Training for IT

1
Cost Transparency Operating Model
Training for IT March 1, 2006
2
Objectives
The objective of todays discussion is to help
you understand

• Scope of the cost transparency operating model
• Changes to the cost transparency reports
• Overview of the operating model
• Flow of chargeback information
• Impact to IT
• Calendar of Activities
• Ground Rules
• Expectations for the initial release
• Product pricing process overview

3
Scope of the IT CT Operating Model

• The cost transparency reports are currently being
  distributed to our customers. Initially we will
  focus on legacy Client Organization. Moving
  forward we will evaluate additional businesses.

Future Scope
Scope

• As the impact of the bank integration initiative
  is determined, the following business units will
  be evaluated for future action
• Legacy Private Bank
• Legacy Asset Management

• For the initial release the following legacy
  Client business units are in scope
• Fixed Income
• Equities
• Investment Banking
• Division A
• Division B
• Shared Services
• Operations
• Product Control
• Credit Risk / Market Risk
• Financial Control
• Financial Control (BASEL II)
• Legal and Compliance division (LCD)
• Human Resources (HR)

4
Background On IT Cost Transparency

• IT Cost Transparency chargeback reports have been
  modified to give the business a better
  understanding of their consumption of IT products
  and services. Reports will enable constructive
  dialogue and rational choices to be made by both
  the business and IT.

What Is Changing?
What Are The Benefits?

• Billing Methodology Chargeback reports will
  provide more comprehensive application charges
  (e.g. infrastructure charges will be incorporated
  into application costs)
• Report Presentation Process The Application
  Development Group (ADG) RM will present
  chargeback reports with support from the
  Financial reporting RM
• Inquiry Process The report inquiry process has
  been streamlined to direct all inquiries through
  a central point of contact
• Broader Audience Chargeback reports will be
  presented to the Desk COOs and shared services

• Greater Transparency Business will have a
  greater understanding of technology consumption
  and cost
• Improved Attribution and Accuracy of Consumption
  IT charges are directly linked to
  Application-Infrastructure and End-User
  Technology consumption
• Improved Planning Business and IT will have the
  ability to better plan consumption of IT products
  and services
• Competitiveness Migrating IT from a support
  organization to a service model
• Improved Customer Support Inquiries will be
  tracked and the cost transparency operating model
  will be continually improved
• Upstream Costs Application Development Group
  (ADG) and Infrastructure Technology Group (ITG)
  will approach the business with a picture of
  total application costs that are inclusive of
  labor and infrastructure expenses
• Improved Governance IT will be accountable for
  all technology related costs pertaining to their
  business partners

5
Overview of the Operating Model
The chart below outlines the operating model for
the IT Cost Transparency process. This new
process will minimize confusion and overlap of
roles and ultimately result in a faster
resolution of billing issues, improved customer
satisfaction and ultimately improved control of
costs.
Report Production
Report Analysis
Report Presentation
Report Inquiry
ReportCorrection
Objectives
Develop an itemized report of IT products and
services consumed by the business during the
previous fiscal month
Perform analysis of consumption trends,
significant deviations on the chargeback reports
Present report and analysis to the business
Provide a mechanism for clients to raise
questions about the report and to request
correction
Determine and implement appropriate action to
reports that require adjustment
Key Activities

• Consolidate end user and infrastructure
  consumption data
• Apply appropriate unit cost /rate card to
  consumption
• Allocate charges to cost centers
• Generate itemized report

• Analyze report and determine cost saving
  opportunities
• Validate findings
• Append report with analysis and status of
  previous inquiries
• Generate predefined views of report

• Review report with ADG RM
• Send monthly high level view to Business COOs
• Present detailed report to the Desk COOs
• Send detailed report to business accounting

• Forward inquiries to Central Inquiry Tracker
• Capture inquiries
• Communicate status to the business

• Forward inquiries to appropriate ADG RM or ITG RM
• Investigate inquiries and determine action
• Make corrections and update the Central Inquiry
  Tracker
• Track issue and close the loop with business

6
IT Chargeback Information Flow in Equities
Chargeback information flow will be standardized
across other divisions to ensure consistent
chargeback report production and presentation.
Inventory Manager Consolidates end-user
technology and application infrastructure
consumption data.
Cost Transparency Group sends an interim
chargeback report to the Financial Reporting RM
Group.
1
2
ITG RM
Equities Division
ITG Inventory Manager Person
Financial Reporting RM GroupPerson
Cost Transparency GroupPerson
Support as needed
Equities Controllers Person
Equities COOPerson
1

• PART C Allocate costs in PART B to the divisions.
  
• PART D Allocate labor costs to the divisions.
• PART E Perform trend and anomaly analysis
• Generate report from PARTS A,C,D,E

• PART A Calculate end-user product costs
• PART B Calculate infrastructure costs

ADG RM
End User Technology
EUTconsumption
Prime Services COO
4
2
Cash COO
Market Data
Financial Reporting RM Group
Derivatives COO
Other IT Towers (App driven)
Application-Infrastructure consumption
Other Desk COOs
Validate report
Recommend changes
3
Client Coverage Team
Financial Reporting RM Group presents the bill to
the IT Coverage Team for validation.
ADG RM and the Financial Reporting RM Group
present the chargeback report to the business
(ITG RM joins as needed).
3
4
7
IT Chargeback Inquiry Flow in Equities
There will be a Central Inquiry Tracker function
that would be responsible for tracking and
forwarding the different inquiry types.
Equities Division
IT 1,2
Business and Desk COOs forward all other
inquiries (IT 3,4,5) to the Central Inquiry
Tracker.
2
Financial Reporting RM Group Person
Equities Controllers Person
Equities COOPerson
Prime Services COO
ADG RM Person
ADG Application Managers
IT 4,5
IT 4,5
2
Cash COO
IT 4,5
IT 3,4,5
4
Central Inquiry Tracker
ITG RM Person
ITG Inventory Manager Person
IT 3
IT 3,4,5
Derivatives COO
IT 1,2,3,4,5
1
Other Desk COOs
3
Inquiry Type Framework Inquiry Type Framework
IT 1 Incorrect application cost allocation at cluster level
IT 2 Incorrect application cost allocation at division level
IT 3 Incorrect End User Technology item (Desktops, Blackberrys etc)
IT 4 Excessive application development charges (labor costs)
IT 5 Excessive application infrastructure costs
NOTE A detailed view of this framework is available in the Appendix. NOTE A detailed view of this framework is available in the Appendix.
Business COOS and Desk COOs forward allocation
related inquiries (IT 1, 2) to the Business
Controller.
Central Inquiry Tracker logs inquiries and
forwards them to the correct contact
Business Controllers forwards progress of
allocation inquiries (IT 1, 2), and any
additional inquiries to the Central Inquiry
Tracker.
1
3
4
8
The Impact on IT
Understanding and acting in your roles assures
better coordination, improved interaction, and
ultimately better service to the business.
Relationship Management Inquiry Response Financial Analysis Financial Analysis What Changes About My Role?
ADG Lead meeting with the business to present chargeback reports Assume responsibility for chargeback items that correspond to applications and projects Participate in the Coverage teams Analyze inquiries and route them to the appropriate contact Track status and follow up until resolution is achieved Report progress to the business client and manage their expectations Analyze inquiries and route them to the appropriate contact Track status and follow up until resolution is achieved Report progress to the business client and manage their expectations Validate the periodic chargeback reports created by the Financial Reporting RM Group Support the Financial Reporting RM group to identify cost drivers, trends, and key performance indicators ADG will own the relationship with the business ADG will own their application charges
Financial Reporting RM Group Partner with the ADG RM to meet with the business Participate in the Coverage teams Support the ADG RM in inquiry resolution Report progress on financial reporting inquiries to the business client and manage their expectations Support the ADG RM in inquiry resolution Report progress on financial reporting inquiries to the business client and manage their expectations Lead the development of chargeback reports and vet them with ADG Lead analysis of cost drivers, trends, and key performance indicators Financial Reporting RM Group will support ADG in their relationship with the business Financial Reporting RM Group will no longer be the funnel of inquiries from the business
ITG Assume responsibility for items on the chargeback report that correspond to infrastructure Participate in the Coverage teams Analyze infrastructure inquiries and route them to the appropriate contact Report progress to the business client and manage their expectations Analyze infrastructure inquiries and route them to the appropriate contact Report progress to the business client and manage their expectations Support ADG and Financial Reporting RM Group with cost drivers, trends and key performance indicators for infrastructure ITG will support ADG in their relationship with the business ITG will attend meeting with the business to review the report as needed
9
Calendar of Activities Targeted BAU Process for
March and onward
Business Days in the Average Month Business Days in the Average Month Business Days in the Average Month Business Days in the Average Month Business Days in the Average Month
1 2 3 4 5
6 7 8 9 10
11 12 13 14 15
16 17 18 19 20
21 22
Cost Transparency Group and Financial Reporting
RM Group develop an itemized report of IT
products and services consumed by the business
during the previous fiscal month
Accounting books are closed for prior month
Report Production
Reports are released to Financial Reporting RM
Group
Financial Reporting RM Group begin to meet with
ADG RM
Financial Reporting RM Group and the ADG RM meet
to vet analysis of business consumption trends,
and of significant deviations on the chargeback
reports
Report Production
Report Analysis
Chargeback Reports begin to be released to the
business client
Presentations of reports to the business begin
Client Coverage Team presents the report and
analysis to the business. The business clients
can then formally raise questions about the
report. Finally, the Inquiry Coverage Team
determines and implements appropriate action to
items that require adjustment.
Report Presentations, Report Inquiry, Report
Correction
NOTE The units are business days. The BAU
process will take several cycles to reach target
dates.
10
Ground Rules
The IT COO has setup some ground rules to
streamline the operating model across all
divisions and ensure a consistent service level.
Areas Where We Can Help

• Supply application usage metrics to the business
  controller for making allocation decisions
• End User Product (desktops, Blackberry)
  consumption
• Application-related infrastructure charges
• Application labor costs
• IT Chargeback trend analysis

Areas Out Of Scope

• Request to upgrade or downgrade application
  infrastructure (i.e. IT Standards and
  Architecture are the purview of IT)
• Financial data without review in the Cost
  Transparency process
• Request to change rate card current rate card is
  consistent with the Global Allocation Committee
  (GAC) guidelines

Initiating Inquiries

• Triage issues within your own division before
  escalating to IT
• All allocation inquiries will be forwarded to the
  business controller business controller will
  address the inquiry and update the Central
  Inquiry Tracker
• All other inquiries will be forwarded to the
  Central Inquiry Tracker

11
What to expect from the initial release?
The expectation has been set with the business
that the initial roll out will have limited
capacity to address inquiry requests. All
inquiries will be captured, but not all inquires
will be responded to.
What to Expect? How to Manage It?
Increase in the volume of inquiries Request business to direct request through business controller so that inquiries can be prioritized Manage business expectations around resolution timeframe Use contact list to forward queries to the appropriate personnel Refer to the Ground Rules in the Appendix
Inquiries are received directly from the business Clients will be encouraged to funnel inquiries through business controller and subsequently through the Central Inquiry Tracker If you get direct queries, forward them to the Inquiry Tracker so that they can be captured in the tracking tool
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Expectations set with the business
Our goal is to continually improve the process
and incorporate lessons learned from this initial
release.
Cost Transparency Expectations
Because we anticipate a high volume of inquiries, we will prioritize responses retroactive adjustments will be made
We expect the accuracy of allocation and infrastructure charges to improve as reports are reviewed in detail The business must focus on improving data integrity The business must demand higher accountability from IT
Responses to initial inquiries will be prioritized as follows Frequency of reporting errors and inquiries Materiality of inquiries
IT and the business are learning together in this process our ability to respond to your inquiries will improve as training is rolled out and enhanced
We are in the process of implementing the Central Inquiry Tracker position this may not be fully operational by the time of this initial release
IT will get your feedback to improve this process
Activities during the rollout include Communication about the operating model Chargeback reports will be released with limited analysis Meetings with the Financial Reporting RM Group will start to take place Inquiries to the report will start to be raised
13
Product Pricing Process Overview
14
Overview of Current Product Pricing Process

• ITG uses a rate card to charge the business for
  the consumption of infrastructure and technology
  services. The product prices in this rate card
  are reviewed on a periodic basis and updated to
  reflect changes to costs and inventory.

Drivers
Key Activities
Timing

• Cost Recovery As a cost center, IT aims to
  minimize under (over) recovery for costs that are
  charged to the business

• Estimate the inventory of billable products
• Determine direct, centrally planned and indirect
  expenses for each product
• Calculate unit price per product

• In 2006, product pricing will occur in Q1 and Q2,
  and can conceivably result in lower unit prices
  for the year
• Beginning with 2007, product pricing will occur
  annually at the beginning of the year

15
Steps in the Product Pricing Process
Product Pricing entails three high level
activities.
Step Responsible
Inventory Collection Provide inventory usage detail ITG Product Owners
Inventory Collection Vet the inventory data and provide the cost transparency group an estimated global volume for all products that have a billing target ITG Inventory Manager
Inventory Collection Run the global inventory through the financial model to determine a more accurate estimate of volume for products that have a billing target Cost Transparency Group
Inventory Spend Calculation Verify the direct, centrally planned, and pass through expenses associated with each product Cost Transparency Group
Inventory Spend Calculation Verify the application, direct infrastructure, and indirect infrastructure expenses associated with each product Cost Transparency Group
Unit Price Calculation Calculate unit price by dividing the total product cost by the volume of billable product Cost Transparency Group
16
Product Pricing Process flow
Provide product Inventory
ITG Product Owners
Calculate estimated volume of products with
billing target
Verify volume discrepancy
ITG Inventory Manager
S
S
Y
Run volume through financial model
Verify direct, centrally planned, pass through
expenses
Verify the application, direct infrastructure,
and indirect infrastructure expenses
Calculate unit price by dividing the Total
Product Cost by the product volume
N
Inventory volumediscrepancy?
Cost Transparency Group
17
Total Product Cost Breakdown

• Total product cost consists of three types of
  expenses that are each made up of different
  components. Direct and centrally planned expenses
  are accounted as operating expenses, while
  indirect expenses are allocations of internal
  costs.

Direct Expense
Labor Cost Costs for FTEs that book time to
support a product
Telecommunication Communication and WAN usage
(provided by external vendor) required for a
product
Operating Expenses
Centrally Planned
Depreciation Software and hardware depreciation
required for a product
TOTAL PRODUCT COST
Machinery / Expenses Costs for software,
hardware and service vendors that are required
for a product
Application Costs associated with applications
that are used by the product
Indirect Expense
NOTE These are all of the possible components
that can go into a products cost, but not all of
them are necessarily included.
Infrastructure Infrastructure costs consumed by
the product
Allocations
GTI Personal Consumption Infrastructure costs
consumed by direct labor
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Appendix

• Report Presentation Process Flow
• Report Inquiry Correction Process Flow
• Inquiry Type Framework
• Coverage Teams (Inquiry Response Coverage Teams,
  Client Coverage Teams)
• Roles and Responsibilities for the Operating
  Model
• Participants in the Cost Transparency Process
• Example Calculation of the unit price for
  Email
• Roles and Responsibilities in the Product Pricing
  Process
• For more information

19
Report Presentation Process flow
Business COO or Desk COO
Business Controller
S
S
Central Inquiry Tracker (CIT)
Create Report
Present report to clients
Make changes to the report
Financial Reporting RM Group
IT PL Community
Review and verify the report
ADG RM
N
ADG Application Manager
Review and verify the report
Recommend changes
Y
ITG RM
Review and verify the report (as needed)
ITG Inventory Manager
20
Report Inquiry Correction Process flow
Signs off on re-allocation requests
Report Inquiry
Business COO or Desk COO
Forwards to the desk or business COOs for signoffs
Forwards updated allocation to Financial
reporting RM via CIT
Business Controller
Report Inquiry
Allocations
Application
Logs and closes inquiry
Logs and closes inquiry
Logs Inquiry
Logs and closes inquiry
Logs and closes inquiry
Inquiry Type
Central Inquiry Tracker (CIT)
EUT
Financial Reporting RM Group
Updates allocations table
IT PL Community
Reviews and forwards to ADG Application Manager
Updates business on inquiry status
Updates business on inquiry status
ADG RM
ADG Application Manager
Updates ADG RM
Updates ADG RM
Infrastructure related
N
Y
Reviews and forwards to ITG Inventory Manager
Updates business on inquiry status
Reviews and forwards to ITG Inventory Manager
ITG RM
ITG Inventory Manager
Updates database ITG RM
Updates ITG RM
Inquiry Valid ?
Y
N
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Inquiry Type Framework
Description Raised By Currently Directed To Proposed Directed To Requirements
IT 1 Incorrect application cost allocation at cluster level Desk COOs Division Controller Step 1 Central Inquiry Tracker (logs it) Step 2 Business Controller Allocation details. Reasoning for re-allocation request. Effective dates Signoffs from necessary personnel
IT 2 Incorrect application cost allocation at division level Desk COOs Business Heads Financial Reporting RM Group Step 1 Central Inquiry Tracker (logs it) Step 2 Business Controller Allocation details. Reasoning for re-allocation request. Effective dates Signoffs from necessary personnel
IT 3 Incorrect End User Technology item (Desktops, Blackberrys etc) Desk COOs Division Controllers Financial Reporting RM Group ITG Inventory Manager Infrastructure Finance group Step 1 Central Inquiry Tracker (logs it) Step 2 ITG Relationship Manager Step 3 ITG RM will forward the query to ITG Inventory Manager Product type being inquired.
IT 4 Excessive application development charges (labor costs) Desk COOs Division Controllers Financial Reporting RM Group IT COO Project Managers Equity IT CIO ITG RM Step 1 Central Inquiry Tracker (logs it) Step 2 ADG RM Step 3 ADG RM will contact the respective project manager. Query definition (excessive work hours, vendor costs, infrastructure) Signoffs from necessary personnel
IT 5 Excessive application infrastructure costs Desk COOs Division Controllers Financial Reporting RM Group IT COO Equity IT CIO ITG RM ADG RM Step 1 Central Inquiry Tracker (logs it) Step 2 ADG RM Step 3 ADG RM will contact the respective application manager. Step 4 If infrastructure related issue then ADG Application manager will forward app requirements to ITG RM Step 5 If infrastructure related issue then ITG RM will get answer from ITG Inventory Manager. Query definition (excessive work hours, vendor costs, infrastructure) Signoffs from necessary personnel
22
Coverage Teams Inquiry Response Coverage Teams
for Equities
Inquiry Type Originator Step 1 Step 2 Step 3 Step 4 Step 5

IT 1 Incorrect application cost allocation at cluster level Desk COO Person X Business Controller Person X Central Inquiry Tracker Financial Reporting RM Group Person X

IT 2 Incorrect application cost allocation at division level Desk COO Person X Business Controller Person X Central Inquiry Tracker Financial Reporting RM Group Person X

IT 3 Incorrect End User Technology item (Desktops, Blackberrys etc) Desk COO or Business Controller Person X Central Inquiry Tracker ITG RM Person X ITG Inventory Manager Person X

IT 4 Excessive application development charges (labor costs) Desk COO or Business Controller Person X Central Inquiry Tracker ADG RM ADG Application Managers

IT 5 Excessive application infrastructure costs Desk COO or Business Controller Person X Central Inquiry Tracker ADG RM ADG Application Managers ITG RM Person X ITG Inventory Manager Person X
23
Coverage Teams Inquiry Response Coverage Teams
for Fixed Income
Inquiry Type Originator Step 1 Step 2 Step 3 Step 4 Step 5

IT 1 Incorrect application cost allocation at cluster level Desk COO Person X Business Controller Person X Central Inquiry Tracker Financial Reporting RM Group

IT 2 Incorrect application cost allocation at division level Desk COO Person X Business Controller Person X Central Inquiry Tracker Financial Reporting RM Group

IT 3 Incorrect End User Technology item (Desktops, Blackberrys etc) Desk COO or Business Controller Person X Central Inquiry Tracker ITG RM ITG Inventory Manager

IT 4 Excessive application development charges (labor costs) Desk COO or Business Controller Person X Central Inquiry Tracker ADG RM ADG Application Managers

IT 5 Excessive application infrastructure costs Desk COO or Business Controller Person X Central Inquiry Tracker ADG RM ADG Application Managers ITG RM ITG Inventory Manager
24
Coverage Teams Client Coverage Teams for Equities
MEETING 1 MEETING 1 MEETING 1 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2
Business Unit/Desk ADG RM Financial Reporting RM Group ADG RM Financial Reporting RM Group Business COO Business Controller Desk COO
Equity Division (Global) U Person names U NA
Equity Division (Americas) U In all columns U
Equity Division (Europe) U cleansed U
Equity Division (Asia) U U
Prime Banking U U
Equity Proprietary Trading (Americas) U U
Equity Proprietary Trading (Europe) U U
FID Proprietary Trading (Americas) U U
Cash Business (Americas) U U
Cash Business (Europe) U U
AEP US U U
AEP UK U U
Research U U
Equity Derivatives (Europe) U U
Equity Derivatives (Americas) U U
Convertibles (Europe) U U
Convertibles (Americas) U U
MEETING 1 - Monthly validation of application
data in chargeback
MEETING 2 - Presentation of chargeback report to
the business at various levels Business COO,
Business Controller, Desk COO
NA Not applicable
25
Coverage Teams Client Coverage Teams for Fixed
Income
MEETING 1 MEETING 1 MEETING 1 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2
Business Unit/Desk ADG RM Financial Reporting RM Group ADG RM Financial Reporting RM Group Business COO Business Controller Desk COO
Fixed Income Division (Global) U Person names U NA
Fixed Income Division (Americas) U In all columns U
Fixed Income Division (Europe) U cleansed U
Fixed Income Division (Asia)
Europe Interest Rate Products U U
US Interest Rate Products U U
Exotics U U
Europe Repo U U
US Repo U U
CDO U U
CMBS U U
Research U U
Listed Derivatives U U
Leverage Finance U U
RMBS U U
Coverage (Europe) U U
Coverage (Americas) U U
Fund Linked Products U U
MEETING 1 - Monthly validation of application
data in chargeback
MEETING 2 - Presentation of chargeback report to
the business at various levels Business COO,
Business Controller, Desk COO
NA Not applicable
26
Coverage Teams Client Coverage Teams for IB,
Division B and Division A
MEETING 1 MEETING 1 MEETING 1 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2
Business Unit/Desk ADG RM Financial Reporting RM Group ADG RM Financial Reporting RM Group Business COO Business Controller Desk COO
IBD (Global) U Person names U
IBD (Europe) U In all columns U
IBD (Americas) U cleansed U

Division B U U
U
Division A U U

Legal and Compliance U U
MEETING 1 - Monthly validation of application
data in chargeback
MEETING 2 - Presentation of chargeback report to
the business at various levels Business COO,
Business Controller, Desk COO
NA Not applicable
27
Coverage Teams Client Coverage Teams for IB
Support and CFO
MEETING 1 MEETING 1 MEETING 1 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2
Business Unit/Desk ADG RM Financial Reporting RM Group ADG RM Financial Reporting RM Group Business COO Business Controller Desk COO
IB Support Person names
Corporate U In all columns U NA
Complex Product Support U cleansed U NA
Executive U U NA
Human resources U U NA
CFO U U NA
Operations U U NA

CFO
Financial Accounting U U NA
Global Treasury U U NA
Group Controlling U U NA
Investor relations U U NA
New Business U U NA
Product Control U U NA
Shared Services Controlling U U NA
MEETING 1 - Monthly validation of application
data in chargeback
MEETING 2 - Presentation of chargeback report to
the business at various levels Business COO,
Business Controller, Desk COO
NA Not applicable
28
Coverage Teams Client Coverage Teams for COO and
CRO
MEETING 1 MEETING 1 MEETING 1 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2 MEETING 2
Business Unit/Desk ADG RM Financial Reporting RM Group ADG RM Financial Reporting RM Group Business COO Business Controller Desk COO
COO Person names
Audit U In all columns U NA
Business School U cleansed U NA
Corp Development U U NA
Corporate Real Estate U U NA
Human Resources U U NA
Market Info Business Mgmt U U NA
Public Policy U U NA

CRO
Credit Risk U U NA
Risk Measurement Mgt U U NA
Operational Risk Management U U NA
Strategic Risk Management U U NA
MEETING 1 - Monthly validation of application
data in chargeback
MEETING 2 - Presentation of chargeback report to
the business at various levels Business COO,
Business Controller, Desk COO
NA Not applicable
29
Roles and Responsibilities in the IT Cost
Transparency Process

Report Production
Consolidate end-user technology and application infrastructure consumption data RA
Apply rate card against end-user product consumption RA
Apply rate card against application infrastructure consumption RA
Allocate application charges (infrastructure) to divisional cost centers RA
Allocate application development charges (labor) to the divisional cost centers RA
Report Analysis
Perform trend analysis for the past 12 months of IT chargeback C RA C
Perform chargeback anomaly analysis C RA C
Determine cost saving opportunities C R AC C I C I
Coordinate with IT to validate the anomaly analysis and cost saving suggestions R RAC C C C
Incorporate suggested changes (requested by IT PL Community) into the summary of observations RA I I I I I
Append report with the status of previous report inquiries RA C C C C C
Generate predefined views for different audiences (e.g.. Newsletter for Business COO etc,) RA
Business/Desk COO
Business Controller
Business Head
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
ADG Application Manager
ITG RM
Global Division RM
A Accountable (makes decision) R
Responsible (does the work) C Consulted
(provides input) I Informed (told of decision)
Note Activities and roles in bold italics are
proposed
30
Roles and Responsibilities in the IT Cost
Transparency Process - 2
Business/Desk COO
Business Controller

Report Presentation
Send high level monthly chargeback view and summary of observations (e.g. Newsletter) to the Business COO, Controller and Desk COO I I I RA I I I I I
Meet with, and present detailed reports to the Controller and Desk COOs according to client needs I I I R RA R C
Gather feedback during meeting C C C R RA
Create action items based of feedback C RA C C C
Issue responses to the business I I I I I RA I I I
Report Inquiry
Client identifies a problem or is not satisfied with explanation and formally questions an chargeback item R R RA I I I
Record the question in the tracking tool RA
Determine the inquiry type and forward to the appropriate contact for investigation. Use contact list RA I I I I
If its an allocation related inquiry, resolve it on the business side RA I I
Investigate the inquiry and determine an explanation R RA R R R
If item can be explained, communicate the response to customer. Close the issue I I I R RA R
If item requires correction, provide update to customer, update status I I I R RA R
Business Head
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
ADG Application Manager
ITG RM
Global Division RM
A Accountable (makes decision) R
Responsible (does the work) C Consulted
(provides input) I Informed (told of decision)
Note Activities and roles in bold italics are
proposed
31
Roles and Responsibilities in the IT Cost
Transparency Process - 3

Report Correction
Get business sign offs for all application re-allocation related inquiries and forwards it to the Financial Reporting RM Group, and notifies the Central Inquiry Tracker. I I RA I I
Central Inquiry Tracker forwards Application issues to the appropriate ADG RM and Inventory issues to the ITG RM RA I I
ADG RM reviews the issue and forwards it to appropriate ADG Application Manager RA C
ADG Application Manager forwards Application Infrastructure related issue to the ITG RM A R CI
ITG RM reviews the issue and forwards it to the ITG Inventory Manager RA CI
Inventory Manager investigates the issue and determines appropriate action RA
Inventory Manager makes correction and communicates the change via ITG RM to the single point of contact I I RA
Central Inquiry Tracker tracks issue and closes the loop on the inquiry RA I I I I
Communicate the resolution to the client I I I I RA
Business/Desk COO
Business Controller
Business Head
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
ADG Application Manager
ITG RM
IT PL Community
A Accountable (makes decision) R
Responsible (does the work) C Consulted
(provides input) I Informed (told of decision)
Note Activities and roles in bold italics are
proposed
32
Key Contacts Involved in the Cost Transparency
Process for Equity

EQUITY - Global Person names
Equity Division (Americas) In all columns
Equity Division (Europe) cleansed
Equity Division (Asia)
Prime Banking
Equity Proprietary Trading (Americas)
Equity Proprietary Trading (Europe)
FID Proprietary Trading (Americas)
Cash Business (Americas)
Cash Business (Europe)
AEP US
AEP UK
Research
Equity Derivatives (Europe)
Equity Derivatives (Americas)
Convertibles (Europe)
Convertibles (Americas)
Business Controller
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ADG Application Manager
ITG RM
ITG Inventory Manager
Central Inquiry Tracker
Business/Desk COO
Global Division RM
The ADG Application Manager will depend on the
application that is in question. The ADG RM will
be able to route the issue to the appropriate ADG
Application Manager.
33
Key Contacts Involved in the Cost Transparency
Process for Fixed Income

FIXED INCOME - Global Person names
Fixed Income Division (Americas) In all columns
Fixed Income Division (Europe) cleansed
Fixed Income Division (Asia)
Europe Interest Rate Products
US Interest Rate Products
Exotics
Europe Repo
US Repo
CDO
CMBS
Research
Listed Derivatives
Leverage Finance
RMBS
Coverage (Europe)
Coverage (Americas)
Fund Linked Products
Business Controller
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ADG Application Manager
ITG RM
ITG Inventory Manager
Central Inquiry Tracker
Business/Desk COO
Global Division RM
The ADG Application Manager will depend on the
application that is in question. The ADG RM will
be able to route the issue to the appropriate ADG
Application Manager.
34
Key Contacts Involved in the Cost Transparency
Process for IBD, Division B and Division A
Business Controller

IBD (Global) Person names
IBD (Europe) In all columns
IBD (Americas) cleansed

Division B

Division A

Legal and Compliance
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
Business/Desk COO
ADG Application Manager
ITG RM
Global Division RM
The ADG Application Manager will depend on the
application that is in question. The ADG RM will
be able to route the issue to the appropriate ADG
Application Manager.
35
Key Contacts Involved in the Cost Transparency
Process for IB Support and CFO
Business Controller

IB Support Person names
Corporate In all columns
Complex Product Support cleansed
Executive
Human resources
CFO
Operations

CFO
Financial Accounting
Global Treasury
Group Controlling
Investor relations
New Business
Product Control
Shared Services Controlling
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
Business/Desk COO
ADG Application Manager
ITG RM
Global Division RM
The ADG Application Manager will depend on the
application that is in question. The ADG RM will
be able to route the issue to the appropriate ADG
Application Manager.
36
Key Contacts Involved in the Cost Transparency
Process for COO and CRO
Business Controller

COO Person names
Audit In all columns
Business School cleansed
Corp Development
Corporate Real Estate
Human Resources
Market Info Business Mgmt
Public Policy

CRO
Credit Risk
Risk Measurement Mgt
Operational Risk Management
Strategic Risk Management
Cost Transparency Group
Financial Reporting RM Group
ADG RM
ITG Inventory Manager
Central Inquiry Tracker
Business/Desk COO
ADG Application Manager
ITG RM
Global Division RM
The ADG Application Manager will depend on the
application that is in question. The ADG RM will
be able to route the issue to the appropriate ADG
Application Manager.
37
Example Calculation of the unit price for Email
The total product cost is composed of direct
expenses, centrally planned expenses, and
indirect expenses.
Description Example Annual Expense Cost per unit
Direct Expenses Labor Cost Costs for FTEs that book time to support a product People book their time in Project Web for Email support 6,500,000
Centrally Planned Expenses Telecommunication Communication and WAN usage (provided by external vendor) required for a product Telecommunication and WAN consumption costs for Email 1,244,431
Centrally Planned Expenses Depreciation Software and hardware depreciation required for a product Depreciation of software and hardware used by Email 1855,024
Centrally Planned Expenses Machinery / Expenses Costs for software, hardware and service vendors that are required for a product Cost of vendors supporting Email, e.g. IBM, Microsoft etc. 3,788,123
Indirect Expenses Application Costs associated with applications that are used by the product A percentage of the fully loaded costs of applications used by Email, e.g. FTP, Tumbleweed etc. 2,077,981
Indirect Expenses Infrastructure Infrastructure costs consumed by the product A percentage of the infrastructure consumed by Email, e.g. servers, databases etc. 6,000,000
Indirect Expenses GTI Personal Consumption Infrastructure costs consumed by direct labor Costs associated with desktops, Blackberry's, etc. used by direct labor associated with Email 1,894,062
Total Product Cost Total Product Cost 23,359,621
Volume of Email Accounts Volume of Email Accounts 35,244
Cost per account Cost per account 663 /year
Email unit price Email unit price 55 / month
NOTE The figures in this chart are for
illustrative purposes only.
38
Roles and Responsibilities in the Product Pricing
process
ITG Product Owners ITG Inventory Manager Cost Transparency Group
INVENTORY COLLECTION
Provide inventory usage detail RA I
Vet the inventory data and provide the cost transparency group an estimated global volume for all products that have a billing target CI RA CI
Run the global inventory through the financial model to determine a more accurate estimate of volume for products that have a billing target I CI RA
INVENTORY SPEND CALCULATION
Verify the direct, centrally planned, and pass through expenses associated with each product I RA
Verify the application, direct infrastructure, and indirect infrastructure expenses associated with each product I RA
UNIT PRICE CALCULATION
Calculate unit price by dividing the total product cost by the volume of billable product I I RA
A Accountable (makes decision) R
Responsible (does the work) C Consulted
(provides input) I Informed (told of decision)