Virtual from the onset, Vanguard has always plied its wares—mutual funds, annuities, 401(k)s and the like—and served its customers by phone and by mail instead of face-to-face. When the Web came along, the decision to do business online was a no-brainer. By 1998, customers were using Vanguard.com to open new accounts, purchase and redeem fund shares, and receive electronic statements. The Valley Forge, Pa.-based company continued to invest heavily in its website as many of its high-value clients migrated to the Web to manage their portfolios. It was a wise investment. Today, Vanguard’s Web customers tend to invest 150 percent more and turn over less frequently than non-Web customers, while the cost to serve them online is just 5 percent of what it costs when a human is involved. However, Vanguard did so well designing top-notch Web tools that it soon outstripped the systems used by its employees (or crew members, as the company calls them). Vanguard had itself a classic case of channel disparity.

When customers with online accounts called Vanguard’s toll-free number for help in the late 1990s, they spoke with employees who were relying on 13 old, siloed client/server systems. Those systems had been built to serve different lines of business and therefore didn’t interoperate. Customer service employees had to toggle among as many as 10 different systems to answer customer inquiries or, worse, transfer callers to other employees because they couldn’t find the answer themselves.

"We made a very robust channel, but all the other channels lagged behind, and we were putting our associates at a disadvantage," says Managing Director of Information Technology Tim Buckley. "Clients had an enterprise view of their data, more robust capabilities and a more efficient channel." In short, customers had a clearer, more comprehensive view of their holdings through the website than did the Vanguard employees who were supposed to be helping them.

Something had to change. "We were staring at a large investment to replace [the crew members’] platform," says Jeff Dowds, principal of Vanguard Direct Investor Systems and project lead for the integration effort. Many in Vanguard’s shoes would have heeded the siren call of CRM vendors. As Dowds, Buckley and the late Bob DeStefano, Vanguard’s longtime CIO until his death in 2001, stared at the numbers, though, a radically different approach suddenly seemed to make sense. After much internal debate, they persuaded themselves and Brennan that the customer service employees should use the same Web interface that had lured so many of its customers online in the first place.