J.P. Morgan Chase Exec: Should Have Outsourced Years Ago

The initial stages of the seven-year, $5 billion outsourcing relationship between J.P. Morgan Chase & Co. and IBM Global Services has included a fair share of misunderstandings, differences of opinions, and complexities. Still, John Schmidlin, managing director and chief technology officer at J.P. Morgan Chase, said today that the company's outsourcing of its IT infrastructure to IBM was a wise decision that he wished he had made years earlier.

Schmidlin, speaking at Gartner's Outsourcing Summit 2003 conference in Los Angeles, said the contract with IBM went live April 1 and included moving 4,000 employees to IBM Global Services. The financial-services firm began its search for an IT services provider two years ago as part of its strategy to cut costs and eliminate distractions not related to its core businesses. "We are not a technology firm," Schmidlin said. The company views technology as an "adjunct to the services we provide to clients."

When evaluating IBM and two other finalists, J.P. Morgan Chase considered factors such as a services provider's ability to understand J.P. Morgan Chase's transformation of its IT infrastructure--including server consolidation and on-demand computing--and offer a detailed a plan for achieving certain milestones toward that effort.

J.P. Morgan Chase also interviewed business-technology executives at other companies who had outsourcing contracts in excess of $1 billion, all of whom warned of bumps related to the transformation of people and processes. Schmidlin extended similar advice. "You'll frequently have misunderstandings, and there'll be differences along the way," he said. "Make sure you have a process in place to deal with the conflicts."

Still, said Schmidlin of the contract with IBM, "If I had to do it all over again, I would have done it five years ago."