As this case study is being written, the financial services industry is experiencing what is being described as the most significant economic crisis since the 1930s. Current levels of uncertainty make it commonplace for employees to check their company stock price as often as they check their e-mail, and wonder about the toll that todays market turmoil may have on them personally. Although the full extent of this downturn and its global implications are not yet known, the immediate impact is clear: intensified pressure to reduce costs, find efficiencies and improve corporate performance.

At State Street, a strong focus on sustained cost reduction has long been a familiar presence, concurrent with expansive business growth and continued global opportunities. One area charged with balancing these often conflicting forces is Global Infrastructure Services (GIS), the team responsible for providing State Streets business areas with the data centers, networks, hardware, software, storage and user computing services that enable its diverse and worldwide business operations. 

Transformation is a tradition for GIS. Originally brought together as an assortment of historically separate platform support groups, the team first united in 2001 to form a functionally organized shared services organization, anchored to businesses and data centers at State Streets Massachusetts headquarters. The group experienced a growth spurt soon afterwards, taking on site support for each of State Streets worldwide business offices. Before long, GIS had re-shaped itself again, regionalizing site support functions across Europe, Asia-Pacific, and the Americas, and aligning them with core infrastructure services offered centrally. By 2007, GIS had stepped up the evolutionary ladder to global integration, overseeing a strong portfolio of offshore providers, managed services and geographically distributed teams, all furnishing cost-effective round-the-clock support to a global organization. 

Before the first rumblings of industry and economic unrest had even made their way to the surface, GIS had already tightened its belt by several notches. A cultivated focus on infrastructure optimization had not only gathered up the low hanging fruit, it had already taken GIS managers high into the uppermost reaches of optimization opportunities. Yet, in the volatile months that followed, even the strongest companies  ours included  responded to an underperforming market and increasingly uncertain outlook with cuts in both spending and staffing.  To meet these targets and still maintain service quality, GIS needed to find new answers to old questions. 

To build upon and honor the achievements of the past while still encouraging and enabling further success in the future, State Street Executive Vice President and head of Global Infrastructure Services, Madge Meyer, worked with her management team to formalize, extend, and scale the set of interconnected strategies that had served them so well to this point. They explicitly defined the principles, tools and techniques they had used, organizing them as general transformative practices for infrastructure business management, technology management and people management. 

This framework has been dubbed IT Infrastructure Transformation 360 (T360) for its ability to operate at all levels of the organization and across platforms, disciplines and functions. By clearly identifying, documenting and communicating its core practices to managers and staff across GIS, T360 helps them recognize and react to constantly evolving opportunities for infrastructure optimization and innovation. As a result of T360, GIS has successfully continued its track record of significantly reducing baseline expenses and improving quality of service, while accommodating record levels of business growth and change.

Technology is an enabler of T360 and the context in which its three pillars of principles, tools and techniques apply. In this section, we outline several of the key principles from each pillar, and then follow with examples of technologies to which these principles have been applied. 

Infrastructure Business Management:  
This pillar of T360 provides the framework to run IT infrastructure as a business within a business. Among its key principles are: 

A) Business Case Analysis: In the transition to lean-and-focused, funding becomes a competitive requirement. To make a successful case for infrastructure investment, managers must demonstrate the accounting impact of proposals on current and future budgets. T360 provides the format, training and governance processes that help GIS managers assess and demonstrate the run rate impact from a total cost of ownership perspective. 

B) Cost of Service Transparency: Once infrastructure managers have squeezed the slack from operations, continued unit cost reductions are subject to diminishing returns. At this point, managed consumption becomes the main lever by which costs are reduced or avoided. T360 provides a way to organize services and clarify the related costs. It allows more accurate and equitable chargeback by aligning costs to specific business drivers and usage metrics. By clearly showing our business partners the relationship between their costs and consumption of infrastructure services, and the cost of alternative options, we help them manage and optimize their infrastructure spending. 

Infrastructure Technology Management:  
This pillar of T360 provides ways to continually renew our technological infrastructure to leverage advances in performance and efficiency. Among its key principles are:

A) Technology Blueprint: In an environment of change and uncertainty, organizations must position themselves to adapt and respond, and avoid being anchored by fixed and sunken costs. T360 provides iterative analysis, planning, and governance processes to stay aligned to both business strategy and technology advancements. The blueprints 3-5 year vision both channels and assesses day-to-day investments to pave our way toward the future. 

B) Lifecycle Management:  When options to replace depreciated or end-of-life technology are aligned to our strategic blueprint and evaluated using financial management discipline, innovation opportunities can blossom even under harsh conditions. T360 brings these elements together to help managers improve infrastructure reliability and performance, while maintaining  and often reducing  current and future spending. 

Infrastructure Staff Management:  
The final pillar of T360 provides 2 mnemonic principles we consider fundamental to seamless global service delivery: 

A) ONE - Ownership, Navigation, Escalation:  These characteristics of a responsive and effective organizational hierarchy ensure that functional accountability is understood and communicated, that processes exist to traverse an end-to-end value chain, and staff are willing and able to spot and communicate unresolved exceptions to their managers.

B) TWO  Team approach, World-class quality, One global process:  These characteristics of a productive and effective workforce complement the formal organizational structure with a set of horizontal binding agents.  These shared values facilitate collaboration and maximize individual contributions through common goals, standards and practices. 

Key Technology Applications  
Technology advances such as the MPLS dual loop private virtual IP network, Capacity on Demand, Virtualization and mainframe Linux have played significant roles in the success of the T360 program. Because these technologies support and enable many of our key transformation principles, we have successfully leveraged them to radically improve IT asset utilization, infrastructure availability and performance, and provisioning time. By deploying these solutions through lifecycle management, we were also able to develop clear business-case justifications to demonstrate their positive impact on the IT infrastructure run rate. In the Benefits section, we further detail results from these technologies, as well as from other outcomes of the T360 program.

Yes

Yes

Benefits resulting from projects that have leveraged the principles of T360:

NEXT GENERATION NETWORK  MPLS :
o	Lifecycle refresh of aging infrastructure improved availability, reliability and performance at a reduced cost. Further reduced operating costs through vendor management solution.
o	Achieved savings of 42 percent over four years. 
o	Established a solid technology foundation that dramatically improved time to market in support of business growth and internal operations off-shoring while also facilitating the successful deployment of new technologies like Voice over IP (VoIP).
o	The MPLS Architecture allowed State Streets network to withstand a major typhoon in Asia-Pacific region with no business impact.


CAPACITY ON DEMAND(COD):
o	Implemented for both server and storage.
o	Provides flexibility to respond immediately, adjust capacity upward with volume increases, and avoid overinvestment in times of level or decreased volume. Enables us to position for the future with minimal investment today. 
o	Savings of 10 percent to 15 percent annually by purchasing for averages, and using COD to manage peaks.
o	Recent market events resulted in peak capacity increases of 25 percent to 30 percent, which were accommodated with complete transparency to users.

VIRTUALIZATION:
o	Implemented for server, storage and network.
o	Through server lifecycle management, 50 percent of State Streets images are now virtualized. 
o	Improves reliability and performance through shared resources. Reduces costs through improved utilization and minimized support requirements. Energy savings of several million dollars annually, and reduced CO2  emissions equivalent to 6,000 cars.
o	Deployment of a consolidated VoIP call processing architecture has decreased the number of distributed PBXs by 84 percent.
o	Implementation of network attached storage overcame file server limitations and reduced local storage technology. 
o	Virtual tape libraries now being implemented with data replicated to DR site eliminates need for tape transfer, reducing risks as well as recovery time.
o	Provides foundation for cloud computing

Linux on the Mainframe Server: 
o	Platform neutral framework puts open systems on the most reliable hardware platform available. 
o	Breaks down traditional silo barriers, leverages foundational investment in mainframe technology. 
o	Increases reliability and availability through dispersed and redundant processing. 
o	Reduced footprint and energy consumption defers data center expansion. 
o	Reduces provisioning time by 35 percent to 60 percent.

Unit Cost Chargeback Methodology: 
o	Transformation from applications owning assets to applications obtaining services.
o	Shared services with pooled costs allow all business customers to benefit from unit cost reductions.
o	Fully loaded costs that are stratified by service, at application level.
o	Ability to differentiate key cost drivers and identify improvements at each service tier.
o	Alignment of costs to business drivers.
o	Actionable data allows business customers to police and manage their own spending.

Industry Best Practices and Processes:
o	Leveraging industry standards such as the ITIL, ISO, COBIT and PMI to achieve one global process.
o	Recent adoption of global change management has resulted in better assessment of costs and risks of proposed changes and improved change productivity.
o	Virtualized service desk support model exploits remote support technology for faster response and lower costs. Has reduced service desk costs by 14 percent and increased first point of contact resolution by 15 percent.
o	A global risk management program based on COBIT leverages best practices, self-assessments and peer reviews to enhance our control and security environments, providing a structured governance process that monitors progress toward improved maturity levels.

A key component of State Streets global growth strategy is business acquisition, which has resulted in successfully expanding our capabilities, markets and market share. Among our many recent projects of this nature was the acquisition and integration of another custodian bank, smaller than State Street in size and international profile, although very successful in many fast-growing market segments. This acquisition allowed State Street to leapfrog competitors in scale, while accelerating our leadership in several targeted market spaces. Key to the strategy and success of this acquisition was State Streets ability to retain its customers and revenue, while significantly reducing its operational costs.

By applying T360 optimization and innovation principles, GIS has made significant and visible contributions toward this goal. As of this writing, we have achieved a 40 percent reduction in companys annual IT infrastructure budget while maintaining and even improving the services being provided to its customer base. By the end of our multi-year integration effort, we expect a total run rate reduction of more than 75 percent.

Although traditional economies of scale account for a portion of these savings, the most significant benefits were achieved and enabled by the application of specific transformation principles. Assessing acquired technologies against the blueprint, for example, allowed us to quickly and objectively determine which should be integrated and maintained, and which should be kept separate and then retired. The one global process leveraged by our virtual team to execute each phase of the integration was used to retire data centers in various countries, assimilate standard infrastructure services (e.g., e-mail, server management, network, etc.) and migrate the customer base with no business interruption or issues. In fact, as a result of the integration into State Streets infrastructure, the company experienced a two-thirds reduction in its service desk calls. The infrastructure was integrated seamlessly. confirms State Street Vice Chairman and head of Investment Servicing in North America, Joseph Antonellis. The greatest value to the business is that it resulted in better service being delivered at a lower cost.

This is also the experience of the acquired companys infrastructure managers, who are now part of the GIS team. One unexpected benefit they witnessed was an improvement in services and relationships with their managed services providers after the contracts were restructured and renegotiated. Although these new arrangements resulted in significant price reductions for State Street, they also provided benefits from the vendors perspective. These too were derived from T360. It is part of our practice to create win-win solutions with our strategic partners. explains GISs Madge Meyer. By working closely with the managed services providers to analyze and optimize the environments, GIS helped them find ways to improve the price/performance of the services they were providing, and identified opportunities to eliminate over-provisioning and other fixed costs to improve efficiency. This type of unrelenting, boundaryless and often unexpectedly rewarding search for innovation and optimization is the essence of T360.

The T360 program dispels the notion that infrastructure investment and innovation must stop or slow during difficult economic times. On the contrary, it is during these very times that savvy infrastructure managers with a good business sense can best demonstrate their value. Many infrastructure managers have technical expertise and an understanding of the end-to-end implications and costs of their technology environments. For example, they recognize that older, fully depreciated equipment typically has higher maintenance fees and requires additional support. What these managers often lack, however, is the ability to easily translate this knowledge and understanding into the quantitative run-rate view that their business partners and corporate controllers understand and often require to assess and approve investment decisions. T360 provides tools and techniques to help bridge this gap.

The T360 program also bridges a similar gap for the businesses by providing them with better visibility into their costs of doing business. Through its transparency principles and practices, the program helps unravel the Gordian knot of infrastructure spending and bring visibility to the end-to-end costs of business solutions and operations. It provides business leaders with better data for their analyses and decisions, and allows them to manage and control their spending. 

In each of these cases, the T360 program is exceptional in the ways in which it integrates and unites business and technology, enabling an end-to-end perspective that improves business decisions, efficiency and effectiveness.

The most challenging aspect of this program is best captured by the analogy of having to change the tires while the car is moving at full speed.  State Street has experienced continued global growth, completed a series of major acquisitions, globalized and off-shored operations, and expanded into new business models, markets and products over the past several years. Any one of these could have a profound impact on the underlying IT infrastructure that supports business operations. All of them combined, however, challenge every aspect of an IT infrastructure groups fiber: skills, technologies, resources, processes, etc. When challenges of this magnitude are issued during a period of reduced spending and staffing, another colloquialism is brought to mind:  What doesnt kill you makes you stronger.   (See Appendices for an overview of the key business drivers and the business and infrastructure volume metrics.)

Two important personal and organizational T360 leadership principles were critical to our ability to overcome these difficulties. The first was a focus on cultivating and communicating a confident belief that we  as individuals, as small teams and as a globally distributed organization  would be able to meet or exceed the goals and challenges that we were given. The second was ensuring that we maintained an equal focus on battling the complacency that can so easily accompany confidence and success. This resolve to never to stop improving and achieving is a pre-requisite to the type of creative destruction that a mindset of innovation requires.

The T360 program itself encountered no objections, although many of the transformation projects that it spawned were initially met with skepticism and doubt, sometimes by the very people who were asked to lead them. This is the nature of transformation, however. In fact, it is often the marker!  People with responsibility for maintaining a stable and predictable environment have every right and reason to view change with suspicion, since they are first and foremost committed to safeguarding the reliability of their environment. To provide a way for peoples concerns could be addressed, we created an innovation lab where they could test and understand the impact, constraints and potential of new technology, with the assistance and support of strategic partners and vendors.  This takes the emotion out of the equation, and provides a way for risks and opportunities to be assessed objectively. 

In parallel with identifying and addressing qualitative issues, there must also be a quantitative financial analysis that can speak for itself. In GIS, we only put transformation initiatives forward for approval or funding if and when the business-case justification clearly demonstrates return on investment, or similarly measurable business value. We also strive to ensure that all or much of that benefit is achieved in the same budget year.

With these twin strategies working hand-in-hand, we consistently overcome resistance and objections by ensuring that decisions to move forward are based on data rather than assumptions.

Exceeded

As it has done for State Street, the T360 framework offers any company in any industry a way to institutionalize optimization and encourage innovation. Because it is built on accepted financial management and accounting practices, leverages cross-industry best practices, and is not limited to particular platforms or technologies, the program and its principles can be applied universally. In fact, we are frequently invited by strategic partners, peer companies, educational institutions and others to share the principles and practices we have laid out in our T360 transformation program.   

This re-usable toolkit of transformational practices for infrastructure business management, technology management, and people management can help organizations more easily sustain and renew their strength and competitiveness, even in this troubled economy. It offers tools and techniques that staff at every level of an organization can use to contribute to a more effective and efficient environment, and bring their innovative ideas to life. 

Our efforts and accomplishments, as enabled by the T360 framework, were quickly and widely acknowledged and embraced across State Street. Our business partners were able to immediately see the value because we clearly captured and communicated the unit cost reductions that we achieved. 

In fact, this emphasis on measuring and communicating business value is an essential component of our program. It is an especially important practice for technology infrastructure, since this area typically carries the costs for the lights-on services that few ever notice, and even fewer understand. As business reliance on technology continues to grow, however, so does this unseen infrastructure of servers, storage, circuits and more. With a nod to the proverbial falling tree in the forest, we know that if our hard work and significant accomplishments are to be recognized and valued by our business partners, we must measure and communicate them in business terms.