State Street Case Study

State Street case study

1. Words

Name:SiYi Liu

ID:710301

Introduction

Technological innovation has sparked profound change across the banking and financial services industry in recent years. State Street intend to be at the leading position of information technology. They are working diligently across the company and collaborating with a broad range of external partners to assess, pilot and deploy information technologies from new and innovative products to enhanced operational efficiency and controls. ( Annual Report to Shareholders, 2017) This report presents a perspective for IS consultant to view IT for State Street’s strategic agility in business terms and to lead in making decisions. The report will analyze the relationships between IT and the rest of company business operation, the impacts of IT change on company’s structure and strategy, and the impacts on managing client relationships.

Relationships between IT and rest of company

IT is a large investment with the average enterprise spending more than 2.3% of revenues annually on IT and 65% of organizations are increasing IT budgets.(IT Spending and Staffing Benchmarks 2017/2018, 2017) . The company should think of IT as services and IT investment as market portfolio. In 2016, State street has spent 1105 million dollars on information system which are accounting for 10.8% of total revenue. (Annual Report to Shareholders, 2017) This IT investment links IT-based capabilities in the enterprise to business partners, external systems such as outsourcing CalPERS , and to internal operation such as Multi-currency HORIZON. The concept of information technology as services is very important, because this concept can help company executives to determine the value of technology and human components of IT system such as data base, program developer, or server. The mangers are able to value a service more readily. For example, the provision of a fully maintained server with access to all of the State street distributed SQL databases. Such services can be measured and controlled in a service level agreement.

On the other hand, the services concept also has advantages on company’s IS group or an outsourcer. The IT services remain relatively stable over time even when their technical components change. The figure of 10.8% includes both the IT budget and ’extra’ IT spending outside the IT budget. For instance, CalPERS service was needed ten years ago and will be needed ten years from now. Although the technology and human components underlying the service such as the servers, the codes, the developers will update over time, the service and the service level agreement are stable.

The impacts on the company’s structure, strategy and clients

State Street operate business unit with multiple portfolios of investments and different levels. Where to place the IT capability is a strategic decision which depends on four classes of IT asset. The first class is transactional IT which automates processes, cuts costs or increases the volume of business a firm can conduct per unit cost. For example, currency transaction, bank cash withdrawal, accounting and other transaction processing functions. The second class is informational IT which provides information for managing, reporting and communicating internally and with suppliers, customers and partners. For example, decision support, sales analysis, customer relationship and risk reporting systems. The third class is strategic IT which supports an innovative implementations of IT. For example, State street is willing to be a add-value information supplier rather than an ‘information provider’(Nolan, Donna B. and Chiara,1995). The last class is infrastructure IT which provides the foundation of shared IT services used by multiple projects. For example, updating servers, networks, laptops, shared customer databases. State Street moved from a strategy of independent business units to ’One Stop State Street’.(Weill and Woodham, 2002) In order to deploy new strategy, State Street created a shared IT services unit to support their large number of innovative business units. Shared IT services enabled an improved customer experience including a central entrance with single log-in and personalized institutional customer dashboards and integrated services.In addition, the establishment of enterprise technical service units has created business of scale, shared development capabilities, leveraged IT technology in a wide range of technologies.