As the financial crisis unfolded in 2007, executives at Citigroup, an $80.2 billion company, announced a far-reaching restructuring that included cutting some 17,000 jobs, aiming to trim $2.6 billion in expenses in a year.
The IT infrastructure group immediately identified a way to save the company hundreds of millions of dollars—simplify and standardize its network—but Citi’s size made the project far less straightforward than it sounds. Yesim Akdeniz, Citi’s managing director of network engineering, saw the restructuring as an opportunity—not just to save money, but to change how the company managed its massive IT backbone. The initiative earned Citi a 2010 CIO 100 award.
Over the years, Citi chased an aggressive growth strategy, and today it processes $3 trillion in transactions for 200 million customers in 140 countries. The speed of its expansion forced the company to take a reactive approach to IT, valuing time to delivery above all else. IT infrastructure was so inefficient that calculating total network volumes, cost of ownership or vendor spending was impossible. “We had teams across the globe executing changes within their regions and rarely did we see a global view of those changes and how they may potentially affect one another,” explains Akdeniz. “We needed to transform fundamentally how we operated.”
Citi identified several problems with its network: too many silos, lack of asset- and demand-management processes, costly legacy infrastructure, overcapacity and underutilization, limited financial controls, and resistance to change. The company planned to re-engineer IT’s spine, including 45,000 network devices and 225,000 phones that support mission-critical operations across the business.
It’s a project that would typically take five years for a company of Citi’s size. Akdeniz completed it in one year. To make sure IT’s response was rapid but not reflexive, Akdeniz’s group took what she calls a “business incubator” approach. Network teams developed a process for evaluating new tools compared to existing ones, and reported those results to the globally dispersed group. “This methodology accelerated the implementation of innovative technologies and increased the likelihood that these solutions would become part of our long-term strategic plans,” Akdeniz says.
Citigroup is one of the world’s largest consumers of infrastructure resources, but due to its fractured sourcing strategy, it didn’t have sway with suppliers. The network group established partnerships with strategic vendors to conduct more comprehensive contract negotiations and introduced continuous spending analysis to increase competition and improve provider service levels. The group also synchronized the company’s technology refresh schedules to optimize cost and effort and introduced new demand-management processes to improve resource use.
“We were looking to develop something that was sustainable and would maintain our best-in-class performance supporting corporate growth, cost leadership, service quality and risk,” says Akdeniz.
The results are rolling in. The company has reduced the number of devices and circuits by 25 percent over the last three years and cut costs by 20 percent, a savings of more than $300 million so far. And, Akdeniz says, almost all her group’s solutions were designed to produce a positive ROI within a year, allowing it to avoid adding much in costs.