Alliance Data Discusses Artificial Intelligence, Data Transformation and IT Security
Mike Rosello - Central Ohio Tech Power Player Honoree
SVP and CIO
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SVP and CIO of Alliance Data, Mike Rosello, discusses
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JB: Good morning!Today we are here with Mike Rosello, who is the Senior Vice President and Chief Information Officer at Alliance Data, and my name is Jim Burden with RoundTower Technologies. I will be your guest moderator today. So, let's get started. Mike, thank you for your time today, and thanks for spending time with us. Certainly appreciate having you here. In your opinion, what is one of the most exciting or disruptive technologies affecting your business today?
MR: Oh, I think the technologies that are affecting our business today would probably be in the artificial intelligence space. We have a lot of AI engagements going on right now, not only in the technology component of our business, but also in the, uh, everything from shared services group to the collections area, to the HR department, to finance and accounting. So, um, we're looking at a lot of different partners that come in and bring a lot of AI experience to us, whether that's new tools, processes, organizational structures…uh, we're starting to see some really good return on investment from these engagements. It's really starting to shape the design of the company now, and how we go about doing budgets, how we go about determining what projects we work on. So, so AI is a big one.
The other one, obviously, is the digital transformation. I would say, uh, we're in the credit card business, so the demographics of the folks who are using credit cards now, no longer want to use plastic. Everything is done off a mobile device. So, all of our capabilities that we're building, um, whether it's on the web or whether it's on the mobile device, are all really shifting towards the demographics of who our cardholders are now. So, it's a, it's a lot of increased digital presence, increased security and um, a lot of conversations with these card holders to find out what they truly want. Uh, are they going in stores any longer or is everything done online?
We also are trying to accommodate to all their rewards programs, as well. So, as you're walking past a store and you're in, your phone is in your hand and, you know, you have beacon technologies that are sending an alert, because we know where you are, we know that there's a store that's 20 feet away that's having a sale right now, and we want to make sure that you know that you have a $20 gift certificate for that store, so you'll go in there and buy something. So, it's, uh, heavy data-intensive, heavy digital-intensive technologies that are really, have been going on now for a couple of years and it's just, it's just growing.
JB: You mentioned, uh, security being, being quite a challenge. As you look at your, your business and what you just described with the advent of all the data that's now available, how do you protect that data and how do you see security kind of entering into your world?
MR: Yeah, well, when you have data in your name, then you better be pretty good at it, or you're a pretty big target. Um, you know, so, we're the brand behind the brand. We have almost 160 different brand partners who the cardholders are associated with those brands, whether it's J. Crew or Victoria's Secret or Ikea. So, the card holders are signing up for the card with their prospective brand. We are in the background processing the transaction, establishing the credit lines, managing the flow of all that transaction and rewards. So, uh, so you not only have to really worry about your own security as an organization, you also have to worry about the flow of security from your brand partner who's coming into your organization. So, there's kind of two different pipes you're really staying focused on. Um, so if there's a bad actor that gets in and infiltrates one of our brand partners, how does that bad actor jump the rails and come into my environment and do damage across all my partners?
So, security is very difficult in this industry. Um, you know, uh, a lot of people hear about, um, you know, data being compromised in, in large amounts of social security numbers being stolen and things of that nature. You know, there's, there's a lot of different ways to go around that. You could have a bad actor be in your environment, but they really can't do much or get much. Most of the data is fully encrypted or, um, you know, if, if you can get in, you simply can't get back out. Um, so, you know, the security department is very robust, monitored 24/7, um always continually making advanced software and hardware decisions in that department to keep up with the pace of what's going on out there.
Um, we process only brand partners domestically, which helps, because you can see security attacks that are trying to come in from other countries, but we have no business doing business with those countries, so it's very easy to shut all that off and really only be concerned with the states within our country. Uh, so that is helpful. A little different for multinational companies. It's much harder for them. Uh, so, uh, you know, in the security, talent is always key. You can buy all the software and hardware you want, but you really need the human element, talent, to know how to make sure you're managing it properly. Uh, so security will never end. It is, it is a game you never win. All you can hope for is, no noise is good.
JB: Sure, sure. Makes a lot of sense. As you think about your role as the Chief Information Officer and the digital transformation that's changing the way you do business, how do you manage the IT budget that's focused on keeping the lights on and paying for their security guys versus, kind of fueling digital transformation efforts?
MR: Yeah, we have – so, our book of work is, is divided up. It's like a pie. And there are many slices to the pie, and every slice of the pie is never big enough for the person who wants that slice. So, you have regulatory concerns, right? We're a financial services institution, so you have intense scrutiny from a regulatory and compliance perspective. So, you have a certain amount of labor that is guaranteed to go to compliance and compliance remediation. Digital transformation, any customer-facing forward initiatives for the most part, um, obviously they want to be the front runner, uh, when it comes to spend. Um, those initiatives are the, you know, the flashy ones that, that really get out there, are very attractive to existing brand partners or new ones. So, they're always wanting to a large slice of the pie.
You have just your standard run bucket. And we have almost 160 clients. There's two data centers, 30 million transactions or card holders. Uh, um, so, uh, just the, keeping the lights on with 8,000 plus associates and over 12 different locations around the country is, is costly. So, you know, you kind of work into virtualization technologies and cloud technologies, work-at-home strategies to try to lessen that footprint and keep those operating expenses down. Uh, so yeah, the, the pie, the pie's never big enough. I think we're very fortunate to have a very healthy capital budget to spend. We just have to spend it wisely and make the right choices. And you know, it's important for everyone on the leadership team to know that everything you want won't be done in one year.
Look at it as like a three-year horizon, you know? Get a, get a different piece that's more important and prioritize accordingly each year – one, two, and three years. And I think that after a three-year term, which is normal in a cycle of a company this size and what's going on out there is, is a, is a good timeframe to have. I always do three-year IT strategies. I don't go any longer than that. Sometimes, after a year or two I'm already refreshing them, because things change so quickly. So, you know, it's, this is my, just finishing up my 10th year at Alliance Data on. It's been a really nice run, uh, in regards to, when I started, we had 25 clients, 2,500 associates and now there's 160 clients and over 9,000 associates. So, it's been a good run, using your money wisely, prioritizing our book of work the right way. Uh, and I think that's really just the trend, not overcomplicating things. And just continuing to using that methodology.
JB: That's great. That's a, that's a tremendous amount of growth in a short period of time. And as you've, as you've been in that role, many of the CIOs we've talked to, their role has changed over time. And,you know, rapid, rapid growth in IT is nothing new, but it seems like we're on a whole new rapid growth plan. How's your role changed in the last 10 years as you shifted into that?
MR: The Chief Information Officer role has turned into the chief negotiator officer role, for sure. Um, so I, you know, I mentioned a couple things, and this seems to be the trend for the last couple of years, will certainly be for years to come, is really managing that pie appropriately in, in giving equal distribution to all your business partners. I have seven business partners on the executive team and, you know, everyone has a job to do. Everyone needs resources, especially from the IT department, to get that job done. So, it's my job really to be unbiased, impartial, and make sure that my business partners are all getting an equal crack to my resource pool, my labor pool.
Um, so my job is really to, kind of help the project management office with that negotiation, making sure that my peers are prioritizing appropriately, making sure the return for what they're asking for is legitimate and on a timeframe and at a cost that's, that's realistic. Um, you know, I think it's, it's also, um, you know, uh, making sure that everyone understands that there are some things that we're doing as an organization that does not have a return. You know, there's regulatory work that needs to be done. There's just standard spending to keep the lights on and it's, you know, so um…one of the things I really focus on is making sure that my peers see what we're doing to drive down operational costs as the business is growing the top line. So, to make sure that I'm doing my part too. I'm not just playing, you know, police officers guiding traffic around here.
The other thing I think is important is, you have to make sure that you're bringing in new partners, bringing in new ideas for them to look at. These are not technologists, so they only know what they know. So you know, if you start doing, uh, AI initiatives, bringing in, uh, whether it's local or national groups to come in and speak to them in regards to their specific business unit and how they can help, you know, I think sometimes there are shops that say, “Well, if we can't do it within our own shop, then we're just not going to do it.” And don't really look outside. And I think that's a disservice to my business partners. If I can't do it, I'll find someone who can. If I don't have the bandwidth to do it because I'm doing something else, I'll find someone who can. And, you know, so far the relationship's been going well with that, you know, as long as you stay fair and balanced with everybody
JB: Great. Well, thank you. Thank you for your time, Mike. This has been Jim Burden and Mike Rosello, and to learn more about us, please visit comsparktech. Goodbye, until next time.
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