Price stays alert for its own crash Backroom: T. Rowe Price's technologies unit keeps the company linked to investors -- no matter what happens.

December 21, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

At 8: 30 a.m. on Monday, Oct. 27, Michael A. Goff grabbed a cup of coffee, settled into his chair behind his desk at T. Rowe Price Investment Technologies Inc.'s St. Paul Street headquarters and logged onto the computer.

A "hot message" shot across his screen.

"To advise: Volumes are very high and the swat team has been on full alert. Management from datacom and telecom are on site."

Goff, president of Price's Investment Technologies, had prepared for this day. After all, his group is the brawn behind Baltimore-based T. Rowe Price Associates Inc., and its mission is to keep the nation's 11th largest mutual fund company humming -- at all costs.

The phone system had been "stressed" to make sure that it could handle thousands of calls. Spare computers were at the ready so managers and supervisors could use them to quickly help anxious customers. And a plan was in place to keep Price's trading desk open. If the desk went down, T. Rowe Price Associates's credibility with customers could be severely damaged.

"The hope was that nothing would happen," Goff recalled. But something did. "It went crazy," he said.

At Monday's opening bell, the Dow Jones industrial average slid headlong, following the overnight plunge of Hong Kong's stock market.

Calls from investors in Price funds and 401(k) accounts across the nation began pouring in, but volumes didn't reach alarming levels until about 1 p.m., when the Dow had fallen about 200 points. Goff was informed that AT&T's lines were clogged and some customers were getting busy signals. His group quickly added capacity by rerouting trunk lines used by Price's discount brokerage operation.

The technology group raced to add 50 more computer workstations. Employees in marketing, legal, accounting, finance and even some managers were tapped to answer phones. They were automatically routed customers with nontechnical questions.

Meanwhile, an even more critical problem had erupted: The trading desk was threatened when stock quotes supplied by an outside vendor were running 90 minutes late. Goff and his team limited some of Price's portfolio managers' access to the computer system so that every ounce of power could be used to keep the trading desk open.

When the fury finally ended that afternoon, the Dow had fallen 554 points, it biggest one-day drop in history. Price's 600 phone representatives had been swamped with 157,000 calls, more than five times the normal daily average. (There were even more calls the next day -- 194,000 -- when the Dow soared 337.17 points.)

"Phones got answered; the trading desk never went down. We basically answered every call that hit every one of our centers," said Goff, 38.

Technology is the backbone of the mutual fund industry, especially companies such as Price that market their funds directly to investors. If phones are not answered because they are overloaded, trades are not executed, and customers may take their business to a competitor. That is why companies like Boston-based Fidelity Investments, the Vanguard Group of Valley Forge, Pa., and Price pump tens of millions of dollars into technology each year.

Technology "is critical," said James S. Riepe, vice chairman of Price. "You can't compete on a national basis unless you can provide state-of-the-art services that people really expect."

$100 million budget

Underscoring that, since 1992 Price Investment Technologies has grown nearly sevenfold to 650 employees. By the end of 1998, it could add another 70 people. And its budget has jumped to more than $100 million, nearly eight times what it was five years ago.

Investment Technologies keeps Price's vast computer systems running so mutual fund managers, who handle $80 billion in assets, can quickly review their portfolios, and phone representatives can instantly pull up information on 6.2 million customer accounts.

The group does everything from making sure the company's e-mail system works, to designing software for retirement packages, to maintaining a complicated array of records on 3.4 million people who have retirement accounts managed by Price.

And if Price cannot offer and operate the latest technology, it could lose the race to the competition. Price, for example, was in the first wave of mutual fund companies to launch its own Web site on the Internet nearly two years ago.

"T. Rowe clearly has been one of the fastest growing direct purveyors of mutual funds," said John A. Hall, an analyst with BT Alex. Brown in Baltimore. "If this [technology] was not helping them, I don't think they would be able to grow as quickly."

It is not only crucial to have the technology, but it is even more important to keep it running.

When disaster strikes

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.