and Requirements for Chief Information Officer Position:

Role
The CIO will report directly to CEO. The role of Chief Information Officer will include
interactions with members of the management team, other employees, external
vendors and occasionally with customers. This individual will be responsible for the
overall IT vision and direction that XYZ will implement.

Responsibilities
 • Build relationships with company executives, business partners, and other
key constituents
• Technology implementation and integration
• Prioritize business and technology initiatives
• Evaluate overall operations of computing and information technology
functions and recommend enhancements
• Manage IT across the company
• Ensure the security of the information systems, communication lines, and
equipment
• Assess new computing technologies to determine potential value for the
company
• Establish and implement short- and long-range departmental goals,
objectives, policies, and operating procedures
• Serve on planning and policy-making committees
• Recruit, train, supervise, and evaluate department staff

Qualifications
• Bachelor Degree in Business, or related discipline; Master’s Degree in MIS
or Business Administration preferred
• A minimum of six to eight years experience in an IT financial service
organization
• Broad understanding of the IT function, organization, services, and related
processes
• Ability to bridge business strategy and operational drivers with IT capabilities
• Innovation and creativity, ability to translate business needs into technical
solutions
• General awareness of current technology trends
• Required skills include internal consulting, facilitation, strategic planning,
collaboration, active listening, and highly-developed interpersonal and
people’s skills
• Strong project management and people management skills
 • Ability to motivate teams to produce quality materials within tight timeframes
and simultaneously manage several projects
• Ability to participate in and facilitate group meetings
• Professional written and verbal communication and interpersonal skills

Qualifications and Requirements for Chief Technology Officer Position:

Role
The CTO will report directly to the CIO on all technology related matters. The
selected candidate will oversee the implementation of the new systems and
processes during the initial integration phase and on a continuing basis. He or she
will ensure that all employees receive the necessary training and upgrading as the
technology within the organization evolves.

Responsibilities
• Responsible for all technical processes and technologies within the
organization.
• Provide strategic planning and direction
• Accountable for overall technical design; influence and approve overall
architecture; ensure design is reviewed
• Accountable for overall performance; define metrics and sets targets
• Oversee all internal and external project dependencies, risks and critical
paths
• Ensure contingency plan is in place
• Recommend solutions and approve plan & timelines
• Understand overall impact on all stakeholders

Qualifications
• Bachelors Degree in Information Technology or Business Administration. Post
Graduate degree preferred.
• Strong background with technology.
• Strong leadership background managing medium to large organizations.
• Experience in developing and implementing short and long-term technology
strategies.
• Prior applied background developing and implementing multi-sourcing
strategies for an organization.
• Previous background managing vendor relationships.
• Project management including the implementation of new software systems.
• Developing and/or modifying processes based on business needs.
• Previous experience in strategic planning and change management across
major business unit initiatives.
• Proven track record of risk taking and innovation.
• Demonstrated business savvy and strong communication skills.
• Skilled in designing and managing outsourcing capabilities.
Figure 1

Figure 2