JP Morgan's Take on IT Project Management

When she joined the New York City investment bank Chase Capital Partners in November 1999, Marcia Bateson only had to glance at her assistant’s desk blotter to see that her new employer needed to fix some important business processes. There, yellow sticky notes stood as records for dozens of big-dollar investments the company made daily via wire transfer.

Other spots around the office also screamed for improvement. At the end of the month, Bateson watched accountants gather by a Bloomberg terminal to jot down financial and market news they needed, which was then entered into Excel spreadsheets. Twice a year, the staff would mail Lotus Notes-loaded laptops to colleagues in offices around the world so that they could review and update information for the company’s investment portfolio.

The sticky notes. The jottings. The laptop mailings. They all spoke of a frightening potential for record-keeping errors at a company handling billions of dollars in investments. Bateson, chief administrative officer and CFO at what is now J.P. Morgan Partners after the January merger of Chase Manhattan with J.P. Morgan & Co., realized the need for automated systems. That led to Project SAIL, a multimillion-dollar ongoing effort to reshape J.P. Morgan Partners’ technology infrastructure and accounting systems and to enable automated tracking and reporting of its global investments portfolio.

A year and a half later, Project SAIL has come a long way and remains on course. Segments completed on time include:

  • Electronic tracking of wire transfers and direct feeds of stock updates from the Bloomberg wire into J.P. Morgan Partners’ database about public companies.
  • A secure worldwide extranet for reviewing and updating information on portfolio companies (see "Your Laptop Is Not in the Mail," Page 104).
  • A database for searching the pipeline of pending deals by industry, region and investment professional.

While J.P. Morgan Partners has had to overcome some challenges?and there’s more to do?Bateson, CIO Edward O’Connor and other executives attribute the positive results thus far to a three-pronged philosophy: Have IT staff and business unit colleagues work hand in hand to develop applications; break the project into small deliverables, celebrating successes along the way; and when possible, choose vendors in which the bank has invested.

Because the project alters every worker’s job, effective management takes some cheerleading, says Bateson. "We’re changing every aspect of every person’s day. So we’ve had to be messiahlike and think about changing the world. We’ve needed everyone’s hearts and minds, not just bodies, pulling data."

The Business Case

Building the case for the project started with business needs, according to Bateson and Controller and Managing Director Lisa Stein. First, accurate information is a must for J.P. Morgan Partners, whose main activity is investing in promising companies. It collects information about those companies to manage its investments and measure performance. Since it’s a bank subsidiary and has foreign affiliates, J.P. Morgan Partners is accountable to its investors but also to federal and overseas regulators.

Second, the business needs information fast to grow in its competitive field. What was a portfolio of 600 companies under Chase Capital Partners in 1998 now covers more than 1,400 companies and $23 billion in assets. And since the IPO market exploded in 1999, J.P. Morgan Partners’ public holdings have grown from 50 securities to more than 100. Third, Internet-based communications mean that J.P. Morgan Partners’ researchers and decision makers need to be able to act quickly to compete. To turn business intelligence into investment decisions, Bateson says, "most firms have a quarter. For us, it’s shrunk down to a month and?in some instances?a day."

And finally, a modernization project was a chance to gain a competitive edge, Bateson says. Eighty-five percent of private equity companies do their accounting and reporting manually off of Excel spreadsheets, according to an Accenture survey of 100 private equity companies. CIO O’Connor’s rationale: "We were using a highly manual process for jobs that required scalability. We were using Post-it notes and Sneakernet."

Last spring, Bateson and Stein made those points to J.P. Morgan Partners Managing Partner Jeffrey Walker and J.P. Morgan Chase management. "It wasn’t a particularly hard sell," Stein says. "The project had to proceed because of the increasing volume we were facing and the increasing complexity being added?as well as the shorter turnaround time being requested, if not required, by all our constituents."

All Together Now

With the go-ahead, Bateson and Stein assembled a team of about 20 IT workers and investment and accounting professionals. This group would develop the applications for the initiative dubbed Project SAIL. SAIL is an acronym for scalability, A+ controls, information at the point of need, and ability to leverage information, turning data into insight.

Even before the company could begin using the applications, though, its first step was overhauling J.P. Morgan Partners’ network infrastructure to handle the applications the executives envisioned. It was also vital, Bateson says, to put important information in one place for end users to access. One result was a system simplification: The company installed a Citrix terminal-server environment, which lets users all over the world access the same database. That replaced a combination of distributed servers and mainframes the bank used in the past.

IT and business cooperation is crucial, says Bateson. No application can help the business unless IT understands how the relevant business unit works. So for each application, she assigned someone from IT to lead the technology aspect and someone from the relevant business unit to take charge of that application’s content.

The project designed to automate accounting systems, for example, tracks investments made by J.P. Morgan Partners on behalf of third parties and business partners, whether they’re pension funds, major corporations or wealthy individual clients. J.P. Morgan Partners not only has to do accounting for investments it makes, but it also needs to accurately allocate the returns on those investments among the various third-party partners who hold a stake. At the same time, ownership stakes may be governed by complicated partnership agreements. In the past, the staff performed those calculations.

To automate that process, known in-house as partnership accounting, Bateson tapped coleaders and told them "to think of yourselves as joined at the hip." IT Project Manager John Blevins and Ann Marie Farah and Mounir Nahas, heads of accounting and reporting, continue to lead that ongoing piece of Project SAIL. To Blevins, it was an invigorating experience. "We didn’t look at it as a project that was technology-driven but as one that was for the benefit of the business," he says.

Quick Victories

As the accounting system and IT infrastructure initiative demonstrate, Bateson did not approach Project SAIL as a single monolithic project. The J.P. Morgan Partners team members broke it into more than a dozen small pieces, and they created frequent deliverables, celebrating each success along the way (by taking a trip to a wine bar and a Yankees game, for example). That is important to keep momentum going on a large initiative?and to keep staff motivated, Bateson says. "If you say, ’We’re going to get from point A to point B’ and engage in scorched-earth tactics to get there, that’s no good," says Bateson. "But if the journey is pleasant and still results in a changed world, it’s a positive experience."

Another big piece of that strategy is to take tasks that can be quickly and easily automated, creating early successes?and early celebrations?whenever possible.

One example is a deal-tracking system that is Web-enabled and can be accessed anywhere in the world so that J.P. Morgan Partners’ staff can track the pipeline of investment opportunities. Investment professionals can search by company, industry, region or person to see what deals J.P. Morgan Partners are working on, which areas have high-volume activity and who might have handled a transaction similar to one they’re currently working on. Associate David Hang says this is a big time-saver. "It also helps for staffing," he says. "Staffers can look and see what different people are working on. If someone’s too busy, we can avoid giving them new assignments."

Before installing the automated system?an early quick-hit piece that was up and running by mid-2000?anytime an associate wanted to examine the pipeline of deals in a particular category, he would have to initiate a "fire drill." Someone would send an e-mail inquiring about a particular industry, for example, and people from all over the world would respond by sending back spreadsheets, which the recipient would put together and try to manipulate. "Now they have real-time knowledge of the pipeline just by clicking into the database," says Bateson. And implementation was fairly simple?the only issue was training investment professionals to log all pending deals into the system. So most professionals felt that adopting the system would make their lives easier, says Hang.

Another quick hit has been the automation of wire transfers. The Project SAIL team rolled out an existing application that already had been developed for J.P. Morgan Chase. A system that replaced the dreaded yellow stickies allows investment professionals to enter information onto an Excel-based form, press a button, and then it’s uploaded, reviewed and processed. In addition to reducing the risk of error, it’s cut down the time it takes to do year-end audits. "We project we’ll get almost all of our year-end audits done one to two months earlier than last year," Stein says.

Bite-Size Portions

Not everything has been so easy. For example, the partnership accounting application, which tracked investment shares owned by third parties, was broken into phases. The first phase?the automation of the investment accounting piece, which involves breaking each investment into the proper ownership proportion among various J.P. Morgan Partners’ legal entities?was implemented in a round-the-clock big bang conversion during Martin Luther King Jr. weekend.

In the weeks leading up to the conversion, application developers on the Project SAIL team were putting in 80- to 100-hour weeks. And once they reached the big bang weekend, 40 to 50 people from the team and Miami-based software company FTI worked around the clock to make sure the investment information was allocated into all the proper fields at the push of a button?and to ensure that the manual calculations didn’t vary from the automated calculations. The conversion was so all-encompassing for those involved that IT Project Manager Blevins brought his wife to watch him watch the screens. "I guess you can call that a bit of work-life balance," he says.

The company celebrated the success with a party, complete with drinks and hors d’ouvres, and Bateson invited vendors from other pieces of the project to celebrate too. A big goal of hers was to make everyone involved?vendors and J.P. Morgan Partners staff alike?see Project SAIL as a singular project changing the shape of the company. So when one piece was completed, everyone would join the victory party.

"People were relishing the accomplishment of a goal and not thinking where they came from," says Bateson. "That was a good thing. You want people not worrying about their own personal agenda, instead focusing on the agenda we’ve all committed ourselves to."

Use Vendors You Know

The Project SAIL team selected vendors whenever possible from J.P. Morgan Partners’ investment portfolio. Bateson says that while the pressure is not overt to do so, there’s a benefit of working with a company in which you’ve invested. "You get to see, as a client sees, what you own," she says. "You’re eating your own dog food, so to speak. You get to be a client and owner at the same time."

Of course, it’s not a perfect view. A vendor may be more likely to mind its P’s and Q’s for a major investor than it is for Joe Customer. But is extraordinary service such a bad thing? Besides, "it’s better than the view I’d have if I wasn’t a client at all," says Bateson. "And is any client experience wholly representative?"

Examples of vendors involved in Project SAIL, in which J.P. Morgan Partners holds a stake, include:

  • Trigyn Technology, formerly eCapital Solutions, a company based in India, helped develop the deal-tracking system to monitor the pipeline of investments and opportunities.
  • Greenwich Technology Partners in White Plains, N.Y., designed and implemented the new network infrastructure. Also the former home of J.P. Morgan Partners CIO O’Connor.
  • Syncata, an El Segundo, Calif.-based software developer and systems integrator, helped create a secure extranet for J.P. Morgan Partners’ biannual review of portfolio investments?putting an end to mailing laptops around the world.

These contract awards were not sure bets. Syncata, for example, had to outbid three other portfolio companies and a Big Five accounting and consulting company to win the extranet project. But its status as a portfolio investment helped.

What’s Left

There’s still more to do on Project SAIL?particularly that partnership accounting application?and more challenges to overcome.

That partnership piece, where the returns are allocated among third-party investors, is behind schedule and won’t be in place until later this fall. Bateson and her staff didn’t realize how complicated it would be for the system to analyze the partnership agreements and to make sure the right amounts are all entered into the right fields. "We underestimated the complexity of establishing logic from legal agreements that are 2-inches to 3-inches thick and translating them into something that can be written into code," she says.

But this delay hasn’t compromised the rest of Project SAIL. "It came pretty far in, and we’d delivered on some other stuff," she says. And once it’s ready, it’ll make a huge difference. "It’ll take us from 15 entries to one entry [each time we make an investment]," she says.

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