Janus Capital Management is no place for aspiring technology stars. Back-office stars, that is.
The Denver-based mutual fund outfit, whose fortunes soared and then crashed with technology stocks, prides itself on stock picking and little else. Portfolio managers, like Helen Young Hayes, head of investments, get marquee billing on the Janus.com Web site. Just try to find the chief technology officer, Andrea Young.
“Technology supplements what goes on at Janus,” explains Young. “Our role is to make the investment professionals as efficient as possible in making their decisions.”
That’s a simple mission statement for Young and her 180 information technology employees. But their jobs are becoming more complicated as Janus’s parent, Stilwell Financial, gears up for a major reorganization due to take effect at year-end. It is combining, under the Janus umbrella, majority-owned affiliates Berger Financial Group and U.K.-based Nelson Money Managers, as well as 33 percent-owned mutual fund processor DST Systems. Janus will also get a new CEO -- Mark Whiston, president of retail and institutional services, who will succeed Stilwell’s Landon Rowland.
The company already has a new chief operating officer, R. Timothy Hudner, who until September was Janus’s CTO. With Hudner’s elevation, Young, who reports to him, became responsible for companywide technology strategy.
The stakes are higher -- the IT department will play a key role in realizing $40 million in annual expense reductions that Stilwell has promised from its revamping -- but the profiles of these managers are not. “The Janus brand promise is to be the best stock picker; everything else is just noise,” says Hank Summy, who manages consulting firm Sapient Corp.'s relationship with Janus. “They don’t want to be known as a technology company; they want everything except stock picking to be noiseless.”
Janus made a lot of the wrong kind of noise in the late 1990s. In 1999 alone, assets under management more than doubled, to $250 billion, and the company acquired an Amazon.comlike New Economy cachet. When Kansas City Southern Industries spun Stilwell off in a July 2000 stock offering, the company was worth $10 billion.
Then Janus hit a wall. At year-end 2001, assets fell to $182 billion and to $144 billion on October 31 this year. Stilwell’s market valuation has dropped to $3 billion, and in preparation for the restructuring, the company took $155 million in nonrecurring charges in the third quarter, resulting in a $131 million loss.
Young joined the firm in 1997 and has spent much of her time on Janus.com and other Web-related projects. She previously worked for eight years in systems management positions at Westminster, Colorado, multimedia conferencing company ConferTech International. Young spoke last month with Institutional Investor Assistant Managing Editor Jeffrey Kutler.
Institutional Investor: Has Janus’s commitment to technology fluctuated with the market cycles?
Young: Janus is and always has been highly dependent on technology. It’s true of financial services in general: There is so much that we have to connect to that technology has to be a big component of operations. But it’s not a case of technology elegance for technology elegance’s sake. The way we apply technology is grounded in the needs of our businesses.
Would you have said the same thing five years ago?
Yes. Take the trading operation. It’s highly dependent on systems to support it. What we have seen is that the issue of capacity has come in and out of focus, depending on the state of the business. When we’ve had a lot of interactions with our shareholders in the call center and on the Web site, we have had to be flexible to the demand.
Are you under more budgeting pressure these days?
Janus has always been cost-conscious. We in the IT organization follow disciplines in making technology decisions and in putting proposals in front of the business areas. Decisions have multiple drivers, such as operational efficiencies or product distribution, but as long as I’ve been here we have been very judicious about the ways we spend.
What hot new technologies are you interested in?
I wouldn’t want to make a value judgment about what’s hot and what’s not. Technology comes into play as we evaluate ways to make the business, and people inside the business, more efficient. For example, our portfolio management and research teams spend a lot of time on the road; they are always looking for ways to get access to information while traveling. Therefore, wireless access and Web-enabled applications are important to them, and as these technologies mature we want to leverage them.
Do you have an R&D unit responsible for staying on top of the latest trends?
There is a group in our architecture department that tries to be out front in areas of interest to Janus. The needs may be immediate or longer-term, based on directions in which the business is headed. This group will occasionally do a proof-of-concept on a new technology. Usually, we hold off on making large investments until we can build a business case.
Is the Web site as high a priority as it used to be?
It’s kind of a maturity thing. In the early days the content was pretty static and high-level; it evolved to more dynamic content with the ability to transact. More recently we’ve been doing more incremental enhancements, and we’ve been broadening the population we serve outside of retail -- in the intermediary and institutional channels. All of this builds on the strong foundation that we started with.
Where do you draw the line between encouraging self-service and providing the hands-on attention that some clients require or desire?
Some business processes or interactions with shareholders lend themselves to self-service better than others. The type, volume and frequency of the interaction may dictate the business case. However, we do want to provide investors a choice in how they do business with us. When services lend themselves to online functionality, we encourage that, but it’s also critical to make some things -- getting an account balance, a daily price, doing a transaction -- available in each channel an investor may choose to use.
How active has the IT group been in helping traders to achieve best execution?
Janus overall is highly collaborative. We work with the business-office managers to understand their processes and their technology-related requirements. So on any operational challenge like trading, we get involved because systems and efficiency are part of the equation.
Do you push traders to install the latest order-routing or risk management technologies, or do they come to you first?
It starts with the business managers, but we get brought into the dialogue early on. We will present a proposal, scan the industry for systems that are out there and for best practices we can learn from. We’ll right-size all that for Janus -- meaning it has to fit into our business context -- and then present options.
Have you considered outsourcing some of your major processes?
All of Janus, IT included, continually evaluates options. It’s part of our strategy to consider opportunities that enable us to leverage the capabilities of third parties.
Might Janus’s forthcoming restructuring affect your oversight of IT?
I don’t see any major near-term changes. We are mainly focused on getting through the broader Janus-Stilwell changes.
Has Janus sought to take advantage of technology synergies across the Stilwell companies, particularly DST Systems?
We are in the early stages of that right now. We believe there are both business and technology synergies, but we’ve had limited exposure to those other organizations, and it’s too soon to tell how things are going to change.
