Freddie Mac CIO

Von Thomas Hoffman

Like other companies that have been battered by accounting scandals in recent years, Freddie Mac Inc., which admitted in 2003 to nearly US$5 billion in understated earnings from 2000 to 2002, has replaced many of its top executives. In September, June Drewry left as CIO at Aon Corp. to become senior vice president of Freddie Mac"s information systems and services group and was joined by Joseph Smialowski, former executive vice president of IT at FleetBoston Financial Corp. Smialowski became Freddie Mac"s executive vice president of operations and technology last month.

To help McLean, Va.-based Freddie Mac automate its financial processes and make them "bulletproof," the company also tapped James P. Witkins, former managing director of operations and technology at FleetBoston, as its senior vice president of technology and CIO in the beginning of January. The 54-year-old Witkins, who once again reports to Smialowski, has 27 years of experience in financial services IT management, including stints at Manufacturers Hanover Trust, Chemical Bank and Barclays Bank PLC. He spoke on Thursday with Computerworld"s Thomas Hoffman about the key challenges he faces.

What"s your charter at Freddie Mac? I"d like to put that into three general categories. First is to enable Freddie from a technology perspective to meet its mission and goals as the market is developing. We believe a high portion of our growth will come from household and business growth from minority families. We are clearly focused on what it will take to do that, including use of Spanish language on our Web site and the ability for them to educate themselves in Spanish on the mortgage process in the U.S.

Second (is) to make Freddie not just effective and competent for our customers, but easy to use. One of the raps, not just on Freddie but other companies, is that the online tools are there but not easy to use. That work continues.

Thirdly, I"m working with the CFO (Martin F. Baumann) to take the financial reporting process into a fully automated and highly repeatable environment and one that is bulletproof.

What"s been done and what"s being planned for automating financial reporting? As I look at our investment agenda for 2005, many of these initiatives address this issue of automating steps in the financial reporting process, given the requirements to fully report to our investors and regulators. There"s a full plate of initiatives under way, and it is a magnificent process that"s gone on.

Are there any efforts under way to create an automated audit trail on financial activities? Absolutely, but we"re at a point where the real smart move is to attack it at the business-object level. If you wait to do it at some audit level within finance, you"re already back where you started from.

What strengths do you bring to the role? I"ve been involved with the financial services industry for the better part of 27 years now, and I"ve worked all three sides (front-office businesses, operations and technology). The model may shift over time, but the delivery of financial services requires all three.

I hope, coming over here to Freddie Mac, to serve a pivotal role in ensuring all parts of Freddie are brought to bear and focused on the customer and the tech teams are working in a highly integrated responsive mode with their front-office and business teams.

It sounds simple, but in practice it"s so easy to get out of balance as one part of the company begins to dominate. At Freddie we"ll see a real purpose of process.

What are the top challenges you face? To get the technology resources of the company focused on our ongoing mission and secondly to keep them focused on the ongoing automation of the financial process.

From a pure technology standpoint, I"m finding one of the key challenges is data management -- the sheer volume of data needed to manage the risk management models we have, the sheer volume of data we have that allows us to be Freddie Mac. This can put real strains on traditional data warehouse and data mart concepts. One of our key challenges will be re-architecting our corporate data warehouse. It"s an extremely data-intensive business.