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Management Of Information Systems

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Introduction

JP Morgan Chase is a financial company with $ 1.2 trillion in assets and $ 106 billion in shareholders equity. JP Morgan Chase is one of the oldest financial services firms in the world and operates both banking and non-banking subsidiaries. Both globally and regionally. JP Morgan Chase runs an additional set of businesses including its Private Equity and Treasury Businesses, Corporate Support companies, automobile financing companies, leasing companies, e-commerce companies and other financial services businesses. With revenues of $ 56.9 billion in the US and 160,000 employees, makes JP Morgan Chase the second largest financial services firm in the US. JP Morgan Chase competes with banks, brokerage firms, investment banking companies, insurance companies, credit card companies and mutual fund companies and is the 3rd largest banking institution in the United States.

JP Morgan Chase & Co. signed a $5 billion, seven-year agreement with IBM for computer services where IBM would take on a significant portion of the bank's data processing infrastructure and help power and host mission-critical functions for the securities side of JP Morgan Chase & Co.'s operations.

Some twenty-one months later, the contract was cancelled because it was believed by JP Morgan's chief information officer, that by managing their own technology infrastructure, it would be best for the long-term growth and success of the company, as well as shareholders and after the merger with Bank One, JP Morgan Chase & Co. would gain competitive advantage, accelerated innovation and enable the company to become more streamlined and efficient while reducing costs and increasing quality.

Strategic analysis is the scanning of a businesses' environment to ascertain key influences like the impact on the organisation, and specially to determine the strengths and weak points (SWOT analysis). There a quite a number of strategic analysis tools which can be used to determine the key influences on JP Morgan Chase & Co.'s business environment.

The following strategic analysis tools were used to determine the key influences on JP Morgan Chase & Co.'s business environment.

S.W.O.T Analysis- SWOT analysis is a tool for auditing an organization and its environment. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

SWOT Analysis- PRE-MERGER

Strengths Weaknesses

* JP Morgan Chase is one of the largest financial service firms in the United States.

* Competes both globally and regionally.

* Operates in over 50 countries worldwide.

* Ability to meet the objectives and needs of clients.

* Superior reputation, their ability to attract and retain its personnel and the appeal of their products to their consumers.

* $5bn Outsourcing agreement with IBM.

* JP Morgan Chase's IT infrastructure was not sufficient in maintaining their systems in their business operations.

* Transferring of employees to IBM's payroll resulting in employee dissatisfaction and loss of productivity as a result of the outsourcing agreement with IBM.

* Consultants had to be brought in to assist in implementing the outsourcing strategy and in helping employees through the transition which caused additional expenses to be incurred

* Decrease in productivity due to a heavier workload for employees.

Opportunities Threats

* The outsourcing agreement with IBM would allow JP Morgan Chase to be more competent by reducing costs and increasing quality.

* The agreement with IBM would create significant value for clients, shareholders and employees.

* IBM would supply its clients with flexible IT costs hence JP Morgan Chase would be able to scale its IT expenditures rather than paying full costs. There would be a reduction of costs by reducing the IT expenses.

* Large number of competitors due to operating in over 50 countries both globally and regionally.

* The fact that IBM could supply its services for numerous companies the size of JP Morgan Chase.

* Employees having to do extra work, having salary reductions and re-application processes for their jobs could cause the workforce to be de-motivated and lose productivity.

* Routine work which used to be done in could no longer be done again due to the new infrastructure implemented by IBM.

* Negative impacts would cause JP Morgan Chase to seek to cancel the outsourcing agreement with IBM.

S.W.O.T. Analysis - POST-MERGER

Strengths Weaknesses

* Merger with Bank One Corp. to promote cost cutting and self-sufficiency from a do-it-yourself approach.

* Long term growth and success for JP Morgan Chase by the management of its own technology infrastructure. * Bringing outsourced work back in-house, proved very detrimental to JP Morgan Chase.

* Employees lost their jobs on the re-shuffle back into JP Morgan Chase. The new merger with Bank One created 12000 layoffs.

Opportunities Threats

* The merger with Bank One led to the acquiring of a larger retail banking presence. Therefore leading to an increased capacity to manage its technology infrastructure.

* Bring IT back in-house from IBM would assist in fixing the poor economics of JP Morgan Chase.

* The success of the back-sourcing agreement with Bank One was not guaranteed.

* JP Morgan Chase would probably look offshore to outsource in the future.

* Cancellation of the agreement with IBM costed JP Morgan Chase millions of dollars.

VALUE CHAIN ANALYSIS

The value chain concept views a firm

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