BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C.  20551
			DIVISION OF BANKING SUPERVISION AND REGULATION
			SR 98-1 (GEN) February 3, 1998

	TO THE OFFICER IN CHARGE OF SUPERVISION           AT EACH FEDERAL RESERVE BANK SUBJECT: Management and Coordination of Information Technology for the Supervision Function                          In recent years the information technology requirements of the banking supervision and regulation function across the Federal Reserve System have been met through a diverse set of committees, user advisory groups and other organizations.  These groups have generally been successful in providing technical and managerial expertise to enhance the operations of the supervision community.  However, the dramatic changes taking place in the banking industry, bank supervision, and information technology, suggest that the governance of IT within supervision should move from a coordinated function to a more actively managed process for the supervision community as a whole.  The goals of this process are to ensure that IT initiatives support the broad range of supervision business needs without duplication and overlap, that the underlying IT architecture fully supports those initiatives, and that supervision's deployment of technology leverages fully off of technology initiatives and processes outside the supervision function.  To accomplish these goals, the Board has established a new structure in the Division of Banking Supervision and Regulation that: Provides a mechanism to ensure the continuing alignment of IT initiatives with strategic supervision objectives; Promotes a high level of involvement and leadership in IT initiatives by the principal business lines within supervision; Establishes clear responsibility for the review and approval of major IT initiatives on behalf of the supervision function; Sets architectural and environmental standards for the supervision function consistent with standards adopted for the Federal Reserve System; and, Retains an active role for Reserve Banks in the management and development of the supervision function's IT initiatives.                         These are the responsibilities of the Supervisory Information Technology Function (SIT).1 As described more fully below, the SIT will consist of a senior level Steering Committee charged with providing strategic direction, and an SIT Office headed by a senior Board officer responsible for managing the implementation of IT throughout the supervision function, with the direction and guidance of the Steering Committee.  The following are the principal components of this oversight structure and a description of their purpose: Information Technology Steering Committee:   The SIT Steering Committee is intended to be a business-focused unit -- rather than a technology committee -- and its charter is to ensure development and execution of an information technology strategy which is in alignment with the overall supervision strategic plan.  Towards this end, the Steering Committee will prioritize competing projects and will approve all significant IT initiatives.  The Steering Committee will ensure that all projects have the necessary sponsorship and level of commitment from the sponsoring line function, including allocation of personnel to serve as the end-user contact throughout project development.  Steering Committee membership will consist of the SIT managing officer, the senior officers heading the Board's BS&R line functions, a senior officer representing the Division of Consumer and Community Affairs, and several Reserve Bank senior officers.  The Director of the Board's Division of Information Resource Management will serve in an advisory capacity. Supervisory Information Technology Office:   The SIT Office will serve as the focal point for coordinating IT activities within the supervision function, including applications development, database and document management, and establishment of software and hardware standards.  Additionally, the Office will ensure that the necessary environment is in place at the Board and at the Reserve Banks to support end-user computing needs and to achieve an appropriate level of IT innovation.  As such, it is the responsibility of the Office to make decisions on behalf of the supervision function as to the specific technologies to be employed in meeting the business objectives.  The SIT managing officer will be Jack Jennings, Deputy Associate Director, who has been actively involved in supervisory operations, policy development, and automation related initiatives for several years.  The organizational components of the Office consist of the following:   SIT Advisory Council:   An Advisory Council will be established composed of Reserve Bank supervision officers who have direct responsibilities for managing and implementing information technology at their local sites, and representatives from the Board's Consumer and BS&R Divisions.  The Advisory Council will serve to identify opportunities for the supervision function to improve its overall management of IT.  Specifically, the group would be asked for recommendations to optimize cost effectiveness in the acquisition and deployment of IT resources, and to identify impediments to the establishment of an operating environment capable of supporting Systemwide business requirements.  The Advisory Council would serve as the central point of collaboration and communication between Reserve Banks and the SIT. IRM Technical Advisor: One of the most important responsibilities of the SIT is to identify strategic automation requirements for the supervision function necessary to support business needs and establish architecture standards consistent with these requirements.  The Office has the support of the Board's Division of Information Resources Management which has loaned an officer to assist in consideration of the strategies for distributed application environments, security technologies relative to emerging business needs, standards for applications development and database and document management, and software and hardware standards.  Ms. Marianne Emerson, Assistant Director from IRM, is on loan to the Division to provide assistance on a day to day basis. System Automation Products Section/Automation Product Offices2:   The resources in these areas will provide services which include:   supporting the informational needs of the Steering Committee and the SIT managing officer with regard to project status and budget matters; providing on-going support to the functional areas in identifying effective and efficient utilization of IT in the implementation of their business processes, preparing proposals for Steering Committee consideration, developing project plans, and identifying redundancies or synergies among IT initiatives; conducting focused research and development activities aimed at identifying opportunities presented by new or existing technologies; and, monitoring application development activities with respect to their progress and compliance with Systemwide standards for large scale development projects. National Information Center Function Office:   The NIC Function Office, headed by Bill Schneider, will continue to report to the Director of BS&R in his capacity as NIC Project Director, although BS&R interests in NIC developments will be coordinated through the SIT office. Supervisory Information Resources:   The SIR section also reports to Bill Schneider and provides local IT support to Board staff and administers system security access to Board and NIC databases.                         This structure envisions the continuation of a strong Reserve Bank role in the overall management process.  Specifically, Reserve Bank senior officers will serve on the Steering Committee charged with providing the necessary strategic direction and resource prioritization among automation initiatives, and Reserve Banks will retain their current roles in leading many of the function's applications development and production efforts.  Furthermore, the process is not intended to discourage appropriate levels of local IT innovation which have proven to be a valuable source of new IT initiatives. Key Objectives of the Supervisory Information Technology Function                         The key objectives of the Supervisory Information Technology Function are: 1) to develop and maintain a strategy for implementing information technology that is consistent with the function's overall strategic goals for supervision; 2) to ensure that the leadership and involvement by the business areas within the function are appropriately matched to the expenditure of resources on IT projects and that such projects are driven by clearly defined user needs; 3) to deploy information technology in a cost effective manner; and 4) to identify opportunities where available technologies can enhance supervisory processes.  These objectives and initial action plans are described more fully below. Strategic Planning Alignment:   Develop and maintain a strategic information technology plan for the supervision function Systemwide in alignment with the goals, strategies and action plans provided for in the supervision Strategic Plan.  A central component of the plan will be a blueprint dealing with the information technology requirements necessary to support the full range of the function's supervisory processes.  The requirements here extend to the establishment of appropriate architectural and product standards. Ensure On-Going Business Sponsorship:   Ensure that all significant IT initiatives have the "sponsorship" of one of the Board's functional areas (Policies and Procedures, Supervision Operations, Applications and Enforcement, Staff Development and Program Review, and Consumer and Community Affairs).  Sponsorship entails both initial approval by the senior functional line officer at the beginning of the project, as well as an on-going responsibility to shepherd the effort throughout its life cycle and to have a direct reporting relationship between the business project manager for the IT initiative and the line officer. This requirement is necessary to ensure that these IT activities are fully aligned with the function's business direction and it allows the functional area to prioritize among its own competing initiatives.  It also enables appropriate flexibility to be used should any changes become evident in the supervision landscape that may impact on the project's requirements, direction or relative priority.  For initiatives currently defined as "national" in scope (list attached), the officers in charge of each of the functional areas will be asked to conduct a review of the project for consistency with business processes and to establish the reporting relationship described above.3 Enhance Cost-Effectiveness of IT Expenditures:   Develop procedures to review and approve proposed expenditures associated with all major IT initiatives Systemwide.  This process is essential to ensure that funds allocated to supervision IT efforts at the Board and Reserve Banks are appropriately aligned with the most pressing business requirements. The process, however, must allow an appropriate level of innovative entrepreneurial efforts at the local level which have served as the prototype for some of the most valuable information systems currently in use.  To the extent cost-effectiveness can be enhanced through realignment of existing IT purchasing procedures or by identifying centers of expertise for conducting certain activities, those opportunities will be considered.  Identify Business Process Improvement Opportunities:   In addition to supporting existing business processes and fulfilling known information needs, information technology offers the potential for delivering clean-slate alternatives to existing processes which have been designed around historical constraints.  The SIT must develop a close partnership with the major line functions which results in a pro-active approach towards identifying opportunities to most fully realize the potential of existing or evolving technologies in meeting the functions' strategic goals and objectives.                         Information technology has the potential to significantly enhance both the effectiveness and efficiency of our supervisory processes.  The reorganization of our management of the supervision function's IT efforts is intended to provide a structure for determining that resources are being used effectively in the delivery of IT services, a broad architectural framework under which innovative technology can flourish, and a vehicle for decisive action.  Your collective support in this effort is essential to its success.  Please feel free to discuss any concerns or questions you may have regarding these efforts with either me, or Jack Jennings, on ext. 3053. Richard Spillenkothen Director Footnotes 1.   The responsibilities of the existing Information Technology Committee will be subsumed under the SIT. The existing Information Technology Working Group (ITWG) will now serve as an advisory group to the SIT Infrastructure Office.  Return to text 2.   The product offices are the Applications Development Office at the Federal Reserve Bank of Dallas, the Data and Information Services Office at the Federal Reserve Bank of Kansas City, and the Infrastructure Office at the Federal Reserve Bank of Philadelphia.  The Consumer Affairs Product Office will continue to report directly to the Board's DCCA management.   Return to text 3.   The SIT Steering Committee will be asked to establish criteria for determining national initiatives.  Generally, the projects initially considered "national" in scope, support business processes common to all Reserve Banks, or inherently create dependencies among the Board, the Districts, or other regulatory agencies for supplying, maintaining, or exchanging data.  Return to text 2/3/98 CURRENT INVENTORY OF NATIONAL IT INITIATIVES FOR SUPERVISION APLOG 1.4 FED OFFICE CONFLICTS OF INTEREST 1.4.5 MINI-CONFLICTS 1.4.5 PERSONAL PROFILE 2.2.2 TESS 2.1 RTS 2.0 ESP 2.0 TIME TRACKING 1.0 NATIONAL EXAMINATION DATA (NED) NICOLAS PRISM 1.0 PHOENIX II FBO DESKTOP LARGE BHC DESKTOP GENESYS/ALERT/ELVIS EXAMINER WORKSTATION 1.5 - MONEY CENTER MODULE EXAMINER WORKSTATION CONSUMER MODULE SHARED NATIONAL CREDIT DATABASE
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