With much fanfare last week, Sun Microsystems Computer Corp. introduced its Ultra Enterprise line of server computers. Attacking companies like IBM and Hewlett-Packard that have deeper roots in the business market, Sun claimed its cost-performance advances should speed the transition of banks and other companies from old mainframe systems to Sun's brand of network computing.
Shortly after the announcement, American Banker senior editor Jeffrey Kutler talked with Sun president Edward J. Zander about his approach to the financial services market. Mr. Zander joined Mountain View, Calif.-based Sun Microsystems Inc. in 1987 as vice president of corporate marketing and more recently was president of its SunSoft Inc. subsidiary.
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How big is the financial services piece of Sun Microsystems?
It's between $700 million and $800 million. Total revenues last year were $5.9 billion, and analysts are estimating $7 billion this year. We are organized around government, education, manufacturing, telecommunications, and financial services. The last two are our really big areas.
Isn't your line-of-business orientation relatively new?
Yes. In financial services we got started with systems for trading floors, largely due to a bunch of bright people at the home office and in the field. Over the last 18 to 24 months we've had more of a focused approach, training and dedicating specific people around specific applications and industries.
When you come out with something like the Ultra servers, is there a marketing infrastructure ready to take it to the financial community?
Yes. Just in the last year we added a vice president of financial services, named Rob Hall, reporting to the vice president of worldwide field operations. And under him are a number of people. At the home office is a good-size financial services group that interprets what these developments mean for their industry, its implications for retail branch automation, the back office, insurance, etc. In addition, we have overlay structures in the field for selling to and supporting the industry.
How much is the Internet - a historical strength of your company - driving your business with the financial community?
Visa Interactive, Intuit, and Vanguard are a few examples where we're getting more of the retail financial applications as back-end servers. The Internet, along the same lines, has helped us. You'd be surprised how many people every day of their lives touch a Sun server in some way. There are potentially millions just on the Intuit home banking service.
How much interest do you see in the "intranet" phenomenon?
We've been selling the network-based concept in the financial world for the last few years. Now, thinking about sitting in front of a Web-type environment that allows you to link and connect everything in your enterprise together, we talk about intranet. That's the whole basis of our trying to connect the trading floors with back offices and retail offices. It gives the financial world not only all of its information and on-line applications in an intranet-like format but also the security and firewalls to reach out to customers. What you'd really like is an intranet-Internet combination with links among employees, suppliers, and customers in a virtual, protected network.
At Sun, haven't you been doing this for a long time?
We have always had a network-based intranet. Now we're actually redoing our applications to put them all on a Web-based front end to take full advantage of the technology.
How long does it take for the markets you are serving to catch up to some of those leading-edge things that you pioneer internally?
It varies by industry. Financial services, at least over the past 10 years, has been one of the more interesting fields that seems to leap to new technology quicker than others. Within an industry, you may find a company or a few that will lead the way, as happened with a few Wall Street banks that went with us. Hopefully others follow. Once we land that first account and get a reference, it can snowball.
How do you convince a retail bank that there are synergies between what you may have proved on trading floors and what you can do for them in a very different side of the financial business?
That's the question. That's what we mean by selling across the enterprise. You obtain a foothold in one of these large companies, gain credibility, and go from there. A lot of our financial services growth this year is not on the trading floor. It's been in the back office, data warehousing, customer management, and back-end Internet-intranet applications.
We have a deliberate plan. We have what we call a five-by-five-by-five matrix of industries and applications: our five industry groups, of which financial services is one; five emerging markets (retailing, health care, oil and gas, publishing, and electronic commerce), and five horizontal applications that run across all those areas. If, for example, we have a back-office or data warehousing application in the financial market, we'll come in with key partners and system integrators. It's a much more sophisticated approach to marketing than in our earlier days.
