IT Executives From Three Wall Street Companies - Lehman Brothers, Merrill Lynch and American Express - Look Back on 9/11 and Take Stock of Where They Are Now

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The second step of recovery was moving back into headquarters at 4 World Financial Center starting in October. At first glance, the building seemed to be in good condition (though 900 windows were blown out of another nearby Merrill office building at 2 World Financial Center). But because loss of electricity immediately after the attacks caused high temperatures in the headquarters office tower?and also because the warranties were voided?a great deal of the computer equipment had to be replaced. Most of the equipment was covered by insurance. Merrill wasted no time, moving 500 to 1,000 employees every weekend?this compared with American Express’s decision to move 400 employees back every two weeks. "Having rebuilt three trading floors in six days, management wanted to give me 12 to do this," jokes McKinley.

On Oct. 21, 2001, McKinley was one of the first people who moved back downtown. Since then, he’s watched the area start showing signs of life. Public transportation, although not ideal, has improved, and some of the restaurants have reopened, along with the Century 21 Department Store, an Embassy Suites Hotel and a movie theater. A Merrill publication called the North Tower Newsletter kept employees informed about what services were available in what felt like an island in the midst of a disaster scene.

"I can’t understate the emotional impact of it," says McKinley, sitting at a table in his airy corner office on the 32nd floor. "It’s still emotional. You are no more than one or two degrees of separation removed in financial services. Either you knew somebody or you know a family impacted by it. It’s tough," he says. Merrill lost three people in the attacks. "You’re making me sad again," he says with a wry smile, trying to lighten the mood.

He can’t afford to be sad, though, as he struggles to help make the company profitable again. Revenue was so bad that more than 10,000 employees were laid off. (The brokerage has also launched an ad campaign to try to mend its image, scarred by a $100 million settlement that ended an investigation of stock analysts’ possible conflicts of interest and, more recently, the suspension of Martha Stewart’s stockbroker after allegations of insider trading.)

McKinley’s efforts, while tied to Merrill’s quarterly fortunes, also transcend them. For example, based on lessons learned during 9/11, he and his colleagues have made some changes in Merrill’s overseas operations, looking at data centers and alternate trading floors in London and Japan. And discussions about how concentrated to be continue.

"The dialogue around real estate strategy has gone up several notches," McKinley says. "Where should you be geosourcing your talent base, your human capital? You’re constantly balancing the synergies of colocation with the resiliency and recoverability of a more distributed model, and where should you be on that continuum? I think it’s not a binary answer."

For a while after 9/11, there was a lessening of the competition?competitors helping each other out, sharing ideas about recovery. "Now it’s back to the brass knuckles," he says, pounding the knuckles of one hand with the palm of another. He laughs. That’s a good thing, he says. It means business is running again.

The PragmAtist

"You’re more dependent on your vendors than you think."

-Glen Salow, CIO, American Express

Glen Salow is pretty unexcitable for a man who helped mastermind a 4,000-person move back to Lower Manhattan that some observers called heroic. "There always will be nuts in the world, and a building that calls itself the World Financial Center in New York City is going to be a target," says Salow, the 46-year-old CIO and executive vice president of American Express, his voice flat. "A lot of my job is assuming things are targets. If you have technology assets here and they don’t need to be here for a purpose, they shouldn’t be here. So get them out."

Salow is getting them out in a grand way?and we’re not just talking about the obvious decision, say, to start storing backup tapes for the office automation servers farther away from headquarters than the basement of the Trade Center. American Express’s technology operations were already spread out, but the company decided to house only a few technology operations in its New York headquarters, such as the bare requirements of telephones and networked desktop computers.

It’s part of a move to make continuity planning geography-based, not building-based. "We had a disaster-recovery plan for this building. We had a disaster-recovery plan for 7 World Financial Center, where we had our bank back office. Each building continuity plan worked, but we hadn’t contemplated losing all of Southern Manhattan," he says. Now, Salow is looking at what might happen if business shuts down in Phoenix or Minneapolis, where the company’s IT operations are based. "A CIO I worked for a long time ago used to say, ’You lose a whole data center every 10,000 years,’ which was his excuse for not having disaster recovery, which was stupid then. You have to assume it’s more likely to happen now, and it’s affecting larger geographic areas."

Salow also signed a seven-year, $4 billion outsourcing deal with IBM Global Services, announced in February. About 2,000 members of his 6,000-person IT team are being transferred to IBM. (So far, about 99 percent of them have accepted the offer, he says.) Salow says the deal will save hundreds of millions of dollars and likens it to purchasing electricity rather than generating it. For less money, he says, American Express can draw on the resources it needs, when it needs them.

Salow went ahead with the IBM deal despite the fact that 9/11 taught him how much he already relied on his vendors. In the future, he says, he’ll spend more time delving into how his vendors would recover from a disaster. But some vendors have already proven themselves with their actions. "If I look at the role IBM Global Services played for us, at the role Compaq played for us, they’ve got every bit of help we could ask for, and it’s there before we could ask for it," he says. With the outsourcing deal, he says, "On the one hand, we’re more dependent on IBM Global Services, but on the other hand, I think I got a really cheap insurance policy."

Between the employees being transferred to IBM and the thousands laid off since September, though, things are certainly looking different from the 51st floor of the American Express building?even for Salow who doesn’t happen to have a view of the Trade Center site. "Maybe in a few months, I’ll stop long enough to think about it and may in fact be taken aback by the level of change and how we got through it," Salow says. "But during the process we just did it."

Copyright © 2002 IDG Communications, Inc.

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