INN: Explain why technology is a core emphasis at Countrywide Financial.
Jones: It started from the begINNing of Countrywide's history in 1969. We understood that one of the clearest ways to have a competitive advantage was through technology. Angelo Mozilo (Countrywide's chairman, president and CEO) still very much believes in technology delivering a competitive advantage today.
That creates an environment where we all focus on how we can do that throughout the company and business divisions, and not just in IT. We're very focused on using technology to drive down costs to make processes more efficient and to improve the bottom line.
INN: Countrywide's organic IT strategy and its adaptive infrastructure have been cited as highlights of its leadership prowess. Describe this strategy and infrastructure, and how the company decided to take this path.
Jones: The organic IT initiative concept revolves around a very modular approach to adding capacity to the system. Having this component-based approach enables us to be more flexible, to react more quickly to change in the environment, and is more helpful recovering from any outages or incidents.
We created a component-oriented, or "organic" infrastructure strategy that applies to the network and to the hardware or the servers that support the application systems.
One example of this organic IT approach is our Virtual Data Center. We look at all of our primary corporate locations where we have data centers as one virtual data center with servers anywhere in that (system). If a server fails, we want it to automatically default over to another server. If the database is corrupted, we want to automatically . . . (switch) over to a second copy of that database.
INN: Explain how Countrywide developed its Virtual Data Center and the Storage Area Network.
Jones: We needed to have a high-powered, reliable network before we could have a virtual data center, so the first thing we did was work on the network in early 2002. We connected all our primary locations with very high-speed fiber optic trunks and used Nortel switching equipment to connect this backbone network together.
The second part of the process was consolidating the storage. Instead of each server having its own disk drive, we connected the servers to the Storage Area Network. This provides high-speed replication of data between the primary core locations and enables us to have very good disaster recovery systems in place.
The third part of the process is to consolidate a lot of the server applications. Since the servers are accessing the data on the Storage Area Network, we can now begin to understand which applications could co-exist on the same servers and run our environment with a smaller number of servers.
INN: Countrywide has been recognized for its enterprise consumer portal, which integrates your mortgage, insurance, and retail banking businesses. Describe what you expect to achieve by doing this.
Jones: We've been diversifying as a company for quite some time and it really became a key strategy.
We realized that it would be great to unify our consumer-facing Web sites for banking, insurance, and home loans and give the consumer that diversified experience. So we created a global navigation, a single user sign-on, and a way of seamlessly navigating between the different consumer-facing Web sites.
I like this type of project because it gets everyone motivated to rally around a very important milestone date. (The company changed its name in Nov. 2002 to Countrywide Financial Corp.)
INN: Countrywide also has an employee Web portal called CWInsider. When and how was it developed?
Jones: This is really a terrific piece of technology. What's fun about it is that we did it ourselves instead of buying portal software. It was developed early in 2002 and it started out as a grass-roots movement used by 500 to 1,000 IT staff. When we realized the power and significance of it, we started connecting everything inside Countrywide to CWInsider.
Now, almost every employee of Countrywide uses CWInsider because no matter where you are, no matter what time it is, no matter what country you are in, you don't have to have anything other than a browser to access everything you need to do your job.
We have thousands of home loan consultants who have become very mobile and they use their laptops. With CWInsider, they are able to access the applications they need. They're able to create loan applications, lock in loan rates, and perform their entire job function from their laptop sitting outside a Starbucks, or with their customer in his home, at a real estate office or wherever they want to do business.
INN: What percentage of revenue does Countrywide typically budget for IT?
Jones: It's actually been on a gradual increase. I would characterize the company as growing about 27% per year, and the IT budget is growing at a much smaller rate than that. If you account for our entire IT infrastructure and all the people it takes to run that infrastructure, it would account for about 3.1% of Countrywide's overall expenses.
If you looked at all the divisions of Countrywide that are building new business solutions and applications, that would account for about 6% of Countrywide's overall expense budget.
We have forecasted spending only to the end of 2003, and our forecast says we will have moderately increased spending to meet a lot of new compliance requirements. We also want to further strengthen the network and the infrastructure to handle the ever-increasing volumes we are experiencing.
INN: What are the company's current major technology initiatives?
Jones: We are continuing with the organic IT approach in terms of infrastructure and we are further expanding our global IT efforts.
We are looking at electronic document creation and delivery with a system called Dynamic Docs. The loan origination system will send XML data to an engine that turns the XML data into documents. Then we will automatically deliver the loan document packages to the closing agents as Acrobat PDF files. Further development of this system, including more automated closings of home loans, is one of our current initiatives.
We're very focused on the customer, so customer-facing technologies are still a very important part of our initiative. We're currently working on a self-service approach to our Web site, which will enable customers to type in a question such as "How can I get a home equity loan?" and receive an answer to that question. It will be a natural English-language, question-and-answer interface between the customer and Countrywide, and also for Balboa Insurance as well.
INN: Which initiatives are part of your short-term IT plan?
Jones: Wireless is huge. Computing anywhere at any time has been our mantra since CWInsider and we now think that's even more applicable as the new wireless technology will become more powerful and more prevalent, with fewer dead zones. We think wireless is obviously very important for our sales force and very important for our employees so we will pursue all the latest wireless technologies.
We think that storage will continue to mushroom and the amount of data that we have to manage will continue to multiply. We will therefore continue to expand upon our Storage Area Network approach to managing that particular environment.
We think that compliance issues will continue to be very important, including data privacy, data security, and data integrity. We also will be very focused on protecting our customers' data as a very important part of our overall technology efforts.
We also want to take the unnecessary steps out of the business process and get it down to its most automated, most efficient level. That will apply to insurance processes, home loan processes and banking processes so we can make everything as easy as possible for our customers.
INN: What advice would you give to other financial services executives who are responsible for making IT decisions?
Jones: I feel I'm very fortunate because I work with people who understand the value of technology, and that makes my job much easier than those of my peers.
In 1999, we were heavily involved in improving our Web site and our e-business capability in response to the new e-business explosion that was happening with many different companies. At that time, we really focused on how we could make our business model work in the online world.
I learned then that the key to success is to have the IT person, the business person and the marketing person really understand each others' areas and really work together. Any one of those three individuals without the support of the other two will not be successful.
When you have the combination of IT, business and marketing working effectively, things go extremely well.
As an IT leader, if you are not as involved in understanding the business as you should be, and if you are not as involved in understanding where the organization needs to go from a marketing perspective, and you think you are only providing infrastructure, then you will not be as successful.
Tina Tapas is a freelance writer based in Prospect Hills, Ill.
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