John C. Skerritt, managing partner of Andersen Consulting's financial services industries practice, places such nebulous terms as "vision" and "alliances" at the top of his job responsibilities.
But buried within such New Age terminology are the strategies that have changed the course of large-scale systems development within the banking industry.
Vision sharpening and alliance building have paid off for the firm. Since it split from Arthur Andersen & Co. in 1989, Andersen Consulting's revenues have nearly doubled.
The practice Mr. Skerritt oversees represents 25% of the firm's overall revenues, which should surpass $3 billion this year. More than 6,000 people worldwide work in the financial services practice, which is divided into retail financial services, financial markets, and insurance.
Filling a Void
To a certain extent Andersen and other consulting firms have stepped into the void left by the diminished influence of International Business Machines Corp. in today's computing environment. With Big Blue no longer providing the blueprint, bankers are looking elsewhere for big-picture strategizing.
"What Andersen sells is a mind-set: This is how you do things, we'll take care of the rest," said Martin Garvey, an analyst with the META Group, a research firm in Westport, Conn.
"My job involves getting 250 partners worldwide to share a common view of the industry," said Mr. Skerritt. "It's hard to get the partners to adopt a common view of the industry because they're used to being independent."
Payback Is Disappointing
Mr. Skerritt also acknowledged a more fundamental problem, one that has long plagued technology suppliers in general. Banks, like most businesses, are not getting the bang they expect from their technological buck. "That's the overriding message," he noted.
The solution, as Mr. Skerritt sees it, is surprising: more consulting. The situation, he said, "necessitates - I lapse into consultant's jargon - all the redesigning, retraining, and remotivating of the people in the company."
The vision Mr. Skerritt espouses has been encapsulated in the Vision technology planning model, used by the firm as both part of its marketing efforts and as a blueprint for its various client engagements.
As for alliances, Andersen's arrangements with software developers such as Systematics Information Systems Inc., Little Rock, Ark., and clients such as Banc One Corp., Columbus, Ohio, have entrenched the firm in the nation's largest banks. Some client engagements also have yielded products that Andersen can then market to other banks throughout the world.
The best example of that to date, according to Mr. Skerritt, was Andersen's involvement in the development of Banc One's Triumph credit card processing system.
"Since we finished the development of that just over a year ago, we've sold it to three other banks [Barclays, Banamex, and GZS, the credit card processing arm of the major German banks], with two more sales to banks in the states pending," Mr. Skerritt said.
Boon for Banc One
The added sales of Triumph also mean additional revenue for Banc One. Banc One officials declined to comment about Andersen's role in the project.
Although he was born in England, Mr. Skerritt has always had an interest in things American, earning undergraduate degree in American studies and history.
Mr. Skerritt has been on a fast track on both sides of the Atlantic. He joined Andersen's United Kingdom financial consulting business in 1973, when it was still in its infancy. From a staff of 12 in 1973, the U.K. practice has grown to almost 800 employees, including 300 who run the technical operations of the London Stock Exchange.
Starting from Scratch
Mr. Skerritt ran the U.K. financial services practice for five years before being transferred to New York at the end of 1989.
"When I came to the states, we had no [banking] product to go to market with," said Mr. Skerritt, explaining the need for alliances with software providers.
After some investigation, Andersen hooked up with Systematics. "They had a very good retail banking processing product, but no track record installing it in the very biggest banks. We had all the systems integration skills. By combining the two, we would be that much more powerful in the marketplace than apart," Mr. Skerritt said.
Deals with Major Banks
So far, Mr. Skerritt's thinking seems to be on target. Since the agreement, the tandem has begun projects in two of the five largest U.S. banks, Chemical Banking Corp., New York, and NationsBank Corp., Charlotte, N.C. Chemical brought Systematics' core accounting system on-line earlier in the year, and a similar project for NationsBank is still under development.
"Now they proved they can operate in the very largest banks," said Mr. Skerritt of Systematics. "I think the fact that we're together has helped the process."
Mr. Skerritt and other partners say the alliances Andersen establishes with other vendors will continue to grow in importance, because banking clients are demanding more complete solutions.
Still, the overarching vision Andersen has for information technology within the industry does not stray too far from conventional wisdom, incorporating as it does existing systems.
"A lot of the back-office technology you might want to leave in place. It's very resilient and terrific at handling large amounts of volume," said Mr. Skerritt.
As for a wholesale change of a bank's existing architecture, "we simply don't believe it can be done," he said.
It will also be a while, Mr. Skerritt predicted, before networks of personal computers make a run at the mainframe-laden glass house. "We developed a huge client-server system that generates tickets for 55% of the domestic airline industry. That's been running live for a year and two months, so it can be done," Mr. Skerritt said.
"But most banks are not even near it yet for core transaction systems. Most of the activity is around the edges, in areas like relationship management and service delivery."
"There's a basic set of processing you can find in a number of places. The key is how you apply it," said James S. Marpe, Andersen's Northeast regional director for the banking industry.
As a result, Andersen is moving away from its traditional approach to client engagements, which is more hands-on than the services of a McKinsey & Co. or Boston Consulting Group, but typically involves more strategy advice than the offerings of, say, Electronic Data Systems Inc.
In the past, the typical project might have included simply placing small armies of consultants and newly minted COBOL programmers - Mr. Skerritt calls them "green beans" - into an engagement.
Mr. Marpe said the firm's "best practice" for a given situation instead may now involve assembling a project management team. The systems development may then be handed over to an outside vendor.
Andersen has broadened its practice to reflect these changes, adding strategic services and "change management" divisions to its existing systems integration and business process management service lines. These new divisions are staffed by outsiders recruited from McKinsey, Boston Consulting, and other firms, a practice considered anathema at Andersen until recently.
"Software vendors don't understand change management," said Mr. Skerritt. "You can't just wheel in new technology, give a bit of training, and say, |Here it is, off you go.'"
"Maybe 15% to 30% of an engagement is managing the change process, as opposed to the traditional design, code, and test," said Mr. Marpe.
A New Wrinkle
Some analysts argue that such additional services are merely new wrinkles in a security blanket Andersen represents to its clients. "How is that different from what they've sold before?" asked Mr. Garvey of META Group. "It's still business process reengineering, the same thing the big accounting firms have been doing for decades."
Some bankers might also find Andersen's book of best practices somewhat restrictive. "Our intent is to define the market, based on our experience," said Jeff Hamilton, managing partner, financial services industry division, western region.
But Mr. Skerritt said Andersen is ready to back up its work with something called a "value proposition."
The value proposition that Andersen now makes within each of its proposals is "very specific," said Mr. Skerritt, promising lower costs or revenue growth in business terms.
"Frankly, clients don't want to pay millions of dollars in fees unless it improves their business," Mr. Skerritt said. "We are making that very specific in each of our proposals."
Whether or not Andersen can deliver on such value propositions could determine the future of the firm. What is clear, though, is that Andersen's view of the industry and the information technology strategies followed by the banking industry's largest players may become increasingly alike.…