October 30, 2007

BS&T: As the world's largest credit union, does Navy Federal Credit Union face any unique challenges?

Herzberg: Like most financial institutions, our ATMs and online banking have to be available 24 hours a day. Our members literally access our home banking system from aircraft carriers in the Indian Ocean. But whereas most financial institutions or credit unions are regional and can process at night, we don't have that luxury since our 127 branches are located in many time zones and some are always open. In naval terms we refer to it as refueling a carrier at sea.

BS&T: What are some of the technology strategies and initiatives you are leading?

Herzberg: We recently developed a dashboard product that takes distributed data and deploys a single interface. We run the dashboard on our mainframe under a Linux partition. It was a huge initiative for us, and we've received a lot of accolades for it.

We're very interested in virtualization on the desktop. Traditionally, developers worked in a single environment on their PCs. But virtualization allows them to run another version or instance of the application and refresh the workstation immediately. That's a major help for development and debugging.

BS&T: Is IT at NFCU organized by line of business or centralized?

Herzberg: Our lines of business are centralized, and our ISD [information services department] works closely with the business. The business gives us the requirements, and we work with them to determine the best tools to get their job done and maximize the value to our membership.

BS&T: What is your legacy environment strategy?

Herzberg: The mainframe is not going away. Instead, we're taking this very powerful, fantastically stable box and reusing it. When I was at IBM (Armonk, N.Y.), I would see customers get rid of their mainframe and then come back and buy it again. Sure, you can buy a bunch of PCs and band them up and say you have a distributed environment. But is the environment stable enough to distribute workloads between multiple unused CPU cycles and then self-correct and self-heal based on the loss of additional servers? No, that's still evolving. It will happen, and when it does the mainframe will become another node on that distributed environment.

BS&T: What technology attributes does Navy Federal look for when selecting solutions?

Herzberg: We look for technology that scales both horizontally and vertically rather than technology that serves as a stopgap. We also look for fault tolerance and redundancy.

BS&T: Do you tend to buy or build?

Herzberg: Any technology evaluation includes a comprehensive buy-or-build analysis. For example, when we were evaluating call center solutions we brought in call center vendors and did a cross comparison, yet in the end determined that we should build the product. For other projects we'll decide that buying is better. We're always looking for ROI and what's the best in terms of time to market, stability and maintainability. All the pieces have to come together before we make a decision.

BS&T: What is the status of your IT budget?

Herzberg: I see our IT budget increasing. I'm not sure I've seen very many IT budgets shrink other than as the result of mergers and acquisitions. I see our staffing increasing as well.

BS&T: Is it difficult to find IT talent?

Herzberg: It can be difficult, depending on the skill set we are looking for. But Navy Federal is well-known in the community for having a very stable work environment, so we attract prospective employees. Our human resources group is constantly looking at recruiting from a variety of sources, such as universities and the government. In fact, we have several jobs that we constantly keep open. If HR finds someone with those skills, they bring them in. We keep HR very busy.

BS&T: How do you retain good people? Does working in bleeding-edge technology help?

Herzberg: Employees are psyched about using the newest technology. That, and the camaraderie of working toward the common goal of serving members, is key. We have a lot of long-term, tenured employees at Navy Federal. If you're here less than 15 years, you're considered new.

BS&T: What kinds of organizations -- financial institutions or others -- do you view as key competitors?

Herzberg: We compete with everyone. I even envision Home Depot (Atlanta) as our competition since they can basically offer home improvement loans to customers.

Our sponsor is the Department of the Navy, so we do have some restrictions as to who can do business with us. We are very customer-centric and constantly look at how we can help our membership.

BS&T: Do you have a large share of members' wallets?

Herzberg: We have a good loyalty base among our members. Like any financial institution, we want to be our members' primary financial institution, and we work very hard to make sure we treat our existing members in an excellent manner. We have very competitive rates and offer lots of different products geared toward our military members, such as Active Duty Choice mortgage. Since we're owned by our members, we want to give back to them in the form of better rates and better products.

BS&T: What sort of personal career challenges do you face?

Herzberg: It's a challenge to keep up with the latest technology and make decisions about what is a flash-in-the-pan technology and what is a lasting technology that will add value to the company. How do you determine the value? Should you wait for the product to mature more? Having an ROI model is the key, but you continually have to reevaluate it.

BS&T: Any career advice?

Herzberg: When you take the elevator to the top just remember to send it back down. That's one of those things I really try to focus on: promoting and enhancing the careers of my employees while planning for attrition and helping employees grow.

My other advice is to spend more time with the family. I understand that there are only 24 hours in a day, but on your deathbed you're not going to wish you worked an extra 20 hours per week. You're going to wish you spent more time with friends and family. --Lisa Valentine

Executive Resume:

Name: John Charles Herzberg

Age: 44

Title: Vice President, Web Development and Technology

Education: San Jose State University with a bachelor's degree in finance and a minor in economics.

Last Job: IBM

Hobbies: Herzberg works on intellectual property patents in areas such as distributed computing and human foot stability.

Contact:

Jennifer Sadler
Public Relations Manager
Navy Federal Credit Union
703-206-3137
Jennifer_sadler@navyfederal.org