Good Governance in a New Outsourcing Model
Merrill's decision to put Thomson at the helm of this project over a variety of subcontractors has, according to both Merrill and Thomson and the other vendors, worked well so far. "It's a very unique model," says Thomson Financial's Lou Eccleston, president of the banking and brokerage group. "It combines the traditional vendor role and elevates it to a partnership role, includes consultant-type roles, and brings it all into one piece."
He asserts that the development and ongoing support costs turned out to be cheaper here than they would have been in a more traditional outsourcing model. "We're not general contractors by profession," says Eccleston. "Merrill is getting that service at a far lower price because we're part of the whole package, including content and applications."
TowerGroup's Ceru notes that "in the past, I think a lot of outsourcing was done in an almost hands-off, or what I would call a delegate-and-abdicate mentality. It was delegated to a third party, then abdicated in the true sense of ownership. Today, the firm is saying to vendors, You're in this with us. It's almost as if you're a division of our company."
In addition to Thomson, which is managing the online function, the players on this project all have stars on the IT walk of fame: AT&T, managing the network; Cap Gemini Ernst & Young, serving as the systems integrator for Siebel and helping to build the online sites; Dell, supplying the desktops; HP, providing network products and services; IBM, being responsible for the physical rollout of components and branch support; Microsoft, furnishing .Net for the integration framework; and Siebel, creating the CRM application.
The key to keeping the project on track has been the tight alignment between Merrill and Thomson. The two aren't strangers (Merrill has used Thomson's ILX market data product for the past five years), so they were already comfortable with each other. Merrill and Thomson each have executive steering committees dedicated to the project that meet monthly. Executives also regularly receive updates: A weekly executive dashboard highlights the status of the project's many components. And the conversations reach all the way to the top: "Dick Harrington [president and CEO of Thomson Corp.] literally talks to Stan O'Neal," says Eccleston.
On the operational front, some 40 Thomson employees and vendor contractors work on-site with Merrill folks, under the guidance of Greenberg and Ed Berlin, Greenberg's counterpart as project manager at Thomson. Organisationally, the goal has been to structure as flat as possible. So for the project's three major areas - desktop, infrastructure and online - teams of peers (as they're known) were put in place that include representatives from the vendors as well as Merrill and Thomson. "We want everyone to take ownership," Vielehr says.
With all those vendors and a condensed development schedule, "there are plenty of thorny issues on a day-to-day basis," says Vielehr. The main bones of contention revolve around scheduling. "A lot of it is where the mid-level of teams feel like they're waiting for somebody, or somebody is late in their mind," says Cummings.
Soul of a New Platform
The 25,000 new workstations already rolled out to the US branches and offices are 2.4GHz Dell desktops with a gigabyte of RAM and two 18-inch flat-panel monitors: One has a Siebel screen with CRM client data, the other a Thomson screen with financial data, news and wealth management applications. But it's the melding of some 130 old and new applications in an integration framework (IF) that's the heart and soul of the workstation. Merrill began building the IF last year, before Thomson was chosen, knowing one would be necessary regardless of which vendor it selected. Merrill also wanted to keep control of the IF in-house. "We weren't about to take all our mainframe systems and turn them over to a vendor and have them figure out how to deliver that data to the vendor applications," says Greenberg.
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 standardisation. 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.
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