Case Studies

Ed Kessler

Chief Technology Officer<br />Capitol Bancorp<br /><a href="" target="_blank"></a><br />2007 Revenue: <strong>$208 Million</strong>
This story appears in the September 2008 issue of BizTech Magazine.

Photo: Glenn Triest

How would you rate your IT budget this year?
Business for most companies in the financial sector is very tough. Profits are down, but our company is still profitable. While some of our markets, such as Michigan, have been hit hard by the housing and real estate downturn, because we do business in 17 states that are geographically dispersed, our business is fairly stable across the board. Of course, management has been asking us to prioritize more and defer some buying.

We haven’t stopped any major projects, but we are thinking twice before signing on for three- and four-year maintenance contracts. We’ll go for a one-year agreement more often than not at this point. We’re also looking at leasing options, rather than putting capital up front. Anything we can do to spread out our cash flow is encouraged.

What is the top technology that you can’t scrimp on?
The one technology we need to move forward on this year is server virtualization. If this project is deferred for some reason it would really set back our plans. Server virtualization is a foundation technology. Through virtualization, we can consolidate our servers instead of replacing individual servers, improve our storage management and save on disaster recovery costs. It acts as a springboard for
application delivery.

Virtualization offers a vehicle to explore central support for applications, which is typically less expensive provided we can sustain performance. We’re looking for virtualization to enhance our ability to react quickly, which is critical in difficult business environments.

How are you measuring ROI on the virtualization project?
I feel very positive about our ability to deliver a strong ROI on server virtualization. We compared our investment with what we would spend on a traditional server farm. We then figured the cost of the replacement servers, the cost of a separate test environment and then disaster recovery costs and compared them with the cost of a virtualized environment. When we compared the two, server virtualization came out with a positive ROI.

(good, not great)
"Our IT budget has not been hit too hard yet."

What is another important technology trend affecting your business?
The other area we are researching is network monitoring and management. We need to be proactive in automating many of those functions. While an intrusion detection system is a start, it’s much more than just an IDS. I want automated activity-monitoring services managing the entire network. We need to know immediately when a web server goes down, if there’s something wrong with the database servers and if the Active Directory servers are functioning properly.

What’s your advice to other IT managers?
It’s really important to scrutinize and prioritize. Think hard about which project will bring back the best return on investment. In the past, I may have taken a chance on a new technology, but in this business climate, I’m more apt to go with the sure thing. For example, when it comes to virtualization, I know we’ll hit our numbers, and if we don’t, I know we’ll be very close. While server virtualization is a safe bet, I think that desktop virtualization is a much riskier proposition. I think it’s very promising, but it’s something I would continue to research because it’s unproven and the ROI is not a sure thing.



Ed Kessler is the chief technology officer for Capitol Bancorp, a network of community banks in 17 states based in Lansing, Mich. In his role, he is in charge of overseeing new and existing technology initiatives for the company. Kessler has more than 30 years of experience in banking and business technology. Before signing on with Capitol Bancorp, Kessler spent nine years as the CTO for Republic Bank.

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