Ch. 5 Case Study: Merrill Lynch

1. Why did Merrill Lynch need to update its IT infrastructure?
Merrill Lynch needed to update its IT infrastructure so that it could remain a dominant competitor in the financial industry. All of the competitor banks and investment firms were going through updates as well. In order to remain competitive, Merrill Lynch looked to provide new programs for its workers and mangers to give them a competitive advantage. Through the application and administration of updated IT systems, Merrill Lynch was able to stay ahead of the competition.

2. What is the relationship of information technology to Merrill Lynch’s business strategy? How was its web services initiative related to that strategy?
The relationship between information technology and Merrill Lynch is one of necessity. The need for information technology is evident in regards to Merrill Lynch’s sustained success. The goal was to develop new systems that exploited the depth of information in its mainframes. This was accomplished with the help of its web services division. The web services initiative at Merrill Lynch was connected to the strategic goals of the company. By using web services Merrill Lynch hoped to cut costs by as much as $20 million. Many criteria were established along with new platforms which facilitated these changes.

4. Do you think that Merrill Lynch’s decision to sell off its successful technology initiatives was a good idea? Why or why not?
I think that Merrill Lynch’s decision to sell off its successful technology initiatives was a good idea. The reasons are those surrounding cost savings, increased revenue, and the creation of new areas for change. By selling off the technology initiatives the information technology budget received more space for spending. This was a well thought out and planned \sale and it turned out to be a good decision.

Sources: Management Information Systems Managing the Digital Firm, tenth edition. pgs. 218-220. Laudon, Kenneth C.