Finance And IT: Creating Seamless Integration

How Symantec's CIO and CFO work together on the Verisign deal.
BURLINGAME, Calif. -- Symantec in May announced its $1.3 billion acquisition of Verisign's Web security unit. Nothing tests how well IT and corporate finance work together than an acquisition. Forbes Publisher Rich Karlgaard talked recently with the security software giant's CIO, David Thompson, and CFO, James Beer, to discuss their roles is in the integration. Video: Symantec Streamlining Verisign's Integration Article Controlsemailprintreprintnewslettercommentsshare Forbes: How do a CIO and a CFO work together for a seamless integration? Beer: We have been putting a lot of thought into the whole process of integration. Planning and mergers and acquisitions have been a regular part of the way in which Symantec ( SYMC - news - people ) has grown over the last decade or so. And so this is absolutely a key aspect of how we do business, how we develop the top line, how we develop the product portfolio. And again it's an example of how the two of us have very much got to be bolted together in terms of our thought process, the prioritization of resources. In order to get the integration accomplished as quickly as we can, one of the things we've learned in recent years has been the value of going more swiftly around M&A integration. Once the technology systems work has been accomplished, it's possible to accomplish the savings volume that you were originally looking for. This puts a lot of pressure on you, David, too. How do you look at acquisitions? Related StoriesThe 10 Youngest Power Men In AfricaStorage & Norton In Focus As Symantec Aims For $22Update: VeriSign Rally Extends As Rumor Mill Heats UpMarc Benioff's Five Leadership SecretsSymantec Heads to $20 with Antivirus And Storage ComboStoriesVideos Rate This StoryYour Rating Overall Rating Reader CommentsPost a Comment Thompson: Well, one of things we did is based on our learning's over the last few years is accelerate the integration. But we've created a cross-functional team where we've mapped out all the processes that we need to integrate. We've accelerated that process. And it makes our life much easier from an IT perspective when we've laid out the business integration plan and then we have an IT integration plan that falls within that. And that's been a great partnership between James and I in focusing on accelerating that time line, a cross-functional ownership of that plan and really driving it in our organizations. What advice would you have for other CIO/CFO teams when it comes to integration? Thompson: One thing that I would highlight as a key tip for integration is assigning team members that really have a background in integration and can work cross-functionally. James and I both have assigned resources to our integration team and planning teams that have been through multiple large corporations, small company integrations. And they understand the issues associated with that. And the impacts on the customers, impact on employees and impact on partners. And I think the key is finding resources that truly know how to work cross-functionally. It's one thing to assign a finance person that understands finance. But that person needs to understand impacts associated with other areas of the company. Same thing from an IT perspective. When I make a decision to consolidate a data center or change a technology I need to understand the impact to the business. And that integration discussion needs to be very cross-functional. That's where James and I have really worked hard on putting the right resources forward.

Computational finance

Generally, individuals who fill positions in computational finance are known as “quants”, referring to the quantitative skills necessary to perform the job. Specifically, knowledge of the C++ programming language, as well as of the mathematical subfields of stochastic calculus, multivariate calculus, linear algebra, differential equations, probability theory and statistical inference are often entry level requisites for such a position. C++ has become the dominant language for two main reasons: the computationally intensive nature of many algorithms, and the focus on libraries rather than applications. Computational finance was traditionally populated by Ph.Ds in finance, physics and mathematics who moved into the field from more pure, academic backgrounds (either directly from graduate school, or after teaching or research). However, as the actual use of computers has become essential to rapidly carrying out computational finance decisions, a background in computer programming has become useful, and hence many computer programmers enter the field either from Ph.D. programs or from other fields of software engineering. Specially with the advent of more complex computational machines, a knowledge of computer software and hardware has become a necessity. In recent years, advanced computational methods, such as neural network and evolutionary computation have opened new doors in computational finance. Practitioners of computational finance have come from the fields of signal processing and computational fluid dynamics and artificial intelligence. Masters level degree holders are also increasingly making their presence felt as more terminal programs become available at the leading schools; see Master of Computational Finance. Today, all full service institutional finance firms employ computational finance professionals in their banking and finance operations (as opposed to being ancillary information technology specialists), while there are many other boutique firms ranging from 20 or fewer employees to several thousand that specialize in quantitative trading alone. JPMorgan Chase & Co. was one of the first firms to create a large derivatives business and employ computational finance (including through the formation of RiskMetrics), while Renaissance Technologies, founded in 1982, is probably the oldest and most notable quant fund (along with D.E. Shaw & Co.).

• Covers all aspects of IT in Finance Shows a broad range of applications, e.g. in banking, insurance, trading and in non-financial companies

This Handbook contains surveys of state-of-the-art concepts, systems, applications, best practices as well as contemporary research in the intersection between IT and finance. Included are recent trends and challenges, IT systems and architectures in finance, essential developments and case studies on management information systems, service oriented architecture modelling, IT architectures for securities trading, IT-systems in banking, process-oriented systems in corporate treasuries, grid computing and networking. The IT applications in banking, trading and insurance cover risk management and controlling, financial portals, electronic payment and others. In addition, also finance-related IT applications in non-financial companies are considered. The concept-oriented part of the book focuses on IT methods in finance like financial models and modelling financial data, planning and processes, security, algorithms and complexity.

About IT-Finance

IT-Finance is a financial software development company based in France. We aim to provide the financial, brokerage and banking industries with cutting edge charting and front-end solutions.

Our developers are highly qualified and only apply the latest technologies. We cover the entire spectrum of charting software development including the handling of large real-time financial databases.

As of 2010, more than 500 000 investors from our top 30 corporate customers connect each month to our datacenters. This high quality feedback on the current and future concerns of our end users allows us to continuously improve our technology solutions.

Being so close to the market, our project managers are able to respond quickly to your requirements and needs.

Management

The IMF is led by a Managing Director, who is head of the staff and Chairman of the Executive Board. He is assisted by a First Deputy Managing Director and two other Deputy Managing Directors. The Management team oversees the work of the staff, and maintain high-level contacts with member governments, the media, non-governmental organizations, think tanks, and other institutions.
Managing Director: Duties and selection
According to the IMF's Articles of Agreement, the Managing Director "shall be chief of the operating staff of the Fund and shall conduct, under the direction of the Executive Board, the ordinary business of the Fund. Subject to the general control of the Executive Board, he shall be responsible for the organization, appointment, and dismissal of the staff of the Fund."
The IMF's Executive Board is responsible for selecting the Managing Director. Any Executive Director may submit a nomination for the position, consistent with past practice. When more than one candidate is nominated, as has been the case in recent years, the Executive Board aims to reach a decision by consensus.

Income model reform

If the IMF believes that its resources might fall short of members' needs—for example, in the event of a major financial crisis—it can supplement its own resources by borrowing. It has had a range of bilateral borrowing arrangements in the 1970s and 1980s. Currently it has two standing multilateral borrowing arrangements and one bilateral borrowing agreement.
Through the New Arrangements to Borrow (NAB) and the General Arrangements to Borrow (GAB), a number of member countries and institutions stand ready to lend additional funds to the IMF. The maximum amount of resources available to the IMF under the NAB and GAB is SDR 34 billion. Under a separate bilateral agreement with Japan, the IMF can borrow up to US$100 billion (about SDR 68
The business model that the IMF has followed since it was established relies primarily on income from its lending operations to finance its work. Lending generates income because the IMF charges member countries that draw on its financial resources a higher interest rate than it pays to its member country creditors (this lending margin will be one percentage point during 2008-09). However, this model had become unsustainable in recent years because of a sharp drop-off in lending activity.
A Committee of Eminent Persons, set up in January 2007 and chaired by Andrew Crockett (former general manager of the Bank of International Settlements), recommended that the IMF adopt a package of income-generating measures, including strictly limited sales of gold (amounting to about one-eighth of the Fund's total gold holdings), to establish an endowment.
In May 2008, the IMF's Board of Governors endorsed a new package of measures to end the IMF's over-reliance on lending income. The package included most of the measures that had been proposed by the Crockett Committee.

Cooperation and reconstruction (1944–71)

During the Great Depression of the 1930s, countries attempted to shore up their failing economies by sharply raising barriers to foreign trade, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to hold foreign exchange. These attempts proved to be self-defeating. World trade declined sharply (see chart below), and employment and living standards plummeted in many countries.

This breakdown in international monetary cooperation led the IMF's founders to plan an institution charged with overseeing the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. The new global entity would ensure exchange rate stability and encourage its member countries to eliminate exchange restrictions that hindered trade.

The Bretton Woods agreement

The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework for international economic cooperation, to be established after the Second World War. They believed that such a framework was necessary to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression.

The IMF came into formal existence in December 1945, when its first 29 member countries signed its Articles of Agreement. It began operations on March 1, 1947. Later that year, France became the first country to borrow from the IMF.

The IMF's membership began to expand in the late 1950s and during the 1960s as many African countries became independent and applied for membership. But the Cold War limited the Fund's membership, with most countries in the Soviet sphere of influence not joining.

Par value system

The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates (the value of their currencies in terms of the U.S. dollar and, in the case of the United States, the value of the dollar in terms of gold) pegged at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement. This par value system—also known as the Bretton Woods system—prevailed until 1971, when the U.S. government suspended the convertibility of the dollar (and dollar reserves held by other governments) into gold.