Madge M. Meyer Executive Vice President IT Global Infrastructure Services State Street Corporation IT Infrastructure Transformation 360 A Competitive Advantage
A Snapshot of State Street Corporation Global Advisors <ul><li>Approximately $2 trillion in Lendable assets </li></ul><ul><li>More than $425 billion in assets on loan </li></ul><ul><li>Lending across multiple asset classes in 45+ markets </li></ul><ul><li>More than 450 customers and 150 approved borrowers worldwide </li></ul><ul><li>$1.6 trillion* in assets under management </li></ul><ul><li>Worlds Largest Institutional Money Manager** </li></ul><ul><li>Investment solutions across the risk/return spectrum </li></ul><ul><li>Fiduciary heritage since 1792 </li></ul><ul><li>26,950 employees in 27 countries </li></ul><ul><li>Core business: managing & servicing financial assets </li></ul><ul><li>$12 trillion* in assets under custody </li></ul><ul><li>Largest provider of investment manager operations outsourcing </li></ul><ul><li>Premiere hedge fund service provider </li></ul>Global Markets Securities Finance Investor Services Asset Servicing Asset Management * As of June 30, 2009 ** Pension & Investments , May, 2009 Investment Research and Trading <ul><li>Over $14 trillion in volume traded across asset classes in 2008 </li></ul><ul><li>Completed over 1,000 transitions in 2008, representing more than $433 billion in value </li></ul>
This is State Street Our Company Today — Industry Leadership No. 1 Overall in Fund Accounting and Administration No. 1 (Globally) in Mutual Fund Administration Most Recognized ETF Brand (SPDR) and Most Informative ETF Website (spdrs.com) No. 1 Financial Services Company and No. 2 Overall Global Securities Lender and Private Equity Administrator of the Year Best Securities Lending House European Transfer Agent and European Hedge Fund Administrator of the Year R & M Global Custodian Exchangetradedfunds.com Global ETF Awards The Globe 100 ICFA Global Awards Computerworld Asia Asset Management July 2009 July 2009 May 2009 May 2009 May 2009 April 2009 January 2009 European Mutual Fund Provider of the Year ICFA European Awards December 2008 No. 1 Overall (Unweighted) and Weighted by Importance to Counterparty ISF Equity Lending Survey September 2008 No. 1 in Securities Lending Among Institutional Investors with $1-10 Billion and More Than $10 billion Global Custodian July 2008
This is State Street Our Company Today — Technology Leadership Global CIO 50 Annual Listing Global Infrastructure Services named Computerworld Honors Program Laureate second consecutive year No. 2 in Computerworld ’s Top Green IT Survey State Street Names to Global Green 100 List Best Infrastructure Category for Zero Footprint, Maximum Impact ™ Special Commendation in European Technology & Trading Provider of the Year (Back Office) Category FX Connect® and Currenex shared top honors as Best Online FX Trading Systems No. 62 out of 500 in InformationWeek 500 Global Infrastructure Services honored with 21 st Century Achievement Award InformationWeek Computerworld Computerworld Uptime Institute American Financial Technology Awards Funds Europe Magazine Global Finance InformationWeek Computerworld June 2009 June 2009 April 2009 April 2009 December 2008 December 2008 November 2008 September 2008 June 2008
Our mission is to sustain State Street's industry leadership through world-class, reliable, flexible, cost-effective, business-focused, and risk-managed computing services. Our regional service delivery managers and global competency functions deliver data center, hardware and software management, networking communications, and end-user computing support. An Overview of Global Infrastructure Services Global Competency Functions GIS Governance GIS Finance GIS HR EMEA Service Delivery Managers Americas Service Delivery Managers Asia Pacific Service Delivery Managers
GIS Service Delivery Model Plan Build Storage Systems Software Software/Release Mgmt Security Software Mgt Middleware/Transaction Services Network Network Engineering Network Installation & Mgt Network Security Systems/ Servers Technology Planning & Blueprint Capacity / Performance Mgmt Global Data Center Strategy New Business Integration Service Level Mgt Client Services IT Initiatives <ul><li>Availability </li></ul><ul><li>Performance </li></ul><ul><li>Capacity </li></ul><ul><li>Security </li></ul><ul><li>Efficiency </li></ul><ul><li>Scalability </li></ul><ul><li>Flexibility </li></ul><ul><li>Manageability </li></ul><ul><li>Speed to Market </li></ul>Continuity Management Business Drivers & Requirements Service Delivery Managers Business Office Business Communications and Metrics Reporting Process / Quality / Risk & Compliance Mgmt Cross Platform Systems/Servers Management Configuration Management Hardware Engineering Storage Area Network Storage Management Deliver Service Desk End User Computing Change Mgmt Problem Mgmt Availability Mgmt Asset Mgmt Operations Incident Mgmt End to End <ul><li>Applications </li></ul><ul><li>Server </li></ul><ul><li>Network </li></ul><ul><li>Desktop </li></ul><ul><li>Email </li></ul><ul><li>Internet </li></ul>
GIS Service Delivery Model - Global Integration AMER APAC EMEA Network Systems / Server / Storage Operations End User Computing Systems Software Strategic Operational Priorities GIS Exec Mgt Sr Regional Managers Sr Functional Managers Service Delivery Mgrs Regional Tech Mgrs Regional Teams New Role <ul><li>Service Delivery Mgr: </li></ul><ul><li>Customer Satisfaction </li></ul><ul><li>Business Service Level Mgt </li></ul><ul><li>BAU Operations </li></ul><ul><li>Demand Management </li></ul><ul><li>Financial Mgt & Communication </li></ul><ul><li>Project Oversight </li></ul><ul><li>Compliance Oversight </li></ul><ul><li>Regional Technology Mgr: </li></ul><ul><li>Technology Strategy & Processes </li></ul><ul><li>Infra Service Level Mgt </li></ul><ul><li>Financial Management </li></ul><ul><li>Resource Management </li></ul><ul><li>Project Execution </li></ul><ul><li>Compliance Management </li></ul>Service Level Requirements Best Practice Solutions New Mgt Structure New Processes What When How Who
Sustained focus on IT Infrastructure Optimization is allowing us to cost-effectively meet increasing demand and address landmark business & regulatory changes The Optimization Challenge: Grow & Globalize while Reducing Costs 2003 2004 2005 2006 2007 2008 2009 Full Year Projection Mainframe -- $/MIPS (Base installed) (-9% CAGR) Mainframe -- $/MIPS Value (Capacity on Demand Cost) (-11% CAGR) Open Systems -- $/Core Open Systems (-13% CAGR) Storage -- $/SAN Storage GB (-38% CAGR) Network -- $/Port (0% CAGR) Cost Per Call by the Service Desk (-14% CAGR) Cost per Ticket by the Service Desk (-23% CAGR) Total Cost of Service per PC (-4% CAGR) Indexed on base of 100 2004 2005 2006 2007 2008 % of Operating Expenses % of Operating Revenue % of IT Spend Infrastructure Spend Comparison 2004 2005 Operating Revenue % of Operating Expenses % of Operating Expenses % of % of IT Spend % of IT Spend Infrastructure Spend Comparison 2003 2004 2005 2006 2007 2008 2009 Full Year Projection Storage Admin Productivity: SAN GB per Storage Admin Backup Admin Productivity: All Open Systems Storage (GB) per Backup Admin Server Management Productivity: # Server Images per Admin Network Productivity: Bandwidth per FTE (Mbps) GEUC Service Desk Productivity: Tickets per FTE (monthly) Indexed on base of 100
The Innovation Challenge Globalization Increasing Sophistication Technological Innovation Product Innovation Industry consolidation Regulatory requirements Cost pressures Requirements Enable State Street’s Global Operating Model Assure Security, Control, Business Continuity Provide Global Reach with Local Performance Zero Defect Expectation Rapid Change Minimal Time to Market Expense Management Market Demand & Opportunity
The Transformation Challenge Management Strategies & Practices Technology Business People
Transformational Business Management Practices "It is not the strongest that survive, nor the most intelligent, but the ones most responsive to change.” - Charles Darwin <ul><li>Customer / Quality Focused Organization </li></ul><ul><ul><li>Global Model with Virtual Teams </li></ul></ul><ul><ul><li>Industry Best Practices (COBIT, ITIL, etc,) </li></ul></ul><ul><ul><li>Tiered Services with Service Level Management </li></ul></ul><ul><ul><li>enabled by </li></ul></ul><ul><li>Financial Management Disciplines </li></ul><ul><ul><li>Governance & Best Practices </li></ul></ul><ul><ul><ul><li>e.g., Asset Mgt, Technology Planning, Business Office, etc. </li></ul></ul></ul><ul><ul><li>End-to-End TCO Business Case / ROI Current Year Impact (self-funding) </li></ul></ul><ul><ul><li>Cost Transparency </li></ul></ul>聽 Listen! Ting!
Transformational Technology Management Practices “ There is only one time that is important - NOW! It is the most important time because it is the only time we have any power over.” Leo Tolstoy <ul><li>Global 3-5 Year Strategy </li></ul><ul><ul><li>Technology Blueprint </li></ul></ul><ul><ul><ul><li>e.g., Capacity on Demand, Grid, ILM, Cloud, etc. </li></ul></ul></ul><ul><ul><li>Global Data Center Strategy </li></ul></ul><ul><ul><li>Green Initiatives </li></ul></ul><ul><ul><li>realized through </li></ul></ul><ul><li>Local Business-driven Execution </li></ul><ul><ul><li>Life Cycle Mgt / New Technology Adoption </li></ul></ul><ul><ul><li>Consolidation & Virtualization </li></ul></ul><ul><ul><li>End User Experience Focus </li></ul></ul>Jin Ji Urgency!
Transformational People Management Practices Those who admire you, can make you confident Those who criticize you, can make you better Those who hurt you, can make you stronger Those who rely on you, make you capable From “Sharing” by Xi Mu Rong Relationship Guanxi 關係 O N E T W O Ownership Navigation Escalation Team Approach World-Class Quality One Global Process Individual Accountability Global Commitment partnered with
A Few Recent Examples Global Data Center Strategy Capacity on Demand MPLS Network Virtualization Regional & Global Support Model Chargeback Models Asset Management Global Process Standards Zero Footprint Office Build-outs Market Volatility Response Split Operations Cost Transparency Sustainability / Energy Efficiency Program IBT Integration Flexible Workplace Initiative Cloud Computing Follow-the-Sun Support z/Linux 改变 Change Gǎi Biàn Align Anticipate Adapt Architect Adjust
Enjoying the Moment (but only for a moment!) "Change is the law of life. And those who look only to the past or present are certain to miss the future.“ - John F. Kennedy "Every act of creation is first of all an act of destruction.“ - Picasso 改变 Change Gǎi Biàn 2008 21 st Century Achievement Award 2008 American Financial Technology Award 2009 Top Green Achiever Award Enterprise Data Center Regional Data Center Local Data Center DR Data Center Reciprocal DR
Key Principles for Success <ul><li>Leadership – vision and perseverance </li></ul><ul><li>Challenges drive innovation </li></ul><ul><li>Pave the way with transformation and optimization </li></ul><ul><li>Inspire with global, long-term strategy </li></ul><ul><li>Execute with local focus and short-term results </li></ul><ul><li>Remain fluid and flexible through each moment </li></ul><ul><li>Measure, communicate and celebrate your achievements </li></ul><ul><li>Reinvent through Schumpeter’s “creative destruction” </li></ul>“ If we wait for the business to tell us what’s required, we’re already too late.” 成功 Chéng Gōng
Reminder This presentation contains forward-looking statements as defined by United States securities laws, including statements about State Street’s goals and expectations regarding its business, financial condition, results of operations and strategies, the financial and market outlook, governmental and regulatory initiatives and developments and the business environment. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing State Street's expectations or beliefs as of any date subsequent to the date of this presentation. Important factors that may affect future results and outcomes include, but are not limited to: global financial market disruptions and the current worldwide economic recession, and monetary and other governmental actions designed to address such disruptions and recession in the U.S. and internationally; increases in the potential volatility of our net interest revenue, changes in the composition of the assets on our consolidated balance sheet and the possibility that we may be required to change the manner in which we fund those assets, all as a result of the May 15, 2009 consolidation for financial reporting purposes of the asset-backed commercial paper conduits that we administer; the financial strength and continuing viability of the counterparties with which we or our clients do business and with which we have investment, credit or financial exposure; the liquidity of the U.S. and international securities markets, particularly the markets for fixed income securities, and the liquidity requirements of our customers; the credit quality and credit agency ratings of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of the respective securities and the recognition of an impairment loss; the maintenance of credit agency ratings for our debt obligations as well as the level of credibility of credit agency ratings; the possibility of our customers incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets; our ability to attract deposits and other low-cost, short-term funding; potential changes to the competitive environment, including changes due to the effects of consolidation, extensive and changing government regulation and perceptions of State Street as a suitable service provider or counterparty; the level and volatility of interest rates and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally; our ability to measure the fair value of the investment securities on our consolidated balance sheet; the results of litigation, government investigations and similar disputes and, in particular, the effect of current or potential proceedings concerning State Street Global Advisors’, or SSgA’s, active fixed-income strategies and other investment products, in particular, the potential for monetary damages and negative consequences for our business arising from the previously announced “Wells” notice we received from the SEC;and the enactment of legislation and changes in regulation and enforcement that impact us and our customers; adverse publicity or other reputational harm; our ability to pursue acquisitions, strategic alliances and divestures, finance future business acquisitions and obtain regulatory approvals and consents for acquisitions; the performance and demand for the products and services we offer, including the level and timing of withdrawals from our collective investment products; our ability to continue to grow revenue, attract highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements; our ability to control operating risks, information technology systems risks and outsourcing risks, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will fail or be circumvented; the potential for new products and services to impose additional costs on us and expose us to increased operational risk, and our ability to protect our intellectual property rights; changes in government regulation or new legislation, which may increase our costs, expose us to risk related to compliance or impact our customers; changes in accounting standards and practices; and changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that impact the amount of taxes due. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in State Street's 2008 Annual Report on Form 10-K and its subsequent SEC filings, including, in particular, its Current Report on Form 8-K dated May 18, 2009. State Street encourages investors to read these filings, particularly the sections on Risk Factors, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this presentation speak only as of August 24, 2009, and State Street does not undertake efforts to revise those forward-looking statements to reflect events after that date.