The major motive of the deal for JP Morgan Chase was to lower its IT costs and come up with better quality services to the customers. IBM, specializing in IT, could definitely help JP Morgan Chase in its motive and as part for IBM; it was getting the honor of outsourcing for a huge organization and increase its repute in the global customers it retains. This was the reason why the deal was beneficial and took place between the two companies.
The deal was although a 7-year duration but ended up in just 21 months. JP Morgan Chase moved back from outsourcing to backsourcing due to a number of factors that proved that the decision of outsourcing was not a right one for JP Morgan Chase. These factors included:
The entirely different work environments of both the organizations which influenced the employees of JP Morgan Chase who were also outsourced. Their ' morale and job security were highly influenced as in IBM they were not given the control and authority as they were given at JP Morgan Chase
The information technology and information systems strategy of any organization needs to be matched with the business processes and requirements of the business. All the business processes need to be inline with the IT infrastructure and the IS which is being run in the organization. This is the reason why at present most of the companies go for customized information systems for their organizations rather than implementing off-the-shelf systems. With the customized approach, there is no need to change the business processes and the system that is being implemented is built with integration to the business processes. However, when off-the-shelf system is implemented, there is a need for BPR (Business Process Reengineering) in which the business processes are changed.
JP Morgan Chase's information technology and information systems were in relation to their providence of the financial services on a global level. IBM is very famous for the quality it provides and the world wide customers it has to which it outsources systems and makes customers. Therefore the IT and IS Strategy of the organization was decided to be fully outsourced by IBM. The full dependency of JP Morgan Chase on IBM and the providence of its all data to IBM for building its IT was not a good decision. This is because the firms should not outsource their operational activities that stand crucial to them by any perspective. Through the operational activities, the firm interacts with its customers. Customer satisfaction is crucial to every business and when this job is handed to any other firm, the job cannot be performed as efficiently as the original firm does.
For JP Morgan Chase, cost cutting and quality were the major issues due to which the decision of outsourcing seemed necessary to take; as through outsourcing, the IT budgets can be lowered. IBM, which is the outsourcing member in this case, has IT as its