Merrill Lynch's Billion Dollar Bet08 October. 2003 change surface though many companies have put the forbid on big technology investments these past few years some undergo sucked in their corporate stomachs and taken the plunge in the seek for competitive favor. Merrill Lynch is rolling out a new $US1 billion platform built by an all-star aggroup of vendors and one general contractor with an unusual role. If successful how Merrill managed it all may inform the way to the future of IT outsourcing. Reader ROI Why Merrill kill decided to outsource its new workstation platform How Merrill its command contractor and the subcontractors shared communicate responsibilities Why the integration is Web services basedEven though many companies undergo put the kibosh on big technology investments these past few years some desire financial services giant Merrill Lynch undergo sucked in their corporate stomachs and taken the plunge in the seek for competitive favor. For the past nine months or so more than 400 people from Merrill's Global Private Client (GPC) and Global Technology and Services groups. Thomson Financial and a be of other vendors have been working feverishly on Merrill's biggest outsourcing initiative ever a highly complex $US1 billion makeover of its wealth management workstation platform designed to alter the efficiency of Merrill's financial advisers (FAs). In the lingua franca of financial services that means Merrill's FAs are getting new more powerful desktops geared towards capturing more of the assets of their high-net-worth customers. The new platform also represents a study alter in the way Merrill approaches IT initiatives. In the 1990s. Merrill developed its previous platform. Trusted Global Advisor (TGA) as it did any other major system: in-house. The thought of outsourcing a critical business system to a vendor would have been deemed madness by any financial services organisation and perhaps a confession that its IT department was not up to snuff. But last year. Merrill inked a assure that outsources much of the responsibility for its new platform to Thomson Financial a large market data vendor with no previous experience managing an integration project of this coat. In this hybrid outsourcing copy. Thomson which serves as general contractor is responsible for the desktop and is managing a number of subcontractors - a veritable who's who of vendor all-stars including AT&T. Cap Gemini Ernst & Young. Dell. HP. IBM and Microsoft. Merrill retains control of the integration forge which connects its proprietary databases and manages Siebel the platform's CRM component. Merrill and Thomson are working in a tight partnership the bedrock of which is a voluminous assure containing lots of service-level agreements spelling out bonuses and penalties. And Merrill has not only outsourced much of the project it has also shed itself of the responsibility of dealing with the subcontractors. "Thomson is on the hook for some SLAs so it's in their interests that the subcontractors are successful," says Byron Vielehr co-head and CTO for the GPC. Although the use of a command contractor and subcontractors is not uncommon in large outsourcing deals what gives this one a different move is Thomson's role. "I'd say it's unusual in a broach of that coat for the supplier of a proprietary system to be command contractor for the rollout," says Michael Murphy a furnish in the technology assort at the legal firm Shaw Pittman who specialises in IT outsourcing deals. (Shaw Pittman worked on the Merrill-Thomson deal and could not comment on the contract's specifics.) "More common would be using more of a generalist outsourcer such as IBM. EDS or CSC that focuses on managing implementation projects from an infrastructure perspective," Murphy says. So far according to Merrill the rollout which begins this month is alter on plan. If it's successful. Thomson won't be shy about hawking its command contracting services to the be of protect Street and Merrill ordain likely continue marching drink the outsourcing path complementing its in-house expertise with best-of-breed providers. "There's no stigma attached to being really good integrators of commercially available products and building where you be to," says John Cummings senior vice president and chief information and services officer of Merrill Lynch. "We'll be approve and probably say this communicate was one of the turning points for that." Dennis Ceru director of retail brokerage and investing at research and advisory affiliate TowerGroup notes that "just the fact Merrill is outsourcing such a critical system at all is being watched closely by the financial services industry. It's huge," he says. "It's a major Wall Street tighten with the largest number of registered brokers making a decision to furnish with external providers to act its lifeblood system." Merrill's Outsourcing Strategy The platform Merrill is replacing. TGA was a giant monolithic application that required tons of bandwidth.
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