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Youd never know just from talking to Steve Elterich, president of Fidelity eBusiness, that many enterprises are clamping down hard on IT spending these days. Even as the stock market has foundered in the aftershock of the dot-com boom and bust, Fidelity Investments, the largest mutual fund company in the United States, a major provider of workplace retirement savings plans and a leading online brokerage, has continued to sink between 20 and 25 percent of its gross revenues into IT each year. This year, that will amount to about $2 billion. About 70 percent of IT spending goes into maintenance of ongoing operations and transaction processing and 30 percent into new development. In Elterichs domain, eBusiness, 60 percent of his budget goes into new development.
Why the unflagging faith in IT? Fidelity customers continue to take more and more of their trades to the Web, market ups and downs notwithstanding. And the number of workers served by Fidelitys benefits outsourcing business grew from 500,000 to 4 million in the last four years.
Its Elterichs job to give these customers a convenient, secure, information-rich online experience for as many of their financial needs as possible. He explained Fidelitys approach to its IT investments and the companys take on everything from Web services to security in an interview earlier this month with eWeek Executive Editor Stan Gibson at Fidelitys Center for Applied Technology, in Boston.
eWeek: How have you managed to keep your level of IT investment steady despite the dot-com boom and bust?
Elterich: The dot-coms had questionable business models. They were selling eyeballs, not [generating] revenue. E-business is core to our products and services. Ninety-one percent of all our brokerage trades and 78 percent of all our retail contacts come through our Web site. This includes getting quotes, financial planning and preparing for taxes. And in our institutional business—401(k), HR and benefits outsourcing to corporations—roughly 73 percent of all our contacts with those customers are over the Internet.
eWeek: Is there one thing that consumers say they want most?
Elterich: A bull market [laughter].
eWeek: What are you cooking up to enhance their experience?
Elterich: The Internet has gotten to be very good at delivering data and transactions, but the Internet needs to become more helpful to assist people in making decisions in a simple way. Today, getting assistance is quite often a complicated and confusing process. We have tools that help people select a mutual fund. We offer 4,500 mutual funds, [including Fidelitys and other providers]. How does somebody ever decide which one is right for them? The trick is to make that simple for somebody.
In financial planning, we need to provide people with better tools. The tools we provide are successful, but we need to raise the bar. I dont think there is any good financial planning tool out there today. The tools tend to be big, complex and require a large time commitment. People need to have things that are simpler, easier and available to them at the point they need to use them.
eWeek: How will you deliver that?
Elterich: Weve looked at phone reps and our branches and our Web site as three independent channels. The real opportunity is to look at these as an integrated delivery vehicle. For example, on our Web site, you can carry on an instant messaging dialogue with a rep who can answer your questions. But instant messaging is only going to take you so far. At some point, people want to talk to somebody and get that affirmation through the human voice. Thats where things like voice over IP and integrating a live representative on the Web site could benefit someone terrifically.
eWeek: Is there anything that can be done through technology to restore investor confidence? For example, do you envision warning people if they are making an investment that is imprudent?
Elterich: One of the things that we will very shortly have on our Web site is the ability to tell people what their appropriate asset allocation is and to show them their current investment picture versus their appropriate asset allocation, then to provide them with a vehicle to rebalance their assets or to do hypothetical trades.
Another thing is to provide people with regular checkups: to tell people through wireless and e-mail what their allocation is and what it should be and if it might soon be out of balance.
eWeek: Is there a single technology, such as portal technology, that will be key in consolidating the different aspects of personal finance?
Elterich: I dont think theres a great example of a portal out there. I see an opportunity where people are looking for services traditionally delivered by different providers: health care providers, pension providers and so on. You want to bring them together in a cohesive manner. Portals and Web services play an important role.
eWeek: Are you using Web services?
Elterich: Absolutely. Im a big fan of Web services and what they can ultimately bring. Im a huge fan of things like single-sign-on security so you can navigate across both public and private sites and be able to bring together that information for an individual.
eWeek: Have you standardized on an approach to Web services, such as Microsoft [Corp.s] .Net?
Elterich: No. The services are still evolving, and the competing approaches are becoming more common. Web services in the pure sense are a set of standards. We are standardizing on those standards—things like [Universal Description, Discovery and Integration].
eWeek: Are you a [Java 2 Enterprise Edition] shop?
Elterich: Yes.
eWeek: But also .Net?
Elterich: Yes. We work with many companies in our benefits outsourcing, so we cant adopt just one implementation of those standards. If were bringing together other benefits providers, they may have .Net. They may have [IBMs] WebSphere. We have to be able to work with all of those. Thats why Web services standards are important.
eWeek: Are you designing for clients other than Windows and Internet Explorer?
Elterich: We design for [Internet Explorer], Netscape, and we design for the Apple [Computer Inc.] implementations of those browsers. We are also putting in support for visually impaired people. Theres a tool called JAWS [for Windows, from Synapse Adaptive] that interprets the screen layout and reads it back to someone whos blind. Were implementing that. Were conscious of how our site works on Opera and Mozilla. Our site may not be totally compliant with them, but it will work.
eWeek: What about wireless clients?
Elterich: We provide traders access to quotes and the ability to trade. We provide them with alerts. We let people do trades on PDAs, and we have implemented wireless on the benefits outsourcing side. Were also on [General Motors Corp.s] OnStar. You can get access to quotes and do trades on OnStar, both retail and 401(k). However, we arent investing a lot of money in the next generation of wireless services right now.
eWeek: 3G wireless?
Elterich: Were going to wait and see. Will people really use phones to make stock trades? We offer that today, but its done in very small amounts. People are not going to want to carry around PDAs, phones and pagers. Theyre going to want to carry around one device. We havent brought all the features together for a 3G phone yet.
eWeek: Lets talk security. Do you break out into a sweat when something like the SQL Slammer worm hits?
Elterich: We feel weve done a good job on [security]. The Slammer had little or no effect on us. But there are people out there inventing new ways all the time to try to break our security.
We deliver our Web capabilities through multiple sites, so if we have a denial of service at one site, we can cut over to another site. Ultimately, thats not going to be an adequate response, Im sure.
The strategy of many companies has been to respond well, but if you are delivering 91 percent of your trades over the Internet, you need to have preventative measures. Were constantly looking for them.
eWeek: Do you use outsourcing for development?
Elterich: Yes. We have our own facilities in Ireland and Salt Lake City. And then we will outsource to professional service organizations. We have facilities in India ourselves, and we are outsourcing to consultants in India.
eWeek: Are you interested in open-source software?
Elterich: We are interested, and we do use some open-source software. Open source, if it becomes successful, could lower our costs.
eWeek: Do you use Linux systems?
Elterich: Yes, for mundane tasks. But I expect that will expand going forward.