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CIO plays The Apprentice

A financial services company forges meaningful relationships between geeks and suits with a three-day contest that could have been scripted for TV's 'The Apprentice.'

CIOs certainly pay lip service to the importance of aligning IT with business needs. Andrew Armishaw, group executive and CIO for HSBC North America Holdings Inc., a financial services giant with an internal IT staff of 4,000, this year decided that the company's technical employees needed a real-world lesson in business benefits.

Instead of sitting and listening to the usual company presentations, 320 HSBC information technology professionals spent a frenzied three and half days competing as if they were contestants on the prime-time hit The Apprentice. Divided into 10 groups, each with its own appointed CEO and COO, managers from every walk of IT were charged with bringing a financial product -- an "e-wallet" -- to market. Each "company" had to secure capital, then promote and sell its fictitious electronic wallets. Application developers participated, to be sure, but so did the IT staff that runs HSBC's networks, data centers and information security. The win would go to the company that made the most money.

"The whole idea was to take people out of what they normally do and get them to understand the kind of dynamics the people we support go through all the time. How do you make things a commercial success? It had a profound effect, much more so than we imagined," Armishaw said.

IT people are analytical by nature and accustomed to dealing in the concrete, building and coding systems. "We have a lot of outcomes, which are to a certain extent predictable. I try to encourage people to understand that dealing with customers is not that predictable. What sells and what works in marketing isn't always as rational as people think, otherwise businesses wouldn't pump millions of dollars into brands," Armishaw said.

So, in addition to analyzing how much to spend on manufacturing or whether to go for volume or for margin, the e-wallet companies had to deal with the big intangible: What do my customers want. It's the question Armishaw said IT should be asking every day.

"We're not some sort of backroom function. As our business is challenged to be more commercial and more efficient, it is very hard to do that if technology isn't helping it along the way," Armishaw said.

The winning team's 'CEO'

Armishaw gets no argument from Hyon Ko. Director of business systems for HSBC North America's consumer lending business, Ko was CEO of the winning e-wallet team. In her daily job, she oversees about 400 people and provides IT services to about dozen different HSBC business units. What did she learn from walking in the company's shoes? "I think the overall takeaway was we had to assume all the responsibilities and burdens that our business partners face every day. So you're not the technology group that is helping to deliver to the business, you are the business. And that perspective really helped shift some attitudes about how we approach our own jobs," Ko said. One big shift: "Just being able to make the case that we were worthy of their funding was in and of itself a big departure from what we normally are asked to do," Ko said. The little company named its product Vertigo, an allusion to the U2 song. "It's a really high energy song, really uplifting," Ko said. The name was also meant to convey how crazy life gets and the need for a tool to manage that. The exercise also showed how business decisions, such as how much quality control to do, or a change in the marketplace can impact the viability of the company.

Vertigo got about two-thirds of what it asked for in venture capital. And it made a critical change halfway through. Knowing it wanted to appeal to the very high end of the market, ($400) Vertigo ultimately priced its e-wallet slightly below at $350, and that Ko said made all the difference.

"You know, maybe our video wasn't the best, maybe our logo wasn't the best, but we were really focused on hitting a certain market penetration at a certain price," Ko said.

HSBC North America Holdings, a wholly owned subsidiary of British banking giant HSBC Holdings plc, provides banking services, mortgages, insurance, consumer finance and other financial services. The company has some 60 million customers, 53,000 internal employees and $300 billion in assets. Armishaw declined to specify the IT budget, except to say that globally it amounts to billions of dollars and is a significant portion of the operating expenses of many of the businesses HSBC comprises. IT charges for its services like an outside commercial organization, presenting a bill each month based on a unit rate.

Armishaw wants IT to become more financially aware of the internal businesses it services, analyzing their strengths and weaknesses and even what their competition is up to, in order to better help them succeed. Armishaw has asked IT people to carve out a specific time each month to visit a bank branch or call center or get out on the Web to understand how the technology does or doesn't support HSBC's commercial activities. IT managers now also get extensive training in how to give effective presentations. "I think we have a tendency to tell the whole story rather than saying here are the three or four key points we'd like you to focus on," he said. "It's the marketing thing. How do you communicate to the customer the value of that e-wallet?"

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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