Striking The Right Balance at Fidelity

Large financial services companies like Fidelity Investments structure and run their technology organizations across so many lines of business. Juggling the needs of the specific business units, along with the desire for cost efficiency and scale, is often a challenge for large organizations.

Each business unit at Fidelity has a CIO who focuses on the specific needs of application delivery and implementation. But if all the CIOs did what they wanted, without paying attention to standards or security or common infrastructure, costs would run out of control and technology wouldn't achieve economies of scale.

"It's all about balance and alignment between what the businesses need and what needs to be standardized from the broad Fidelity perspective," says Stephen Neff, enterprise CTO at Boston-based Fidelity Investments, who takes a long-view perspective on technology.

Today, after more than a decade at IBM, a long stint at Salomon Brothers in New York and London, and 17 years at Fidelity in a variety of senior technology positions, Neff's role is coordination and execution of the firm's IT and risk management functions. This includes all of the global horizontal functions that span the corporation, such as technology infrastructure and information security. Neff also chairs the Enterprise CIO Council, which comprises 14 leaders around the company who collectively manage the direction of technology.

As one of the largest money managers in the world, with approximately $1.9 trillion in assets under management, Fidelity utilizes technology to offer portfolio guidance, institutional brokerage, retirement planning, benefits outsourcing, and health and welfare, among other financial products, to more than 20 million individuals, institutions and financial intermediaries. Overall, Fidelity has an IT budget of $2.5 billion and 12,500 technology employees, associates and contractors around the globe, with teams in four regions -- North America, Ireland, India and China.

Technology is structured so that each business line has a CIO and a development and implementation team. The CIOs leading each unit have a dual reporting line to the company's president and then a dotted line into Neff. "I manage all the stuff at the center -- infrastructure, data centers, and risk and security," he says.

Fidelity's perspective is that senior technology leaders should wear "two hats," says Neff. CIOs have an organization they directly manage and they also have expertise in a dedicated business line. "The other hat is for picking standards and implementing the same technology and trying to get reuse" of the technology across the company, says Neff.

Global Experience

Neff's previous experience with running global technology organizations certainly helps him manage Fidelity's worldwide IT footprint. One of the most memorable work experiences that influenced his career was his move to London in the early 1990s while working for Salomon Brothers. Much of the project was rolling out digital trading technology for Salomon's European businesses, while working closely with teams in New York and Japan. "The whole notion of a global work and 24-hour clock and how you do projects on a global basis was fairly new at the time," says Neff. In these early days of distributed technology, Neff was also exposed to a new set of technologies, including Sun desktops, Unix and Sybase and Teknekron for market data distribution software, that would become fairly standard across the industry. Fidelity was one of the first to use these technologies, though Neff didn't know it at the time.

Fidelity continues to be an early adopter of technology and is known for devoting R&D to emerging tech through its Center for Applied Technology. For instance, the center recently created a prototype of Google Glass as a wearable computing device for retrieving stock quotes.

However, Neff says he's more focused on the longer-term vision of compute platforms. "We're a traditional shop. Many of our platforms are running on combinations of distributed technology and mainframe technology," he points out, adding that the firm has a multi-data center environment. Along these practical lines, Neff says he's spending a lot of time "looking at what our long-term compute strategy should be with data center facilities and compute platforms."

Among its top IT priorities, Fidelity is heavily investing in and developing its own internal private cloud so that it's analogous to the public cloud. "Conceptually, it's using the same principles as the big public cloud providers use," says Neff. "It's all based on OpenStack and a highly automated provisioning process." The technology takes advantage of "highly available, commodity storage servers to be able to deliver at scale and in the future to be portable to other forms of public cloud," he says.

One advantage to Fidelity's private cloud is that it becomes more cost effective to implement distributed computing and to provision servers much more quickly than traditional approaches. "Literally, it used to take weeks to deliver a service. Now it takes minutes," says Neff. It's also a way to deliver elastic computing since teams don't necessarily need the servers forever, he says. Fidelity has found that a reasonable percentage of server allocations given to development teams are returned later on and then reused by other teams. "It makes it much easier to grow when you need it and shrink when you don't," says Neff.

Prefab Data Centers

Fidelity is also fast-tracking the modular data center concept called Center Core. "In our concept, it is all prefabricated off site, shipped to the site, and then a multistory structure is assembled on site," explains Neff. It implemented the first modular data center in Raleigh, N.C., where Fidelity has operations near Research Triangle Park. In Raleigh, Fidelity has in excess of 20,000 square feet of IT space and about 500 kilowatts of power. It's building a data center in Omaha, Neb., which will become one of two major hubs using this process. Raleigh's data center building is designed through Center Core with a distributed computing framework that Fidelity calls "click to compute" and an OpenStack private cloud environment. "What Center Core provides is more flexibility in constructing data centers, quicker time to market, and it allows you to build only what you need," says Neff. In a traditional environment, firms may build a facility with 50,000 square feet even though they may only use 10,000 square feet for the first year or two, he says. A modular design enables Fidelity to build in smaller increments. This allows the company to build more quickly and it can spread the investment out over a longer time frame.

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