Customer Solution Case Study
/ / Financial Services Firm Saves $1.7 Million, Speeds Development 50 Percent
Overview
Country:United States
Industry:Financial Services
Customer Profile
Headquartered in Calabasas, California, Countrywide Financial Corporation is a leading provider of consumer and business-to-business financial services.
Business Situation
The company needed to replace its AS/400-based tax services solution with an alternative that offered greater flexibility and reliability at lower cost.
Solution
Countrywide migrated its tax applications to Microsoft® Windows Server SystemTM, including the Microsoft .NET Framework.
Benefits
Cuts costs 50 percent, by U.S.$1.7 million
Speeds development up to 50 percent
Enables disaster-recovery site
Increases productivity by 43 percent
Increases transaction speeds up to 1,600 percent / “The reduction in TCO by choosing Windows Server over AS/400—both the initial savings and the ongoing reduction in maintenance—is tremendous, freeing resources that we can deploy strategically.”
Paramjit Chumber, Senior Vice President and Chief Information Officer, Countrywide Tax Services
The Tax Services subsidiary of Countrywide Financial Corporation was adding more than 100,000 new mortgage-customer tax records to its database every month—and stressing its AS/400 system capacity. A new AS/400 would be a prohibitive expense and still leave the unit without the flexibility and reliability it wanted. The company chose a solution based on Microsoft® Windows Server SystemTM, including the Microsoft .NET Framework. The company achieved first-year savings of U.S.$1.7 million—more than 50 percent—and expects annual savings on maintenance of $500,000. The development team got up to speed in one-third the time it would have taken on competitor systems, and continuing development is up to 50 percent faster. As the company takes increasing advantage of Microsoft technologies—for example, adopting Microsoft SQL ServerTM 2000 Enterprise Edition (64-bit)—the solution’s performance continues to climb.
Situation
Since its founding in 1969, Countrywide Financial Corporation has become a leading provider of consumer and business-to-business financial services, including mortgage banking and diversified financial services in domestic and international markets. Headquartered in Calabasas, California, Countrywide is a member of the S&P 500, Forbes 2000, and Fortune 500. Its loan servicing portfolio in 2004 was a record U.S.$838 billion.
As rewarding as that growth is, it brings with it new challenges. Take the company’s Countrywide Tax Services Corporation (CTSC), which is responsible for tracking real-estate tax payments for all of Countrywide’s six million domestic mortgage loans—a portfolio that’s growing by approximately 100,000 loans every month. “Tracking” tax payments means establishing and maintaining relationships with every real-estate taxing authority in the country, obtaining real-estate tax bills for every property for which Countrywide holds the mortgage, confirming the correct property address and owner for all those bills, setting up “tax lines” that record tax escrow payments for the mortgages, and ensuring that the taxes are paid, either out of the escrow payments or directly by the property owners.
The company had been managing these functions on an AS/400 system. One of CTSC’s key concerns was the centralized nature of AS/400 processing. In addition, the AS/400 was being shared by many units and CTSC’s portfolio was growing rapidly. Countrywide was close to using all available resources on the AS/400, and CTSC’s only choice in that environment was to purchase another AS/400 solution for an estimated cost of almost $2.3 million. Beyond the expense, CTSC couldn’t know whether it would be buying much more computing power and resources than it needed for the next few years, or whether it would quickly outgrow the additional system. Buying exactly the right amount of computing power and, thus, maximizing the return on its investment, seemed difficult to project on the AS/400 platform.
“I wanted a solution that could scale with the increase in Countrywide’s portfolio growth and maximize the ROI on my investment at the same time,” said Paramjit Chumber, Senior Vice President and Chief Information Officer, Countrywide Tax Services. These issues were also complicating CTSC’s interest in building a remote mirror site to be used in disaster recovery.
Similarly, the use of the AS/400—which the Tax Services subsidiary shared with other Countrywide units—restricted all the units to an eight-hour nightly window for batch jobs. During peak seasons, jobs that could not be run in that time had to be delayed until the following day or night, thus creating operational risk.
Another problem stemmed from the unit’s tax applications, which were engineered based on physical loan files. Several departments needed these files to service a loan, creating logistical difficulties and bottlenecks, as well as requiring four staff members to manage the documents. The green screens customary with the AS/400 permit the type of graphical user interface that CTSC’s employees were accustomed to with other applications—especially applications based on the Microsoft® Windows® operating system. Nor did those AS/400 screens enable the productivity possible with Windows-based applications, for example rendering images.
Solution
Chumber and his colleagues knew they wanted a distributed computing solution to overcome the problems inherent in their AS/400 “mini-mainframe” infrastructure. They first considered and rejected several software solutions on the basis of performance and the time it would take to develop the skills to implement them. Instead, they chose to build their solution on Microsoft Windows Server SystemTM integrated server software, including the Microsoft .NET Framework, the foundation of the next generation of Windows-based applications that are easier to build, deploy, and integrate with other networked systems. The solution begins replacing the AS/400 with four Hewlett-Packard DL740 computers, four Hewlett-Packard DL580 computers, and two Itanium II computers clustered in active/passive mode, with all computer servers running the Microsoft Windows ServerTM 2003 operating system.
To test the waters with .NET Framework development, Chumber asked his lead developer to create a “tax line setup” component to render images of tax bills onscreen. The result was a Microsoft ASP.NET application created in 10 days using the Microsoft Visual Studio® .NET 2003 development system and Microsoft Visual Basic® .NET development language.
CTSC chose to start its development with Visual Basic .NET because of its developers’ familiarity with Visual Basic 6.0. It then adopted the Microsoft Visual C#® .NET development language to exploit its inherent XML integration features and to ensure that its developers made the transition to the object-oriented techniques offered by C#. In 20 months, CTSC has developed more than 15 Tax Services applications for Windows Server System and the .NET Framework and plans to migrate the few remaining AS/400 and Visual Basic 6.0 applications to the new platform as well. This effort has included the creation of an enterprise-class Data Model, implemented in Microsoft SQL ServerTM 2000 Enterprise Edition, and a supporting Business Process Re-engineering (BPR) project. In the meantime, CTSC uses Microsoft ADO.NET technology to pull data from those remaining AS/400 applications into the Windows platform, as needed.
Adopting the 64-bit Version of SQL Server
After considering DB2/400 for its database, Countrywide chose SQL Server 2000. “We tested the two databases and found comparable performance,” says Chumber. “We chose SQL Server because it offered lower TCO and greater integration with our Windows Server System and .NET technology.”
Countrywide tested SQL Server 2000 Enterprise Edition(32-bit) and found it scaled well to support more than 1 terabyte of data—far more than the Tax Services unit needed for its database, which amounted to 500 gigabytes. The company later tested and migrated seamlessly to the 64-bit version of SQL Server 2000 Enterprise Edition, boosting transaction speeds by up to 1,600 percent.
Countrywide expects to continue to follow the SQL Server roadmap when Microsoft releases the 64-bit version of Microsoft SQL Server 2005 Enterprise Edition. With the software’s increased scalability and performance, Countrywide expects that SQL Server 2005 Enterprise Edition will scale to support a database that will likely grow to 2 terabytes or more over the next few years. When it adopts SQL Server 2005 Enterprise Edition, Countrywide will reconfigure the servers to active/active mode in order to load balance the throughput and maximize its infrastructure investment.
Creating Web Services
CTSC has taken advantage of Visual C# .NET and the .NET Framework to create two Web services that form the primary interactive link to the Java hub in Countrywide’s lender services division. One Web service, used in the Tax Service’s “tax line setup” application, moves account data for new Countrywide mortgage customers between the lending services database and the tax services database, which is based on Microsoft SQL ServerTM 2000 Enterprise Edition. The result is that the customer’s account is matched to the proper tax line, ensuring that the correct amount of tax money is collected for escrow during the contract closing on the property. In its first few months, the Web service processed more than one million transactions.
The second Web service that CTSC created is a direct parsing service that accepts customer addresses from the loan servicing solution, matches the address to the standard address in its property database, and returns the confirmed or corrected address to the loan servicing solution.
More Ways to Integrate
Beyond SQL Server, Countrywide is also taking advantage of other key members of Windows Server System, including Microsoft BizTalk® Server 2004, Microsoft Office Project Server 2003 Reporting Services and Microsoft Office SharePoint® Portal Server 2003.
BizTalk Server 2004 is the third Microsoft technology—in addition to ADO.NET and .NET-connected Web services—that CTSC uses to integrate its .NET-connected and Framework-based solutions to solutions elsewhere at the company. “BizTalk Server gives us orchestration functionality,” says Chumber. “That enables us to add workflow considerations to our integration.”
For example, Countrywide’s procurement department acquires real-estate tax bills from local governments around the country for properties for which it holds a mortgage, and matches those tax bills to its customer accounts. But because those tax bills are acquired just several times per year, rather than being continuously updated in real time, they will always miss Countrywide’s newest customers, those who take loans with the company after it receives a set of tax bills. CTSC’s “procurement exception handling” application is designed to identify these loans so that the corresponding tax bills can be obtained separately and processed in time to meet tax-payment deadlines.
Countrywide used BizTalk Server orchestration to provide the integration because the application must interact with several other CTSC applications, including those for tax line setup and disbursement of funds, and because the way it interacts with these other applications is dependent on workflow rules, which BizTalk Server orchestration supports.
“BizTalk Server orchestration allows us to prioritize the workload on a state-by-state basis, depending on the tax cycles and deadlines in each state,” says Chumber. “As processing moves from tax line setup to dispersal of funds, any accounts that were not properly setup can be sent back automatically for exception handling and correct setup, freeing staff from having to handle them manually. When the correction is handled by the application, the application then sends a message to dispersal authorizing the tax payment. We needed a messaging tool with a workflow component to manage all of that as it moves through our system—and BizTalk Server is that tool.”
Enabling Project Management, Collaboration
Project Server 2003 gives Countrywide’s Tax Services unit a way to manage the work of its 40 developers. They can report their time by project and task—each development project can have up to 500 tasks—with all of those reports rolling up into a comprehensive report that Chumber can access via the Microsoft Office Project Web Access interface. The Project Server 2003 solution replaces a system based on Microsoft Office Excel 2003 spreadsheets that required manual reconciliation. Custom reports have been added using Reporting Services to supplement Chumber’s chief information officer (CIO) dashboard.
Countrywide is using SharePoint Portal Server 2003 in two ways. First, it created an internal portal across departments, which allows all Tax Services employees to access employee manuals, procedures, CIO technology messages, organizational charts, FAQs, and other content. The second stage, still in development, will add collaboration and workflow functionality. For example, Countrywide plans to enable CTSC’s training department to not only publish information on upcoming training classes to the SharePoint Portal Server 2003 intranet, but also to enable employees to register through an automated interface that then sends class roster information to the trainer as well as sending advance class information, if any, to the registrants. Another example, also in development, will use the workflow and collaboration components in SharePoint Portal Server 2003 to track and report on all desktop and laptop assets within CTSC.
In the longer term, Chumber envisions that SharePoint Portal Server 2003 could be the basis for an external portal that allows taxing agencies and homeowners to conduct self-service inquiries. Integrating the portal with BizTalk Server would also enable external parties to kickoff workflow processes through the portal.
Benefits
The solution enables Countrywide Tax Services to save $1.7 million over the cost of an expanded AS/400 solution, to speed development by up to 50 percent, and to save $2.5 million in increased productivity.
Cuts Costs 50 Percent, Saves $1.7 Million
By migrating to the Windows platform, Countrywide Tax Services estimates it achieved first-year savings of $1.7 million—50 percent—over the cost of selecting an AS/400 infrastructure to meet its growing needs. That savings includes a one-time $1.2 million savings in hardware and software, plus continuing annual savings of $500,000 in maintenance allocations.
“The reduction in TCO by choosing Windows Server over AS/400—both the initial savings and the ongoing reduction in maintenance—is tremendous, freeing resources that we can deploy strategically,” says Chumber.
The move to Windows Server also enables Countrywide to plan its infrastructure investments more effectively, buying only as much additional infrastructure as it needs over the short-term, and scaling out with additional servers only as needs require.
Speeds Development up to 50 Percent
By adopting the Windows platform with the .NET Framework, Countrywide migrated its applications far faster than it could have done with Java, according to Chumber.
“If we had tried to train our developers on Java, it would have taken at least a year for our team to get the concepts and another year to become proficient,” says Chumber. “With Windows Server System and .NET, our lead developers were up to speed in three to four months and training the rest of our team. In 10 months after we decided to go with Windows and .NET, our entire team qualified as Microsoft Certified Professionals, with most earning either the Microsoft Certified Application Developer (MCAD) or the Microsoft Certified Solutions Designer (MCSD) certification.”
Chumber also estimates that his developers can create applications using Visual Studio .NET in 30–50 percent less time than they could using their previous development tools. The ability to reuse code, and to buy Web parts for less than the company would spend to create them, drive down development costs even more.
Enables Greater Reliability
Beyond lower cost and faster development, Chumber says that Countrywide is experiencing greater reliability thanks to its move to Windows Server System and the .NET Framework. For example, the Tax Services unit has created a remote disaster-recovery site in Texas that is a one-to-one match of its production site and always up-to-date within 15 minutes.
“Until we moved to Windows Server System and .NET, we didn’t have the technical ability to manage all of our data electronically and we didn’t have financial ability to set up a complete mirror site,” says Chumber. “From both business and technology standpoints, Windows Server System and .NET have enabled us to add this important level of reliability in the event of a disaster.”
Boosts Productivity 43 Percent, Saves $2.5 Million
Since moving to Windows Server System and the .NET Framework, CTSC has seen productivity increase 43 percent as measured by the number of loans it can process for tax purposes. That productivity gain has enabled Countrywide to avoid a 43 percent increase in staffing to handle additional business, saving the company $2.5 million according to Christopher Stock, Operations Manager.
As Countrywide continues to make increasing use of Microsoft technologies, the benefits to the company increase. The company has increased transaction speeds by 400 to 1,600 percent, depending on the operation, by moving from the 32-bit version of SQL Server 2000 Enterprise Edition to the 64-bit version. SQL Server 2000 Enterprise Edition 64-bit enables this increase because of its advanced memory addressability, bus architecture and cache, 64-bit data pathway, more-scalable symmetric multiprocessing, and optimal use of Itanium branch architecture to reduce execution time.
“We see our current solution as the beginning of the story, not the end of it,” says Chumber. “With Windows Server System and .NET, we have a platform that will deliver increased benefits to us for years to come.”