LoanDepot has named George Brady Chief Digital Officer, effective July 6. LoanDepot has funded more than $300 billion in loans since its founding in 2010 and currently ranks as the second-largest retail nonbank lender and one of the leading retail mortgage lenders in the United States. LoanDepot is an approved seller and servicer for Fannie Mae, Freddie Mac, and Ginnie Mae.
Brady will oversee all of loanDepot’s technology capabilities, including the leading proprietary platform, mello, with a specific focus on spearheading loanDepot’s technological innovation. Brady will report directly to loanDepot Founder and CEO Anthony Hsieh. LoanDepot’s technology team, led by Chief Information Officer Sudhir Nair, will report to Brady.
“Pushing the technology envelope is in loanDepot’s DNA,” said loanDepot founder and chief executive officer Anthony Hsiea. “Since our launch in 2010, our technology-powered products and services have changed the game for both customers and originators by providing an exceptional experience they can’t get anywhere else.”
In describing Brady’s hire, Hsiea went on to note, “George is a world-class talent whose unmatched knowledge, skills and leadership adds incredible horsepower to an already exceptional team. Under George’s leadership, I’m confident we’ll drive our world-class platform, mello, to new heights and continue to cultivate a culture of innovation and technical excellence. We have a tremendous opportunity to not only continue our innovation path as a category leader, but to shape and change the entire industry.”
“LoanDepot has a deep understanding of how technology can push the boundaries to enable both consumers and originators to seamlessly and successfully navigate the lending process,” noted Brady. “Between its remarkable track record of digital innovation, the talent and passion of its outstanding team, and the commitment of a visionary CEO to stay on the cutting edge, loanDepot is in a unique market position. The time is right to set the new standard for technological excellence and expand our capacity to meet the changing expectations of our customers.”
Brady has spent most of his career in financial services at companies like Goldman Sachs, Fidelity Investments, and Deutsche Bank. He was most recently the Chief Technology Officer at Capital One.
Peter High is President of Metis Strategy, a business and IT advisory firm. He has written two bestselling books, and his third, Getting to Nimble, was recently released. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.
In order to compete with the speed and agility of startups, organizations need efficient, disciplined financial management practices that detail how their money is spent and how each investment ties to specific business outcomes. This requires decision-making frameworks and management systems that use credible, timely information to empower leaders to quickly evaluate a situation and determine a course of action. Often, the fastest-moving organizations either are those with the most streamlined financial management practices, or the most careless. Developing these sound financial practices can give leaders critical information they need to act with confidence during uncertain times.
IT financial management is a journey. CIOs can mature throughout this process by managing costs, increasing cost transparency and partnering with the business to communicate the true value of transformation initiatives.
Many organizations still manage their budget based on traditional general ledger categories such as hardware, software, labor, and the like. The difficulty with this approach is that it provides a financial view that is not particularly helpful for IT. Business functions might track revenue by the accounts served or services provided. To improve cost transparency and promote accountability, IT leaders should do the same, tracking and managing costs based on the services provided, whether end-user, business or technology services.
Technology Business Management (TBM) is one of the most common service-based cost models we have encountered with our clients. The TBM framework allows organizations to track how costs and initiatives align to different cost pools, IT towers (e.g. compute, network etc.), services and business units. This helps drive cost accountability among IT teams by establishing baseline and ongoing costs for the services provided to the organization while providing business owners with the true cost of IT services.
With the help of Metis Strategy, an international financial services organization implemented a similar framework to gain more clarity about how it’s nearly $500 million budget aligned with business goals and created value for the company. We first analyzed the labor and managed service spend on key IT services such as application support, IT service desk, network and telecom, and other business functions. With this breakdown, the client was able to identify cost per employee based on location, job type, and which application or service the employee supported. This increased transparency ultimately allowed the organization to save or reallocate $15 million in costs.
While service-based models provide greater cost transparency, they come with their own set of challenges. A common one is tracing shared infrastructure costs back to the business unit that consumed them. Often things like laptops or storage budgets are listed as run items that aren’t tied to specific business units. This often results in a large bucket of “run items” that no one outside of IT quite understands. Without the ability to see how these costs directly support business units, CIOs often face pressure to undertake arbitrary budget cuts.
To provide more clarity on how costs are allocated, adopt an allocation model across the entire financial portfolio. Based on their maturity, organizations typically use the following two allocation models:
After defining an allocation model, IT organizations should aim to influence business demand and accountability for IT services by educating them on the cost impact of their decisions. We recommend that IT start with a “showback” model that illustrates the cost allocation through a dashboard or report. This will give IT the data it needs to shape the demand for additional requests and have more productive conversations with colleagues: “What is the return on this investment? We can show the cost, but are you able to articulate the value?”
In many cases, a showback approach can create a sense of shared ownership for how a business decision may impact an IT budget (i.e., if I hire 10 more people, the IT costs will go up by $100*10). In other cases, where a single stakeholder is consuming a large volume of a service, or has a justifiable business need to control spending, a direct “chargeback” may be more appropriate. For example, if a business unit is driving a major sales campaign, they may need a burst of capacity on a website for a finite period of time. There is a clear return on the investment, but very little value in IT governing whether it is the right way to spend the money. The business unit should simply be charged directly for its consumption and be empowered to control its own destiny.
Once a well-defined financial management framework is established, IT can begin to shift conversations with business partners away from IT costs and toward IT-driven value. A showback or chargeback model will provide transparency on the total dollar spent and can also help illustrate the benefits and trade-offs of different initiatives.
Metis Strategy worked with a manufacturing company that went on this journey. The IT organization was responsible for running and maintaining the Manufacturing Execution Systems (MES) in the factories. Over time, the systems had become disjointed and expensive to maintain. However, upgrading them would be a multi-million-dollar project that would span two to three years. The CIO tried to make the case for an upgrade, but his proposal fell on deaf ears until he was able to articulate the hard and soft benefits of the upgrade to the business. Implementing a showback model allowed his team to build a robust business case that highlighted the potential for future savings by reducing data storage, maintenance and labor support costs. That financial information also allowed the CIO to show how the upgrade would create a more harmonious manufacturing environment and better access to data.
Financial management cannot happen in isolation from project and portfolio management processes (PPM). Organizations need to align their portfolio to the company’s strategy, manage demand, and prioritize investments. This becomes easier to achieve when these key activities are supplemented with the right financial data. Instead of prioritizing a project portfolio based on arbitrary soft benefits, improved financial management practices can help organizations understand and quantify costs and negotiate a seat at the table by demonstrating value for the company.
There are many financial management solutions in the marketplace, but they will be of little use if they are codifying and scaling a broken process. Before adopting a solution to kickstart your financial management practices, it is important to start with the problem you are trying to solve and define the financial metrics that will help improve decision making. It is also critical to ensure your company can produce credible data. If the data collection, manipulation, publishing, and consumption processes are not ironed out first, organizations are likely to run into data quality issues, which can ultimately lead to a lack of trust, branding challenges, and a less successful implementation.
Dynamic companies need well informed leaders who can quickly decide how to respond to a competitive threat, where to invest more money or where to make tradeoffs. With IT budgets often among the top five cost centers in companies, a clearly defined IT financial management framework can provide greater cost transparency and help influence those decisions. An elevated financial management discipline will also strengthen relationships throughout the business by streamlining investment decisions and more clearly quantifying IT’s value.
This article originally appeared on CIO.com. Chris Boyd co-authored the piece.
As technology departments shift from traditional project management frameworks to treating IT as a product, it is triggering a broader re-think about how technology initiatives are funded.
Under the existing “plan, build, run” model, a business unit starts by sending project requirements to IT. The IT team then estimates the project costs, works with the business to agree on a budget, and gets to work.
This setup has several flaws that hamper agility and cause headaches for all involved. Cost estimates often occur before the scope of the project is truly evaluated and understood, and any variations in the plan are subject to an arduous change control process. What’s more, funding for these projects usually is locked in for the fiscal year, regardless of shifting enterprise priorities or changing market dynamics.
To achieve the benefits of a product-centric operating model, the funding model must shift as well. Rather than funding a project for a specific amount of time based on estimated requirements, teams instead are funded on an annual basis (also known as “perpetual funding”). This provides IT product teams with stable funding that can be reallocated as the needs of the business change. It also allows teams to spend time reducing technical debt or improving internal processes as they see fit, improving productivity and quality in the long run.
“We have to adapt with governance, with spending models, with prioritization,” Intuit CIO Atticus Tysen said during a 2019 panel discussion. “The days of fixing the budget at the beginning of the year and then diligently forging ahead and delivering it with business cases are over. That’s very out of date.”
Business unit leaders may be skeptical at first glance: why pay upfront for more services than we know we need right now? A closer look reveals that this model often delivers more value to the business per dollar spent. For example:
Shifting away from old ways and adapting a new funding model can seem like a daunting task, but you can get started by taking the following first steps:
First, establish the baseline to which you will measure the funding shift’s effectiveness. A technology leader must consider all the dimensions of service that will improve when making the shift. Two areas of improvement that have high business impact are service quality and price. To establish the baseline for service quality, it is important to measure things like cycle time, defects, net promotor score, and critical business metrics that are heavily influenced by IT solutions.
The price baseline is a little more difficult to establish. The most straightforward way we have found to do this is to look at the projects completed in the last fiscal year and tally the resources it took to complete them. Start with a breakdown of team members’ total compensation (salary plus benefits), add overhead (cost of hardware/software per employee, licenses, etc.) and then communicate that in terms of business value delivered. For example, “project A cost $1.2M using 6 FTE and improved sales associates productivity by 10%”. When phrased this way, your audience will have a clear picture of what was delivered and how much it cost. This clear baseline of cost per business outcome delivered will serve as a helpful comparison when you shift to perpetual funding and need to demonstrate the impact.
The shift to a new funding model will be highly visible to all business leaders. To create the greatest chance of success, focus on selecting the right teams to trial the shift. The best candidates for early adoption are high-performing teams that know their roles in the product operating model, have strong credibility with business unit stakeholders, and experience continuous demand.
In our work with large organizations piloting this shift, e-commerce teams often fit the mold because they have a clear business stakeholder and have developed the skills and relationships needed to succeed in a product-based model. Customer success teams with direct influence on the growth and longevity of recurring revenue streams are also strong candidates as their solutions (such as customer portals and knowledge bases) directly influence the degree to which a customer adopts, expands, and renews a subscription product.
Estimation in the product-based funding model is different than in the project model. Under the new model, teams are funded annually (or another agreed-upon funding cycle) by business units. As funding shifts to an annual basis, so should cost estimation. Rather than scoping the price of a project and then building a temporary team to execute it (and then disbanding after execution), leaders should determine the size and price of the team that will be needed to support anticipated demand for the year, and then direct that team to initiate an ongoing dialogue with the business to continuously prioritize targeted business outcomes.
When completing a team-based cost estimation, it is important to include the same cost elements ( salary, benefits, hardware, licenses, etc.) that were used to establish your baseline so that you are comparing apples to apples when demonstrating the ROI of product-based funding. Where you will see a difference in the team-based model is resource capacity needed to deliver demand. In a product model, a cross-functional team is perpetually dedicated to a business domain, and there is often zero ramp-up time to acquire needed business and technical knowledge.
Since the teams have been perpetually dedicated to the domain, they are encouraged to take a longitudinal view of the technology estate and are able to quickly identify and make use of reusable components such as APIs and microservices, significantly improving time to market. For these reasons, among others, teams in the product-based operating model with perpetual funding can achieve more business value for less cost.
Pilot teams should work closely with the BU leadership providing the funding. Stakeholders should work together to generate a list of quantitative and qualitative business outcomes for the year (or other funding cycle) that also satisfy any requirements for existing funding processes operating on “project by project” basis.
If you don’t already have a great relationship with finance, start working on it now. Your partnership with finance at the corporate and BU level will be critical to executing your pilot and paving the way to wider enterprise adoption of team-based funding models. Ideally. Leaders should engage with finance before, during, and after the team-based funding model so that everyone is in lockstep with you throughout the pilot. This alignment can help bolster adoption with other areas of the enterprise.
Each finance department has unique processes, cultures, and relationships with IT, so while you will need to tailor your approach, you should broach the following topics:
You will need to achieve success in the pilot to bolster adoption in other areas of the business. Your success needs to be communicated in terms that resonate with the business. As your pilot comes to an end, gather your baseline data and match it up with the results of your pilot. Put together a “roadshow deck” to show a side-by-side comparison of costs, resources, and business outcomes (Business KPIs, quality metrics, cycle times, NPS, etc.) before and after the shift to team-based funding.
Depending on your organization, it may be prudent to include other observations such as the number of change control meetings required under each funding model, indicators of team morale, and other qualitative benefits such as flexibility. Have conversations with other areas of the business that may benefit from team-based funding (start off with 1-on-1 meetings) and offer to bring in your partners from finance and the product teams as the discussion evolves. The most important part of your story is that the team-based funding model delivers more business impact at a lower cost than the old model.
Establish light and flexible governance mechanisms to monitor performance of the teams operating in the teams-based model. The purpose of these mechanisms is to validate that the increased level of autonomy is leading to high-priority business outcomes, not to review progress on design specs or other paper-based milestones. A $40B global manufacturing client adopting the team-based funding model established quarterly portfolio reviews with BU leadership and the CIO to review results. BU leadership reviews results of the teams and the planned roadmap for the subsequent quarter. BU leadership is then given the opportunity to reallocate investment based on changing business needs or can recommend the team proceed as planned.
It is important to communicate that this process requires constant buy-in from business units. While funds will be allocated annually, demand will need to be analyzed and projected on at least a quarterly basis, and funds should be reallocated accordingly. In cases where investments need to be altered in the middle of a fiscal year, it is important to note that the unit of growth in this model is a new cross-functional team focused on a targeted set of business outcomes. The idea is to create several high-performing, longstanding, cross-functional teams that have the resources needed to achieve targeted business outcomes, rather than throw additional contracted developers at teams as new scope is introduced.
Making the shift from project-based funding to product team-based funding is a major cultural and operational change that requires patience and a willingness to iterate over time. When executed successfully, CIOs often have closer relationships with their business partners, as well as less expensive, more efficient ways to deliver higher-quality products.
At the Forbes CIO Summit at the Ritz Carlton at Half Moon Bay, the theme of the conference this year is The Digital CIO Takes Charge, as the CIO is now positioned to drive product, revenue and customer experience. At our conference you will see these trends personified.
I have been enormously encouraged by the number of CIOs who have taken digital responsibilities in part or completely for the enterprises they are a part of. As they do, they tend to get more involved in product development, as well. In the process, these grade A CIOs are getting more involved in driving revenue growth for their companies in addition to the traditional purview of CIOs of cost cutting.
We will hear from a number of leading lights who are shaping the technology landscape. Former Cisco CEO, John Chambers will join me on stage to talk about his career in addition to his current work as a venture capitalist.
7/16/2018
By Peter High. Published on Forbes
When Gary Reiner was the chief information officer of General Electric for parts of two decades, ending in 2010, he had an unusual purview in that role even for today. He led mergers & acquisitions, sourcing, IT, operations, and quality teams for the company. Armed with an MBA from Harvard University, and having spent time as a partner at the consultancy, Boston Consulting Group, he brought an unusual degree of business savvy to the role of CIO.
Since then, Reiner has made the unusual leap from CIO to venture capital, joining the growth equity firm, General Atlantic immediately after his tenure at General Electric. In that role, he has joined the boards of a number high growth companies (Box, Mu Sigma, Appirio, SnapAv), while also joining the boards of mature companies such as Citigroup and Hewlett Packard Enterprise. Thus he has a deep well of knowledge of what the buyers of enterprise technology (CIOs) want in the technology they seek, and he also can advise mature companies on how to borrow some of the magic of start-ups while counseling start-ups on how to mature as they grow.
Reiner also sees the CIO role maturing, as well. He believes it will become more strategic as software continues to eat the world, and in fact, he believes that the rapid production of software at scale will become increasingly important among CIOs, as well. In this interview, he offers a wealth of recommendations for CIOs, offered from the various experiences he has had in the world of technology.
To listen to an unabridged audio version of this interview, please visit this link.
Peter High: You are an Operating Partner at General Atlantic [GA] and part of their Resources Group. Could you talk about your purview in that role?
Gary Reiner: My responsibility is to look at technology companies where technology is the strategy and to become an advocate internally to partner with them. In many cases, if we do partner with them, I stay involved by joining the board to try to help them grow. We are a growth-oriented private equity firm, that is our mantra, and therefore what I try to do is centered around helping them grow faster than they otherwise would.
To read the full article, please visit Forbes.
by Peter High, published on Forbes
1-25-2016
When Jim Fowler was promoted to become the Chief Information Officer of GE, it was a move that he was aware of well in advance. A hallmark of GE’s legendary talent management program is to have leaders identify people who could take their places in advance of the need for that transition. Jamie Miller, who had been CIO for two and a half years prior had identified Fowler – then CIO of GE Capital – as her possible successor. As Miller ascended to the role of President & CEO of GE Transportation, Fowler had been preparing for this move. In turn, in his first six months in his current role, he will be planning who might succeed him, even though he has no plans to leave the role any time soon.
In this interview, Fowler describes how he has organized himself in the early stages of his role. He already has developed audacious goals of driving $1 billion in productivity gains by 2020 while also generating $15 billion in revenue growth from software and technology. At the heart of this is Predix, an analytics platform to help assets run more effectively. GE is using it internally, and has already garnered $5.5 billion in revenue gains by making it available to GE’s customers. All the while, Fowler has developed a well thought out plan to keep GE’s information secure. He talks about all of the above and more in the following interview.
(To listen to an unabridged audio version of this interview, please visit this link. This is the 32nd article in the CIO’s First 100 Days series. To read past interviews with the CIOs of P&G, Kaiser Permanente, Microsoft, CVS Caremark, and Ecolab, among many others, please click this link. To read future articles in the series, please click the “Follow” link above.)
Peter High: In our last conversation, a number of months back, you were the Chief Information Officer of GE Capital, a unit that has since been sold off, and you have taken over the role of global CIO for all of General Electric. I wonder if you could reflect on the transition, how you found out about the new role, how you began to prepare to the ascension to the role, and how the news of the role came to you.
Jim Fowler: The role came about as a series of leadership succession movements were planned in the company. Those successions, based on a few retirements, led to the previous group’s CIO, Jamie Miller, taking on the CEO role of our Transportation business. That planning started to happen over the summer as some of the retirements came to be known. I think I found out about it around mid-July. The plan was to have me step in as the group CIO later in the year. I had thirty days’ notice before the formal announcements went out to start to think through what I had to do to prepare for the role and to lay out a plan.
I used that thirty days to spend some time with Jamie, understanding what her thoughts were as I transitioned into the role, what things she felt needed to be continued or changed, and get her feedback on what it had taken her to be successful in the role. I also used the opportunity for myself to reflect on my experiences in the company and where I thought the company was headed relative to digital products, what we were doing related to growing the company in new areas, and how that was going to relate to the priorities for the IT function. So, that let me lay out a ninety day plan. I am coming to the end of that ninety days having worked through a lot of the steps in the plan.
High: Can you describe your purview as CIO of GE?
To read the full article, please visit Forbes
