IT Outsourcing: Merrill Lynch's Billion Dollar Bet

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The workstation connects 18 legacy back ends (running applications such as HR, various accounting systems and the TGA database) to the new platform. The IF is Web services-based, using Microsoft’s .Net, and Vielehr asserts that it’s one of the largest Web services implementations ever. "The volume of data that will blow through is substantial," he says. Vielehr allows that going with Web services was a big decision, but not that hard. The TGA platform, which involved lots of point-to-point connections, was hard to scale and had very little standardization. Using Web services to build the middle tier allowed the back end to integrate smoothly with the desktop and also made it easier to integrate the network, hardware and applications. "If we had done this from a proprietary perspective, we would have perpetuated a lot of the problems we had in the past," says Vielehr.

The development schedule has been nothing short of hellacious. After the contract was signed in December 2002, the project team was given six months to bring the new platform to life in order to get the FAs out from under the clunky TGA platform as soon as possible. (The compressed schedule also saved Merrill money.) Teams formed in January, then Greenberg—who refers to himself as the hired gun—was brought over from Merrill’s investment management group to manage the project. Greenberg also serves as the Thomson relationship manager, a two-headed role that basically means he eats, breathes and dreams about the new workstation. His umbilical cord to the project extends to happy hour: Greenberg recently took some of his team out for margaritas, but, while sitting with his cohorts at the table, had to phone in from the bar for a conference call.

Ramping Up to the Rollout

Throughout spring and early summer of 2003, the integration of the workstation and the online sites proceeded. Piloting in Merrill’s Hopewell, N.J., campus began in August, to be followed by select branches in October. A full production rollout will begin shortly after piloting is completed.

The hope is that the new workstations will make life easier for the company’s 14,000 FAs. The new Siebel CRM system, the client management part of the platform that sits on one of the station’s two screens, provides a 360-degree financial view of clients: their assets, performance profiles and transaction history. Unlike the TGA system, where client or prospect information continually needed to be rekeyed into different applications, the new system is supposed to have information pre-fill into all forms. Also, where previously an FA might have needed to bounce between as many as 18 screens to get information from TGA, now client information integrates seamlessly among applications. So, for example, an FA could instantly create a client list for all those holding DaimlerChrysler stock and alert them when the share price dropped or rose a predetermined amount.

While client information fills the first screen, the other runs Thomson’s Thomson One application. That app contains market data, news feeds, portfolio management tools and calculators, providing the information and functionality an FA needs to do his job. Another key feature of the platform is that the new online sites are fully integrated with the FAs’ desktops and the FAs can mouse between the Siebel screen and Thomson screen. "You talk to any adviser at any firm and they’ll tell you that the lack of integration between applications is their single biggest impediment to efficient practice management," says Jaime Punishill, a senior analyst who follows wealth management at Forrester Research.

Merrill hopes that FAs will be able to compete more effectively for high-net-worth customers (see "The Quest for the High-Margin Customer," Page 52)—and maintain existing ones—by giving FAs better, faster information, while giving clients the same, real-time view that their FAs see on their desktops. Theoretically, the FAs will also be able to spend more time with these customers, and not just because of the new platform—all calls from less profitable clients (those with less than $100,000 in assets) will be routed elsewhere. As happy as the bigwigs at the GPC are for their FAs, they’re downright giddy at the prospect of the money they’ll save with the new system. According to Vielehr, annual operating cost savings will be in the tens of millions.

Ahead of the Competition, but for How Long?

It remains to be seen whether Merrill’s billion- dollar investment will produce the competitive advantage it’s hoping for. Unsurprisingly, its executives predict that it will. "[The platform] raises the cost of entry of being a financial advisory firm. There’s increasing consolidation in the industry because the cost of equipping financial advisers is prohibitively expensive for all but a handful of firms," says the GPC’s Gorman.

"I think we’ll be a couple of years ahead of most competitors," says Vielehr. "Most [other] players have point solutions that operate in silos; none are as integrated." And that integration, Vielehr believes, comes with a side benefit: It will help sell new recruits on working at Merrill.

Some analysts are reserving judgment. "Merrill typically does this stuff earlier than others, but it’s a short window [of advantage]," says Forrester’s Punishill. "We’re not talking about new analytics or different stuff than what others are doing. It’s a better way of putting something together. If it does a better job, FAs are more productive. If they’re more productive, will they generate more business or play more golf?"

Punishill also points out that if the workstation succeeds, Thomson certainly will market it to the rest of the industry, thereby ensuring that Merrill’s putative competitive advantage will immediately begin to spring leaks.

For now Merrill is hoping to improve the lives of its 14,000 FAs by giving them a speedy, more intuitive, hassle-free desktop. And, with Thomson riding shotgun on the project, and all the subcontractors in the backseat, it’s making sure its vendor partners feel—in their pocketbooks—as much responsibility for the success of the platform as it does.


Copyright © 2003 IDG Communications, Inc.

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