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JERRY McELHATTON
senior executive vice president
MasterCard |
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McElhatton
leads MasterCard’s IT behemoth with 1,700 full-time employees, $150
million annual payroll in a new state-of-the-art $136 million facility.
By Kevin Kipp
If MasterCard International were a manufacturer, Jerry McElhatton’s
piece of the company would be the factory. But the company’s bread
and butter is information. Lots and lots of information.
MasterCard’s $136 million Global Technology and Operations Center
at WingHaven in O’Fallon, Mo., processes 40 million credit card
authorizations a day. The facility also sorts out settlements for
25,000 members, and clears roughly $1 trillion worth of purchases
each year—$11 billion on a busy day.
“Those three core functions—authorizations, settlement and clearing—is
how we make 65 percent of our money at MasterCard,” says McElhatton,
senior executive vice president in charge of MasterCard GTO. “We
have all of the technology and all of the support—the member services,
everything from publishing manuals to security to website usability.
What we don’t have is marketing, administration, finance, sales
or legal. That’s in New York.”
MasterCard’s “members” are the customers, all those banks that don’t
have to each set up an individual payment system tied into 32 million
merchant locations. GTO built that network for them.
Of MasterCard’s 4,000 employees worldwide, GTO employs 3,200. Significant
pods of workers are in Singapore, Brussels, Australia and O’Fallon.
Seventeen hundred full-time employees and roughly 400 contractors
and temps work here. The local annual payroll is around $150 million.
Those are big numbers, far flung, and requiring management expertise
of both carbon- and silicon-based systems.
Asked if McElhatton is up to handling it all, Paul McKee, whose
McEagle Properties is the master developer of WingHaven, makes riposte:
“The first thing I’ll tell you is he’s older than me.”
McKee quickly turns informative. “I got to know him from doing the
deal. What he says, he does.”
The “new urbanism” WingHaven (developed, McKee points out, with
McBride & Sons, Fred Weber Inc. and Doug Brown—not just McEagle)
is widely credited with offering the virtues that MasterCard found
irresistible when it was looking to consolidate four separate St.
Louis facilities in 1998.
Meanwhile, word on the arterial is that McKee has turned away a
SIGNIFICANT tenant or two who didn’t sufficiently buy into his trademarked
“live, learn, work and play” mantra.
McKee likes McElhatton’s management style: “The way he treats his
people makes MasterCard a great place to work. It’s just outstanding,
and it’s because of him. He genuinely treats his people as partners.”
McKee also likes the way McElhatton treats his family. “He’s been
married to the same woman all his life,” McKee says. “He’s an all-American
family man, and he came up the hard way.”
Being a cop can be hard. McElhatton started his career as one of
his hometown’s finest. Born and reared in Columbus, Ohio, McElhatton’s
mom was a homemaker. His dad was a manager with Kroger.
McElhatton was in law enforcement for three-and-a-half years. He
said it was rewarding—“You see a lot of things.”—and he kept busy.
When not helping people or breaking up brawls, he attended night
school at Franklin University. And he met his wife through a friend.
They have a son and two daughters, now grown.
“After I got my degree in industrial engineering and management,
I started to work at Westinghouse as a computer operator,” McElhatton
says.
According to his bio, McElhatton’s first executive management positions
were in operations and technology with Cleveland-based Ameritrust
and Bank One in Columbus. He also served for 10 years as president
and CEO of First Republic Bank Services Corporation.
Before joining MasterCard in 1994, McElhatton had his own business,
Dallas-based Payment Systems Technology & Consulting Inc., where
he was president and CEO. The firm specialized in “process reengineering
and technology design,” and it revamped the processing and operating
systems for Midland Bank, one of the largest banks in the United
Kingdom.
“The guy who hired me at MasterCard was the same guy who hired me
at Midland,” McElhatton says. “I divested my company, because I
felt it was an opportunity to do great things in the payment industry.”
Great things like MasterCard’s Systems Enhancement Strategy. The
$160 million effort completely overhauled the GTO processing platform,
the software and hardware that handles those three core functions.
“It caused MasterCard to leap ahead in terms of flexibility, scalability
and speed,” says Linda Locke, vice president of global communications
for MasterCard international. “Thirty-seven percent of most large
IT projects are completed on time and on budget. With Jerry’s leadership,
the Systems Enhancement Strategy was completed a little ahead of
schedule. It hit the top of the lists for successful completion.”
McElhatton says planning for the project began in 1995. That led
to five years of working on applications. The work wrapped up in
June.
McElhatton says, “We have really differentiated ourselves from our
major competitors because of these capabilities. We are more cost-effective,
and we have additional quality control. It also improves our time-to-market
advantages. We can introduce new products, services and software
releases as available, instead of twice a year.”
Another payoff for MasterCard members is their enhanced ability
to seek competitive advantages. “A credit card is a credit card,”
McElhatton says. “Each of our members is trying to do something
unique. They might offer rewards, variable interest rates or a variety
of other perks. It’s up to the card members how they want to structure
that. We need to be responsive and our systems can support them.
“The invoice comes from the bank,” McElhatton continues, “but our
job is to capture and report the data, to provide them with capabilities.
We provide the data so they can do some things they couldn’t do
otherwise.”
Complicating the strategic overhaul was the need to interface with
members and their technologies. “That was an interesting challenge,”
McElhatton says. “When you work with members, you have to work with
their schedules, too.”
McElhatton says the secret to the program’s success was “breaking
it into manageable pieces with measurable milestones. You have to
break it apart. If you just throw it in a pot, you’ll run out of
money. You get what you inspect, not what you expect.”
One of the other great things McElhatton brought to the technology-dependent
payment industry is shirtsleeve English. He used it to describe
just what authorization, clearing and settlement are.
“When you’re standing at the terminal in the grocery store, from
swipe to printing is authorization,” he says. “There’s a lot that
sits behind that. The message goes from the merchant to his bank.
The bank’s computer looks at it and asks, ‘Did we issue this?’ Probably
not, so then the message comes here. We look at it, see where it
came from and send it to the card user’s bank. They approve it,
send it back to us and we send it back through the pipeline.
“We want it to be fast and accurate,” McElhatton says. “We want
you to get your approval, so you continue to use the card. Our piece
of that takes an average of 130 milliseconds.
Clearing, McElhatton says, means “capturing the data about the transaction:
You spent $50 at a store. It’s huge to get that accurately to banks,
regularly and continuously, noting credit limits and protecting
against fraud.”
MasterCard has teams whose job is to investigate and protect the
interests of cardholders, merchants and banks, “stopping fraud before
it happens,” McElhatton says. “We use neural technology that can
look at usage patterns, alert the bank if it sees a questionable
pattern and then they can take the steps necessary.”
MasterCard can also alert its members to scams such as a new card
applicant using the address of a “vacant lot, the penitentiary or
some other undesirable location.”
Settlement according to McElhatton: “At end of month, you write
your check. You send it to the bank. They capture the money and
send it to MasterCard, and we send it to the merchants’ banks.”
Maintaining the reliability of the network and those three functions
is crucial. In fact business continuity planning has a sufficiently
high priority that the GTO facility has enough back-up power to
run a city of 30,000 people. Additionally, the company built a $50
million back-up facility at an undisclosed location.
The evil perpetrated on Sept. 11, 2001, focussed attention on the
need for disaster planning, but it has been a long-standing priority
at MasterCard, even if to protect against less sinister calamity
like earthquakes.
“This business is about convenience, responsiveness and availability—anytime,
anywhere,” McElhatton says. “If it isn’t, the card goes to the back
of the wallet, and we never want that to happen.”
After all, if authorizations took 130 seconds instead of one-one
thousandth of that, people might return to using currency of all
things. Cash and checks, McElhatton says, are his strongest competition.
“That’s also our biggest opportunity,” he says, “and we’ve opened
a lot of new acceptance channels: grocery stores, government offices,
the post office...you can even pay taxes with MasterCard.”
What’s more, he adds, debit cards are replacing many checks and
in-bank transactions. As part of its positioning to maximize its
opportunities, MasterCard also serves 880,000 ATMs through its Cirrus
system.
Over at MasterCard’s usability lab, Joe Caro is vice president of
internet technology services. One of the challenges he solves for
MasterCard is how to make navigating their websites easy.
“You can’t touch your users, and you can’t train them, so you’re
developing sites in a vacuum,” Caro says. “The idea is to make sites
as intuitive as possible, so no training is necessary.
“Some sites you want to leave right away,” he observes, “and other
sites make you say, ‘I wish they were all built like this.’”
Consumers can visit MasterCard.com to find and apply for a MasterCard
or look for the number to report a lost or stolen card or even look
for good deals shopping.
“Regardless of the reason,” Caro says, “we want them to be able
to get the information they need quickly. If they find a website
too confusing or difficult, they’ll leave to go to a competitor.”
MasterCard also maintains an extranet for use by bank employees,
plus other sites that might help members identify fraudulent transactions,
for instance.
“What we’ve tested ranges from on-line banking to card-related sites
to bank intranets for employees’ own use to ATM machines to wireless
phone screen options,” Caro says.
After running tests with 500 real consumers over a period of a couple
years, Caro says, “We believe we know more than anyone in the world
about how people use those sites. It is just a natural extension
to provide usability services to the members for their own consumer–oriented
websites.”
Additionally, the tests have been conducted on several continents.
Caro says, “We found that good internet practices are not culturally
dependent. That’s not what we expected.”
Testing entails participants visiting a website with a mission,
like selecting a MasterCard. Participants are recorded describing
what they are doing, why they are doing it and any impediments or
frustrations they encounter. The sessions are videotaped and provided
to the usability client with a report summarizing and highlighting
findings and recommendations.
Caro says after testing five users, his group can usually develop
10 to 30 items to improve a website. His lab has also developed
more than 200 examples of “best practices”—what to do and what not
to do—from commonly used sites.
“We train our developers to use these and offer the manual to member
banks’ website developers, so they can use best practices,” he says.
The usability staff may be relatively small. But the resident talent
also illustrates one of the reasons MasterCard is still in the St.
Louis metropolitan area.
“In 1997, we began looking and laying out a plan to move from four
facilities that were bursting at the seams into one,” McElhatton
says.
“We have a tremendously talented group of people,” he says. “They
are extremely committed. They’re smart and they’re good. If we had
moved 730 miles to Dallas, we’d have risked losing very valuable
and very experienced people.”
McKee recalls, “We competed with 46 other cities over two years
and it came down to three sites in O’Fallon and Los Colinas, a successful,
world-renowned, master-planned development in Dallas.”
And remember 1998, McKee says. All the IT people were tied up with
Y2K problems. “MasterCard’s decision validated that St. Charles
County and O’Fallon had the knowledge workers, the kind of employees
they needed.”
“The state, the city, the school district and the RCGA all appreciated
the impact this would have on both the tax base and employment rolls,”
McElhatton says. “Certainly they helped our decision.”
“That decision validated the St. Louis region and St. Charles County
as a business site and validated our LifeWorks concept at WingHaven:
Live, learn, work and play in the same community,” McKee says. “This
was a huge decision for us, and we were thrilled.”
McElhatton says, “We ended up with 550,000 square feet on 52 acres.
Construction began in 1999. We moved in 2001. Instead of a 15-to-18
percent turnover that we could have expected from moving to Dallas,
it was less than two percent.
“We have a great facility,” McElhatton says, “and we can expand.”
Kevin Kipp runs Bubble Communications, a creative services and
community relations firm in St. Charles.
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