Citi Home Equity Statistics

Citi Home Equity Statistics

The CIO A look at the evolving role of the CIO. Vicky Hsinyu Bill Keller Nathaniel Laroche Aaron McMurry 1 For Our Purposes CTO Relied upon for IT architecture, infrastructure, etc. 80% IT and 20% Business CIO: Integrates IT into the overall business strategy Introduces emerging technologies 80% Business and 20% IT 2 Introduction Demographics of todays CIO An interview with Bryan Doerr, CIO/CTO of Savvis Communications An interview with Greg Anstead, CIO of Citi Home Equity The evolving role of the CIO

The CIO, Compliance, and Security The New CIO Leader 3 Demographics of the CIO The source of past experience 1. IT/Technology 71% 2. Business Operations (non-IT) .7% 3. Consulting.7 % 4. Engineering... 3% 5. Finance/Accounting. 3%

http://www.cio.com/state/, viewed March 21, 2006 4 Demographics of the CIO Tenure Less than 2 years24% 2-5 years35% 5-10 years...31% More than 10 years..9% Average tenure for a CIO is 4 years 11 months. Contrast that with the average tenure of 28 months for a CFO. http://www.cio.com/state/, viewed March 21, 2006 5 Demographics of the CIO Salary by industry revenues Small Company <$100 Million Revenue Mid Size Company $100 Million - $1 Billion Revenue Large Company: >$1 Billion Revenue $0

$50,000 $100,000 http://www.cio.com/state/, viewed March 21, 2006 $150,000 $200,000 $250,000 $300,000 6 Demographics of the CIO Who CIOs reports to CEO.42% COO.14% CFO..23% Corporate CIO..3% Other26% CEO COO CFO Corporate CIO Other http://www.cio.com/state/, viewed March 21, 2006

7 Demographics of the CIO How CIOs spend their time Managing Crises/Putting Out Fires Integrating with IT Vendors, Outsourcers, and Service Providers Designing/Optimizing Business Processes Leading Projects Strategic Planning Making Strategic Systems Decision Interacting with CXOs and Business Executive 0% http://www.cio.com/state/, viewed March 21, 2006 20% 40% 60% 80% 8

CIO Interviews Bryan Doerr, CIO/CTO of Savvis Greg Anstead, CIO of Citi Home Equity 9 Founded in 1995 HQ in St. Louis ~ 2000 employees > 5000 enterprise clients One of the largest IP network and hosting providers in the world Goal is to become an application infrastructure utility

1 Security and reliability of a private infrastructure Cost effectiveness of a shared service Company has strong technology emphasis due to core service offering and evolution of the company 10 Example of service Connecting satellite offices and/or customers to headquarters ERP system via an intelligent IP virtual private network (VPN) -Or- have Savvis also host the ERP system at a Savvis data center Each site can have own internet access as well as secure access to VPN VPN (single access circuit) can handle multiple applications, voice, video conference, CRM, etc Remote Site A Savvis IP

Network Savvis Data Center Partner Site C Remote Site B 1 HQ Partner Site B Remote Site C 11 Savvis Statistics Revenue Revenue $US Million $800 $700 $600 $500

$400 $300 $200 $100 $0 2000 2001 2002 2003 2004 http://www.savvis.net/NR/rdonlyres/1150CCDC-20D1-4CDA-9AA7-E77E21558A69/8782/ factsglance2.pdf 2005 12 Savvis CIO Bryan Doerr1

BRYAN DOERR is Chief Technology/Information Officer at SAVVIS Communications CIO role began in 2003 Leads product R&D, OSS development, traffic engineering and cost management, customer solutions, and back-office system development. Mr. Doerr held positions in management, software technology research, and software development at Bridge Information Systems, Boeing, and the Applied Physics Laboratory. Education 1 Masters Degree in Electrical Engineering from Johns Hopkins University in Baltimore, Maryland Masters Degree in Information Management from Washington University in St. Louis, Missouri. 13 Savvis Executive Team Philip Koen CEO John Finlayson COO

Jeffrey Von Deylen CFO Bryan Doerr CTO/CIO HR SVP VP Product Engineering Product Mgt SVP Advanced Planning Team Sales SVP VP Engineering Global Accounts SVP VP Business Integration Operations SVP VP Global Operations System Architecture EMEA GM Chief Scientist

Asia GM VP Global Systems Development IT focused business with Engineering focused staff. Process Management Director All Managers above (excluding shaded area) are part of Tier 1 Executive Team. All have equal access to CEO and equal influence All have their own budget Bi-monthly meetings Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. 14 CIO Role at Savvis Combines CTO and CIO roles IT management is centralized

Mr. Doerr had CIO type responsibilities before current role and took on CTO responsibilities when accepting his current role No silos or divisional CTOs CTO vs CIO focus is business driven Focus right now is more CIO focused Strategic Operational CIO 65% / CTO 35% Possible for this to swing back (reverse) Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. Strategic

Operational 15 Top Priorities for 2006 Non ValuedAdded Operational Non ValuedAdded Operational Valued-Added Strategic Continued Integration of Systems Improve position for legislative requirements Internal system integration due largely to acquisitions and providing IT efficiency SOX

Business Process Efficiency Automating operational tasks and helping users improve their business metrics Top priorities seem more focused on CTO/Operational goals for this year Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. 16 What keeps you up at night? The right systems architecture Too slow in getting there Operational vs. strategic tradeoff figuring out how long you can freeze something to fix it is a challenging problem

Conflicting Tier 1 priorities Level of short-term sacrifice for long-term benefit Lesson Learned from Quote/Order System Development: if they [user community] cant draw the process, dont even start it Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. 17 CIO Skills People 1. Leadership and flat executive structure Technical 2.

Savvis is highly technology focused If I dont have the vision of what the [technical] structure will be, I cant lead people Business 3. May be interesting to see if this changes with new CEO Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. 18 How is CIO Evaluated Subjective, company wide model Operational Compliance Specific Business Objectives Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006. 19

Citi Home Equity Statistics Fortune 1000 Companies Starbucks Office Depot Office Max Foot Locker SuperValu Citi Home Equity(CHE) Apple Computer Monsanto Aramark Darden Restaurants Ryder Owens Corning Bausch & Lomb Timberland Dillards Net Income ($MM) 392 335 335 293 280 277 276 267 263 232

216 204 160 153 118 Citi Home Equitys $277 MM of Net Income in 2006 would rank number 330 on latest Fortune 1000 list. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 20 Citi Home Equity Statistics 600 $480.7 $ Millions 500 400 300 $243.8 200 100

$22.8 $44.2 $65.1 $103.0 0 2000 2001 2002 Revenues 2003 2004 2005 21 Citi Home Equity Organizational Structure CitiGroup

Alternative Investments Global Wealth Management Corporate and Investment Banking Global Consumer Group Each business Consumer Lending CitiFinancial Bankcards Group unit has a CIO that reports to a CEO. All technology is Auto Loans Student Loans CitiMortgage Citi Home Equity generally left on the SBU level. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 22

Citi Home Equity CIO: Greg Anstead Education AA in Computer Science BS in Computer Science/BS in Management Masters in Management Recent Experience CTO with Citigroup Real Estate and Technology for 2 years managing a development group of 400. CIO of Citi Home Equity for the last 15 months Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 23 Greg Anstead Interview Notes How do you see your role in the organization?

To provide technology solutions for the business to be competitive, reduce cost, and increase innovation. What keeps you up at night? Control is issue number one at Citigroup as one bad audit could shut this business down and compromise the integrity of Citigroup. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 24 Greg Anstead Interview Notes How is your performance evaluated? Tactically Strategically Politically being able to relate to CEOs managers. This is actually weighted heavier then the tactical (operational) or strategic portions of his performance.

Current role is more operational then strategic due to tremendous growth. Role should be 80% strategic and 20% tactical. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 25 The re-org of Citigroups North American IT! Each SBU has a CIO that reports to a corporate CIO with a dotted line to the SBUs CEO. CitiGroup Alternative Investments Global Wealth Management CitiFinancial Auto Loans Corporate and Investment

Banking Bankcards Student Loans Global Consumer Group Consumer Lending Group CitiMortgage North American IT Citi Home Equity Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 26 The result of the Citigroup reorg Old model: each SBU has their own CIO New model: each SBUs CIO reports to a corporate CIO with a dotted line to the SBUs

CEO What do you believe are the goals/benefits of this organization? What do you see as some potential drawbacks? 27 The result of the Citigroup re-org Greg Anstead noted in his interview that the goal of this centralization is to: drive down cost improve consistency present one face to customers improve our compliance with regulators. The potential drawback is a lack of focus reporting to a corporate CIO and a dotted line to the SBUs CEO. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006. 28 Development of the CIO Customer Service HR

Supplier MGT Early on business functions are silos of excellence. Operations Manufacturing Sales Service Delivery Technology Budgeting A/P Billing Finance A/R External Reporting 29 Development of the CIO Customer

Service HR Supplier MGT Early on business functions are silos of excellence. Operations Manufacturing Sales IT is recognized by internal stakeholders as a key tool for operational efficiency. Service Delivery Technology Budgeting A/P Billing

Finance A/R External Reporting Technology supports functional improvements 30 Development of the CIO Ind ust ry ch e T Operations COO IT becomes more an integral to the business. CIO gy o

l no The organization must also respond to external forces. Technology CTO Finance CFO s er om t s u C Coordination between silos must increase. Reg u lato ry 31

Role of CIO with External and Internal Demands Demands on Business: Customers (speed, reliability, accuracy, security) Operations Technology COO CTO CIO Supply Chain Demands on Business: Customers (accessibility, integration) B2B Finance CFO Demands on Business:

Shareholders (reporting, planning) Regulatory (reporting and compliance) Financial Markets (reporting and compliance) 32 Role of CIO within Citi Home Equity and the implementation of a new system Demands on Business: The COO needs to understand how the new website will affect workflow and customer care. Operations Technology COO CTO CIO Demands on Business: The CTO needs help in understanding the business requirements of a new Orginiations

website. Finance CFO Demands on Business: The CFO needs to be a part of and understand the questions asked in the website to be sure they meet credit standards. 33 The changing role of the CIO 1986 ranking of top 10 issues* 1. Facilitating/managing end-user computing 2. Translating information technology into competitive advantage 3. Having top management understand needs and perspective of IS 4. Measuring and improving effectiveness/productivity 5. Keeping current with changes in technology 6. Managing information resources 7. Integration of IS technologies 8. Data security and control 9. Impact of new technology Passino, Jacque H., Jr., and Severance, Dennis G., The Changing Role of the Chief Information

Officer Planning , Vol. 16, 5, Sep/Oct 1988, pp. 38-42. 10.Training andReview education 34 The changing role of the CIO 1986 ranking of top 10 issues* 1. Facilitating/managing end-user computing 2. Translating information technology into competitive advantage 3. Having top management understand needs and perspective of IS 4. Measuring and improving effectiveness/productivity 5. Keeping current with changes in technology More of an operational focus 6. Managing information resources 7. Integration of IS technologies 8. Data security and control 9. Impact of new technology Passino, Jacque H., Jr., and Severance, Dennis G., The Changing Role of the Chief Information

Officer Planning , Vol. 16, 5, Sep/Oct 1988, pp. 38-42. 10.Training andReview education 35 The changing role of the CIO 2005 ranking of top 10 issues* 1. Cost containment 2. Data security and integrity 3. Fiscal compliance and data transparency 4. Revenue and business growth 5. Innovation of products and services 6. Stakeholder pressure 7. Risk Management 8. Customer data integration 9. E-business/E-government 10.Privacy Guptill, Bruce, and Koenig, Mark, CIOs Budget for Business Optimize, Optimize, Vol. 4, 5, May 2005, pp. 77-80. 36 The changing role of the CIO 2005 ranking of top 10 issues*

1. Cost containment 2. Data security and integrity 3. Fiscal compliance and data transparency 4. Revenue and business growth Major 5. Innovation of products and services strategic 6. Stakeholder pressure 7. Risk Management initiatives 8. Customer data integration 20 years 9. E-business/E-government later 10.Privacy Guptill, Bruce, and Koenig, Mark, CIOs Budget for Business Optimize, Optimize, Vol. 4, 5, May 2005, pp. 77-80. 37 The changing role of the CIO 2005 ranking of top 10 issues* 1. Cost containment 2. Data security and integrity Two relatively new and highly

3. Fiscal compliance and data transparency emphasized issues for CIOs! 4. Revenue and business growth 5. Innovation of products and services 6. Stakeholder pressure 7. Risk Management 8. Customer data integration 9. E-business/E-government 10.Privacy Guptill, Bruce, and Koenig, Mark, CIOs Budget for Business Optimize, Optimize, Vol. 4, 5, May 2005, pp. 77-80. 38 Demands on Business and CIO: Compliance Section 404 of Sarbanes-Oxley Act requires managements assessment and signoff on all internal controls. When CIOs began installing ERP systemsthey unwittingly took something that used to belong to CFOs: financial controls.1 One of Greg Ansteads biggest objectives was to maintain compliance and meet audit standards for fear what poor audit results

could do to the whole corporation! http://www.cio.com/archive/070104/sarbox.html, viewed 3/3/2006 1 39 Demands on Business and the CIO at Citi Home Equity: Compliance Demands on Business: COO is required to document all processes as part of SOX requiring functional information on IT systems. Operations Technology COO CTO CIO Demands on Business: CTO must build, improve, and

implement systems that meet new regulations. Finance CFO Demands on Business: CFO required to with auditors to look at data systems to comply with the SarbanesOxley Act and the Graham-Leach Act. 40 Demands on Business and the CIO: Security 1 Identity theft, phishing scams, intellectual property theft are just three examples of the types of information security threats. Just 37 percent of respondents reported that they had an information security strategyand only 24 percent of the rest say that creating one is in the plans for next year.1

Going back to the Citi Home Equity interview security was identified as a major component to Citigroups success and a major initiative at Citi Home Equity. www.cio.com/archive/091505/global.html, viewed 3/3/2006 41 Security demands on the Business and the CIO at Citi Home Equity Demands on Business: Entitlement reviews go out across the business checking for unauthorized access. Operations Technology COO CTO CIO Demands on Business: The CTO must implement technical controls to tighten access to systems and

to be sure all systems are relatively hack proof. Finance CFO Demands on Business: CFO must work with Technology to be sure systems are secured and access is controlled. 42 From What to How Necessities for the leap from CTO to CIO Leadership Credibility Communication & Relationship building Business Knowledge Know Your Enterprise Competitive environment, business fundamentals, etc. Vision Where can IT strengthen customer relationships and impact growth? Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

43 Leadership: Deliver Results that Matter Credibility To build credibility with your fellow executives: Deliver results that matter to them How does it help executive colleagues meet Initial their goals? Credibility Credibility Resul ts Resources Lost Outcomes Credibility Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005. 44

Leadership: Play Politics Communication is the Key Push, Prod, Educate & Stimulate 20% of CIOs time Build Relationships Build Political Capital Know key stakeholders Convert opponent; Strengthen advocates Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005. 45 Business: Know Thy Enterprise Industry & Competitive Environment Where does the enterprise stand relative to its competitors?

Lagging, Maintaining or Leading Business Fundamentals Competitive Advantage & Strategy Industry Trends What developments will impact the firm? Business maxims IT maxims IT initiatives Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005. 46 Vision: Dont Just Manage, LEAD! Based On:

Economic model of enterprise Strategic intent & endeavors Seize the Opportunity Visibility Generate ITOs Choose wisely Dont follow the hype Pilot programs Testing phase Technology Trigger

Peak of Inflated Trough of Slope of Expectations Disillusionment Enlightenment Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005. Plateau of Productivity 47 In the Future No More IT Projects! IT Projects are Business projects CIO as an Enterprise Business Leader Implement strategic initiatives Create competitive advantage Capitalize on opportunities (emerging tech.)

Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005. 48 What questions do you have? 49 Appendix 50 Demands By the Business Make this easier, Customer Service HR Supplier MGT less manual, and more effective. Operations Manufacturing

Sales Service Delivery Technology Budgeting A/P Billing Finance A/R External Reporting 51 Demands By the Business Make this easier, IT recognized by business a key tool for operational efficiency. Customer Service

HR Supplier MGT less manual, and more effective. Operations Sales Manufacturing Service Delivery Technology Budgeting A/P Billing Finance Head of Technology is called upon for intrafunctional process improvement. A/R External

Reporting IT plays a larger role in business processes. 52 Demands By the Business Make this IT becomes more integral to the business. Customer Service HR easier, less manual, and more effective. Supplier MGT Operations Manufacturing Sales

CTO Service Delivery Technology Budgeting A/P Billing Head of Technology is called upon for inter-functional process improvement. Finance A/R External Reporting CTO role manages demands by the business. 53 Role of CIO with External and Internal Demands

Demands on Business: Customers (speed, reliability, accuracy, security) Operations Technology COO CTO CIO Supply Chain Demands on Business: Customers (accessibility, integration) B2B Finance CFO Demands on Business: Shareholders (reporting, planning) Regulatory (reporting and compliance)

Financial Markets (reporting and compliance) 54 Role of CIO Citi Home Equity Demands on Business: Customers (speed, reliability, accuracy, security) Operations Technology COO CTO CIO Supply Chain Demands on Business: Customers (accessibility, integration) B2B Finance

CFO Demands on Business: Shareholders (reporting, planning) Regulatory (reporting and compliance) Financial Markets (reporting and compliance) 55

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