This is an excerpt of a podcast with David Castellani, CEO and senior managing director, and Neal Ramasamy, managing director and CIO, at New York Life Retirement Plan Services (RPS). A Westwood, Mass.-based division of New York Life Investment Management LLC, New York Life RPS manages $38 billion in bundled retirement plans and more than $3.5 billion in defined-contribution investment-only assets.
The full podcast includes the duo's discussion of the changing role of the IT organization, how and why they are developing a social media platform for their customers, and why they are doing away with desktops.
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There is much discussion around the need for IT departments to become more like an IT services organization. Neal, do you think this has to happen for IT to truly be a part of the business and drive innovation?
Neal Ramasamy: I absolutely do. If you look at any company, you see that IT takes up quite a bit of bottom-line expenses. So, you sort of have to look at the IT organization as a standalone services organization within the company, with a standalone [profit and loss statement]. The CIO automatically becomes the CEO of that organization. If you look at it the other way, if you said, "This is your grandmother's money. Where would you spend the money?" It's all about pragmatic innovation: If you were to spend a dollar, how are you spending the dollar in a way that is going to maximize shareholder value?
I know we're a privately held company, but it really goes back to, are we putting the money in the right place, where we are providing good tool sets to the participants or the sponsors? Is it helping us to become more efficient? Is it helping us to put out more innovative products down the road? You also have to look at it from another angle: Do you understand the key operating drivers that make the business run?
A lot of times, the IT organization does a pretty good job talking about cost, but they have a really difficult time articulating the value delivered by those investments. So, if you bring it all back together, you do have to look at IT as a standalone entity operating within the business groups; and their job is, they are providing a service. A lot of times, when you cross the line, when you have the IT organization leading and deciding the company's future, that's when you have a lot of the challenges we face today.
Social media resources
Are you doing anything to move more towards an IT services organization?
Ramasamy: We are, and the first thing really starts off with the software portfolio rationalization. We look at what do we have to do over the next three years? How does that line up with our roadmap? What we also have is an internal methodology where we try to plot the work we do on a simple chart which has cost and value laid out.
We look at that picture to say, "Are we investing money in the right places where it's going to maximize the value retuned from those investments?" Then if you align that with the proper investment choices, it's going to get you to where you need to go. You couple this with a strong business alignment, where we've required the senior IT team to live, breathe and understand the core business drivers, that's really the key to where we would like to go and how this will help RPS down the road.
The workforce is changing quite a bit. What are you doing to foster newer work cultures with younger employees raised on mobile devices and social media?
Ramasamy: The ongoing challenge for us is always going to be, how do we stay ahead of consumer technology? The newer generation is used to technology from a much younger age, so we need to build products that are ready for tomorrow but at the same time, balance out the product needs across multiple demographics. I go back to the famous hockey player, Wayne Gretzky. Someone asked him, "How are you successful?" He said, "I don't skate to where the puck has been, I always try to skate to where the puck is going to go."
How do you apply that mind-set or mentality to software and products development? A lot of organizations are trying to solve problems with a finite number of resources. Our goal is to look at the future across multiple demographics, and use a handful of social media to build a tool set that will transcend generations. It's an interesting challenge for a financial services company. You have to come out with innovative products [and] balance that with the ever-changing regulatory compliance.
David Castellani: I think about our end users, the participants we serve and generations now that are different, and I'll use four words here: Today's generation is open. They're collaborative, they seek to get data from the bottom up instead of from the top down. The traditional mind-set of how you deliver basic educational services to help 401(k) investors become wiser has to change greatly. Today's generation doesn't seek information from authoritative sources, it seeks it from communities. How do we interface with social media to make the points we wish to make, and make the education available to them in a way that's going to affect their outcomes? Most of the people in executive positions come from the baby boomer ranks, and they tend to be trapped in the old way of thinking.
Are you going to introduce any social media [technologies] within your organization to not only bridge that generation gap, but also move to a model where it's more transparent and more people are collaborating?
Castellani: We're moving very aggressively to that model. The first phase for us is to create a social site so clients can post information on all kinds of benefits. It doesn't necessarily need to [be a] reply to retirement benefits, it could also be in the health care arena, where there's a lot more pain points. We can facilitate over 500 clients in a single place to get. The common questions we get from clients are, "What are the best practices?" "What are other companies doing?" We can make that a real-time environment quite easily. That's an area we're both investing in and thinking about how we make it most useful for plan sponsors. Ultimately we'll shift that to participant side.
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