JP Morgan Chase-IBM - The Outsourcing Journey
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Case Details:
Case Code : ITSY047
Case Length : 12 Pages
Period : 1999-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : JP Morgan Chase
Industry : Financial Services
Countries : US
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background Note
JP Morgan's history can be traced back to the late 1800s, when an American businessman named Janius S. Morgan, worked as a merchant banker for three decades in London. In 1890, his son Jack Pierpont Morgan (Pierpont) took over the reins of the business and consolidated the firm's European and American interests...
Technology Management
Technology played a key role at JP Morgan. The entire gamut of financial
services and banking business from creation of novel products/services,
introduction of the products in the market to ensuring client satisfaction was
influenced by technology...
Outsourcing to IBM
Valued at over $5 billion (Refer Exhibit III for other mega outsourcing deals),
this deal was the largest-ever computer services outsourcing deal in the
financial services sector...
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Merger with Bank One
In July 2004, Morgan bought Chicago-based Bank One Corporation for $58 billion
in stock. Hailed as one of the largest mergers in the banking industry in the
US, it created an entity with combined assets of $1.1 trillion...
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Cancelling the Deal
In August 2004, Morgan cancelled the outsourcing deal with IBM. Commenting on this decision, Adams, who took over as Morgan's CIO after the merger with Bank One said,
"We believe managing our own technology infrastructure is best for the long-term growth and success of our company as well as our shareholders. Our new capabilities will give us competitive advantage, accelerate innovation and enable us to become more streamlined and efficient."...
Implications for IBM
IBM downplayed the cancellation of the deal by Morgan. In its filing with the US
Securities and Exchange Commission (SEC), IBM stated that since the contract was
still in the early stages of deployment, IBM was continuing to invest in the
engagement... |
Exhibits
Exhibit I: Top US Commercial Banks by Assets (Based on 2002 Data)
Exhibit II: IBM: On Demand
Exhibit III: Billion Dollar Outsourcing Deals
Exhibit IV: Jp Morgan Chase Technology Council
Exhibit V: Jp Morgan Chase - Revenue from Business Segments
Exhibit VI: Bank One Corporation - Revenue from Business Segments
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