The bull is still strong - CIOL Interviews

The bull is still strong

There's more to Merrill Lynch than just the sub-prime crisis and mortgage low we keep hearing about.

Tuesday, April 01, 2008

As we peer into the IT attics of the world's largest brokerage and one of the biggest investment banking firms, slowdown is a word conspicuous by its absence at an organization that has enterprise computing grid and cross-utilization of idle disaster recovery servers and other under-utilized resources as some highlights of its IT strategy.

In a chat with Pratima Harigunani of CyberMedia News, Ajit Naidu, MD and Chief Technology Officer, Global Equity Markets and Services technology, Merrill Lynch, talks about some of the latest IT action happening there.

Merrill Lynch has introduced an interesting IT approach with 'intelligent scavenging' using spare desktop PC capacity, and not-in-use data center processors, servers and hardware.
How many applications after risk analysis, simulations and calculation-acceleration are now under enterprise grid computing? How is this unique inclination of "following the moon" to use data center processing power free at the end of the day delivering at the company?

The name of the game is building large computing capabilities with higher utilization. One way to approach this is through virtualization with remote desktops. Other way is to optimally use the hardware infrastructure. We have about 50 applications on grid now. This is touching new areas like real-time pricing, risk management and all kinds of derivatives, forex etc.

Talking of effectiveness the trick is in managing average and peak utilizations simultaneously. Average usage hovers at around 40 per cent while we still have to keep room for peak usage that can be up to 80 to 90 per cent. Based on that, the thresholds have to be set. Trading volumes can shoot up in non-linear fashion, as witnessed recently. So managing normal operations with peak demands and simultaneously adding new capabilities is a tight rope balance.

Now the question that is hard to miss by - with billions going under write down in high-risk sub-prime mortgages that have already hit the biggest banks to the tune of $100 billion in blanket losses, how can it impact the much-worried about recession, specially for outsourcing spends?

The scenario is impacting for sure. But that does not mean we will cut all investments. We will get aggressive in some areas as we also slow down our spends in other not-so significant ones.

It would be a sweet-cum-sour strategy henceforth. Outsourcing, per se, continuously evolves. It is a mix of captive and vendor agreements. At the vendor level too, it is evolving as they keep coming with new ideas and expertise. We will keep leveraging IT in these difficult times.

What exactly can be IT's role when slowdown shadows an organization?

IT's role can be very huge. If we have the right infrastructure in place there is so much possible. STP (Straight-Through Processing), cross-border trading, automating manual work and thus pitting more efficiencies are just some examples.

Is managing the IT basket as challenging as the investments you manage?

Managing IT is very much like the portfolio of investments. Technology investments change fast. The challenge is that while we have to handle procurement and new infrastructure on one hand, we have the task of handling legacy systems on the other hand.

They can be quite an Achilles heel. We have to work on which ones to shut down or re-evolve. Managing the new with the old is an interesting dilemma. We have to use our portfolio approach here.

So what is your strategy around these legacy systems?

Most of them are old ranging back to five to 20 years. Some grow in the legacy band because of scale reasons, some cease on stability, some are niche functions which have to be looked into with a new light in the absence of vendor support and so on. We have to decide on each one accordingly.

From a CIO's vantage point, would SLAs see a change in approach in future?

There would always be SLAs in place as a sense of benchmark but they do not necessarily correlate with satisfaction. From my own experience, satisfaction comes out of better relationships, client orientation and the right management of infrastructure. SLAs, if and wherever needed, would stay. But they are not the only parameter of performance.

How important is India for IT at Merrill Lynch?

Quite a bit. Statistics can't lie as they show how India is increasing its presence in global corporations. I guess by 2020, we will see a scenario whether we are either working with an Indian or an Indian is working for you.

So what would you invest next in Merrill Lynch?

We would be investing in BI, information-centric business processes as we move over from canned reports. We would also look into Very Large Databases (VLD) and move rom terabytes to peta bytes. On the trading floors, we will put in new investments on Video Over IP and integration of chat with video etc.

©CyberMedia News