Swiss Bank Corp./O'Connor Aims To Outsource Mainframe-Based Apps, As N.Y. Group Plans Move

As it moves forward with its long-ongoing effort to migrate its trading systems to a client/server-based architecture, Swiss Bank Corp./O'Connor is considering outsourcing its remaining mainframe-based applications. Though officials at the bank either decline to comment or did not return calls seeking comment, other sources close to the bank say that it is committed to outsourcing all of its mainframe-based applications.

What's more, one source says that SBC/O'C has issued a $30 million request-for-proposal for applications management, and has retained the Gartner Group, a consulting firm, to conduct the search for an outsourcing vendor. An official at the Stamford, Conn.-based Gartner Group confirms that SBC/O'C is one of the group's clients, but declines to comment on whether the bank has retained Gartner to conduct the outsourcing search.

The possibility of outsourcing comes on the heels of SBC/O'C's recent decision to move the majority of its New York City-based operations to Stamford. SBC/O'C is planning to relocate 1,300 of its 1,500 New York City employees to a new building in downtown Stamford by 1998. According to SBC/O'C officials, the remaining 200 employees will operate out of the bank's 10 East 50th St. office. In addition, bank officials say that SBC/O'C will retain a currency trading floor -- at either its 222 Broadway office or at another downtown location.

Though the technology ramifications of SBC/O'C's move have not yet been settled by the bank, one SBC/O'C official says that the bank will deploy a "state-of-the-art" digital data distribution platform to support its Stamford-based traders. The official would not comment on whether the bank plans to deploy a system other than its incumbent -- Micrognosis Inc.'s Mips -- but a source in New York says the bank has been under pressure from its sister office in London to at least test Reuters' Triarch 2000.

SBC/O'C had negotiated a global site license for Mips from the former FD Consulting Inc. (TST, Nov. 1, 1993) -- a deal that gives the bank the right to deploy Mips to an unlimited number of users. But the New York-based source says that the chances of the bank sticking with Micrognosis' system are slim.

Although this source confirms that SBC/O'C is currently not piloting any trading room systems, he says the bank is looking to dump Mips because Micrognosis does not have the capability to support it. Says the source: "They're never going to come up with the technical people to support Mips. We've already had Micrognosis people in here trying to get [Mips] running, keep it running, and it crashes. The people here know so much more about Mips than Micrognosis."

Meanwhile, details of SBC/O'C's plans to outsource its mainframe-based applications remain sketchy. But the source familiar with SBC/O'C says that the bank is looking to "globally outsource" the management of all "support functions" for mainframe applications. The source says that the majority of those applications support SBC/O'C's back- office operations, but he declines to specify them.

According to this source, SBC/O'C has already laid off some of its mainframe-dedicated information technology personnel in preparation of the outsourcing move. This could not be confirmed at press time.

Earlier this year -- after SBC/O'C reorganized its global information technology units and established a centralized so-called international and finance division (TST, July 11) -- sources close to the bank had said that SBC/O'C was weighing several options to centralize the technology that the IFD unit and the bank's so-called domestic banking division employ.

At the time, in addition to outsourcing, sources said the bank was considering creating a separate technology subsidiary and hiring a centrally deployed consultant to help the bank cut costs. But the source familiar with SBC/O'C says the bank has already made up its mind. "I believe that they will absolutely try to outsource the applications that are running on a mainframe," the source says.

The source in New York says that one piece of technology that definitely has a future at the bank's Stamford facility is Next Computer Inc.'s Nextstep operating environment. The source says that SBC/O'C has begun rolling out Nextstep "big-time," mainly in support of the bank's foreign exchange traders.

Nextstep is primarily being installed on Hewlett-Packard Co. workstations, the source says. According to the source, the H-P workstations will eventually supplant a "huge quantity" of Next's so-called black box workstations.

SBC/O'C officials say that the bank chose to move to Stamford only after conducting a "14-month review" in which it considered "several sites in the greater [New York City] metropolitan area." These officials says that the bank will hire an additional 700 workers -- bringing the Stamford personnel total to 2,000 -- before it moves into its new facility.

Before SBC/O'C makes the jump to Stamford, the deal will have to be approved by the Connecticut state legislature: Connecticut law currently prohibits foreign-owned banks from doing business within its borders. However, a bill to eliminate that restriction for investment banks such as SBC/O'C is expected to pass in the Connecticut legislature sometime this month.