Fidelity National chooses single vendor route

Fidelity National Financial Inc. has undertaken a four-year project to replace its distributed, multi-vendor computing environment with a centralized infrastructure based on IBM Corp. technology.

Jacksonville, Fla.-based Fidelity National said the project, which will cost “tens of millions” of dollars, will enable the company to increase speed and reduce management complexity in its mortgage division, which processes US$8 trillion in loans every night for the nation’s largest banks. Fidelity National and IBM announced the move in February.

Joe Nackashi, Fidelity National’s chief technology officer, said the existing infrastructure is built around two IBM eServer zSeries 900 mainframes and 800 to 1,000 servers. Those systems run a range of distributed client/server applications, including Microsoft SQL Server and Oracle databases. The plan is to consolidate those systems onto three new IBM eServer zSeries 990 T-Rex mainframes running IBM’s DB2 database.

The project also involves streamlining Fidelity National’s communication with member banks by means of a portal-based system built with IBM’s WebSphere middleware and its Rational Unified Process methodology, a set of software development best practices.

“Clearly, from our perspective, we will need fewer people to manage and develop the environment. So you’re going to see a clear ROI,” Nackashi said.

By choosing a single vendor, Nackashi said he’s able to move away from “the complexities of a client/server distributed world” and to simplify vendor accountability. “You know how it goes when you have all the vendors doing all the finger-pointing,” he said.

Guillermo Kopp, an analyst at TowerGroup in Needham, Mass., said that in the past several years, there has been steady growth in the amount of IT dollars financial services companies are spending to replace legacy systems. The driver is cost containment.

In 2004, system revamps will represent $41.8 billion, or 12 per cent, of a total $347.2 billion that financial services companies are expected to invest in IT worldwide, Kopp said. In 2000, by comparison, legacy transformations represented less than 10 per cent of total IT dollars spent by the industry, Kopp said.

For every dollar saved on IT infrastructure, there’s $7 to be saved in operational business expenses, because many legacy processes are convoluted, require manual intervention and often create errors, Kopp said. Fidelity’s current Cobol-based mortgage processing system has “significant lines of code,” which is a challenge to manage when adding functionality, Nackashi said. And although 70 per cent of the system’s processes operate in real time, customers are asking for more service-oriented architectures, with increased functionality and scalability.

Fidelity’s IT revamp follows a trend among the country’s largest financial companies to install systems with greater processing capacity to improve transaction performance and cut costs. But not all financial institutions are taking the same approach. Charles Schwab & Co. in San Francisco went live in December with a Linux-based grid-computing system in an effort to speed up some of its compute-intensive investment management applications.

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