Empire Builder: Blackstone CTO William Murphy

“Steve, LT, and others resolved that Blackstone should invest more in technology, and they knew a traditional back-office role wasn’t sufficient, nor was it really suitable for the skills I bring,” Murphy says. “As we started talking about what we wanted to do, one of the first things was to change the department’s name from ‘IT services’ to Blackstone Innovations and Infrastructure, as a signal both internally and externally that we’re trying to think differently.”

Product Style
Words matter at a firm whose very name is something of a cryptogram: Schwarz, from Schwarzman, is German for Black; Stone comes from the Greek Petra, honoring the firm’s second founder, Pete Peterson.

But results matter more. Murphy wanted to do something different, bringing in a number of senior Capital IQ developers with him to pattern Blackstone’s technology thinking after product-style development, rather than reactive support. Recognizing that physical identity is also important, Murphy recently established a new dedicated home for Innovations and Infrastructure a few blocks up Lexington Avenue in Manhattan, with an open layout to foster collaboration.

“Where our design process was, we needed to back up three steps. Before, when a request would come in, IT would run around, work really hard, but not assess why the need was there to begin with. Now we can start with getting people in a room, where the first goal is simply to explain the function required in gruesome detail, so as to develop the right solution. Understanding ‘why’ is the only thing that I care about at that stage,” he says.

More often than not, that conversation has created efficiencies, removing several extraneous steps in the design’s flow, Murphy says. More importantly, though, it trains technologists to “see around the corner,” thinking about long-term continuity rather than fixing today’s problem, alone.

Tipping Point
In 2013, two features of Blackstone demand well-honed, strategic thinking—what Murphy analogizes as a “farming” rather than “hunting” mentality. The first is the firm’s diversity: Today’s Blackstone is a menagerie of advisory and alternative investment businesses, built both organically and through acquisition. Traditional private equity now represents only about a quarter of the firm’s managed assets.

The tipping point, Murphy says, was the ramping up of Blackstone’s Alternative Asset Management (BAAM) and the acquisition of GSO Capital Partners, the firm’s $29 billion credit hedge fund, in 2008. Each requires a different kind of technology approach.