Joanne Rohde wears two hats for UBS Warburg: She is both global head of information technology, a key strategy-setting role, and chief procurement officer, directly overseeing the investment bank’s dealings with its many systems and ser-vices suppliers.
But Rohde’s work doesn’t end there: She also contributes to Warburg’s technology investment research. Twice a year she gets on the horn for conference calls that Warburg’s technology research team holds for investors, and about once a week she goes out to speak to institutional clients.
Her assignment? To delve beneath the surface of quarterly financial reports and executive opinion surveys for clues about the next big thing -- even if that might only be more bad news about cutbacks in corporate tech spending. That’s pretty much the message she delivered on her most recent call, in late January.
“Clients especially want to understand where we are spending our money and how that is changing,” explains Rohde, 44. “We tell them to look at us as one data point, albeit a big data point.”
With her group’s annual spending at $1.3 billion -- and that’s just in the investment banking unit of Zurich-based financial giant UBS -- Rohde is one of a handful of capital markets executives overseeing a ten-figure technology bud-get. It pays for a staff of 5,200 worldwide (the majority are in London and the New York area) and for an infrastructure consisting of 7,200 server computers, 30,000 workstations and 60,000 network ports powering sophisticated trading, risk management and back-office systems.
Those are “data points” that Phillip (Pip) Coburn, Warburg’s global technology strategist, believes can be invaluable to his analysts and clients. He says that Rohde “speaks clear nontechnogeek about spaces we are spending money in.”
She has a rare talent for combining management skills with analytical insights, adds Joseph Beninati, CEO of White Plains, New Yorkbased consulting firm Greenwich Technology Partners. “Joanne has a great view of how IT dollars are spent,” he says. “I find her one of the most knowledgeable people in the industry.”
Rohde, an English major at Wesleyan University in Connecticut, didn’t become a technology manager until halfway through her 23-year career, chiefly on the corporate and investment banking sides of Bank of Montreal, Chase Manhattan Corp. and UBS. Her UBS affiliation goes back to 1991, when she joined Chicago-based O’Connor Associates, the highly regarded derivatives boutique that Rohde says “introduced technologies that are mainstream today in finance and trading.” O’Connor was acquired by Swiss Bank Corp. in 1992, and SBC merged with UBS in 1998.
Rohde, who is based in Chicago along with 400 of her staff, discussed her current outlook in a recent interview with Institutional Investor Assistant Managing Editor Jeffrey Kutler.
Institutional Investor: How is your bank organized for technology?
Rohde: Within the parent UBS are several large IT organizations. I represent one, the global investment bank, and there are sister organizations in UBS PaineWebber, in wealth management and business banking and so forth. In the investment bank IT is responsible for both systems development and production. We make most decisions by committee -- all the business groups and their heads of technology are represented in determining what our investment projects are.
Do the subsidiary tech groups come together at the parent company level?
There is a group consisting of division CTOs that typically discusses production issues, as opposed to development, which takes place in the lines of business. At Warburg those include equities, treasury products and investment banking.
Why are procurement and IT management so closely linked?
About 70 percent of what goes into an IT budget is provided by third parties, be they hardware producers, telecommunications companies, consulting firms or offshore service providers. The procurement role provides a useful link between investment banking and the client world. It helps us to understand the bankers’ business and who they serve.
How tight is your budget?
Like any other firm, we watch our budget very carefully. It has been shrinking.
How deeply have you been cutting?
It’s hard to give an apples-to-apples comparison for a bank like ours that has grown through mergers. With each merger we wrote off things that were duplicative and quickly found synergies to bring costs down. Within any single year we haven’t cut the budget by more than single-digit percentages.
That doesn’t sound too drastic.
We may have put the brakes on tech spending earlier than other firms did. Ours peaked in 1998, the year of the [UBS-SBC] merger. Both banks had been investing heavily in technology, but we kept spending at the same level in 1999 and decreased it in 2000. Because of that timing, we haven’t had the pressure for double-digit budget cuts that you hear about elsewhere.
Has your ability to complete essential projects been affected?
In a lot of ways, the slowdown in the economy has been helpful for technology. It has forced us and our businesses to prioritize what we really need to do. There has also been a tighter focus on customers, and because we have gotten closer to our suppliers, we are better able to blend technology innovations with our business needs at a favorable cost. With prices for commodity items like computers falling dramatically, we have been able to swap goods for services. That is, we spend less on hardware and can put more into the development environment, which allows us to be more business-focused. We have kept the same number of employees throughout the market contraction.
Have you shifted the balance between in-house processes and outsourcing?
There have been shifts in both directions. Our number of permanent employees went up, but that’s a little misleading because going into 2000 we were at all-time highs in numbers of consultants and contractors. We then went on a program to convert the best of those contractors to employees, which increased our permanent head count. At the same time, we moved some of our application-production support offshore, using some Indian outsourcing firms.
Why convert contract workers to employees?
Leading up to the Y2K conversion -- we were also dealing with the euro introduction and the UBSSwiss Bank merger -- we had seriously swollen the ranks of our contractors. A lot of these people were employees in all but name; the fact that they were contractors had more to do with the labor market dynamics of the time. We wanted to convert the best of these near-employees.
What becomes of the futuristic investments that might confer longer-term strategic advantage?
The time line for payback on any investment has shrunk. There are projects with clearly positive returns in year two or three that get delayed. I think the cutbacks are appropriate, given the overall weak results in the financial community. We’d certainly invest where there is an immediate return, but there just aren’t that many projects that make the cut. The big question is, When do you take the brakes off? That’s the kind of investment decision that makes the difference between winners and losers.
What can you seriously pursue, given the constraints?
Things that enable serious cost control. I spend a lot of my time today on offshore outsourcing and on lower-cost server technologies like Lintel [Linux operating systems on Intel-based processors]. There’s less interest in the toys, more in what can provide a sustainable advantage. We see that happening in knowledge management. Sharing the information that’s in the heads of all our employees and linking it to clients and vice versa is where we believe competitive advantage will come from. The technologies of passing, sorting and sharing information are the innovations that interest me.
©Copyright 2003 Institutional Investor, Inc.
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