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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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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"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."¹

- Austin A. Adams, CIO of JP Morgan Chase.

"The combined firm found itself with an abundance of IT assets. This decision was like other business decisions related to the merger."²

-James Sciales, Spokesperson, IBM.

Introduction

In December 2002, JP Morgan Chase (Morgan), the second largest bank in the US in terms of net assets (Refer Exhibit I for the leading banks in the US in terms of net assets), signed a 7-year $5 billion outsourcing contract with IBM.

The contract entailed the transfer of a majority of Morgan's IT services infrastructure including data centers, help desks and data and voice networks to IBM. The deal also involved the transfer of 4,000 IT employees of Morgan to IBM.

Morgan wanted to take advantage of IBM's On Demand expertise (Refer Exhibit II for a note on IBM's On Demand).

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1] Dawn Kawamoto, "JP Morgan Chase Cancels IBM Outsourcing Contract," www.zdnet.com September 15, 2004.

2] Gretchen Morgenson, "IBM Shrugs off Loss of Big Contract $5 Billion JP Morgan Deal Was Touted As Vision of Future," The New York Times, September 17, 2004.

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