Fed Case

Case Study

Financial Equity Managers, Ltd.

Background

Financial Equity Managers (FED) is a large financial institution that was founded in the early 1950s. FED revenues grew conservatively for 40 years under the direction of its founder, Ross T. Nichols. Since the founder’s death in 1989, and under new, aggressive management, FED has undergone major changes in business direction as new opportunities developed as a result of deregulation. However, the majority of FED’s growth came mainly from acquisitions in the 1990s.

Although FED’s financial performance in the 1990s was astounding for investors, achieving $500m US in the last ten years, it took its toll on the infrastructure as costs rose at a higher rate than revenues. The many acquisitions resulted in duplicative functions and systems. Systems maintenance and enhancement costs consumed 50% of the IT $50 million annual budget. In the last few years, investors have grown leery of FED’s ability to sustain its financial performance as aggressive competition erodes its market share.

Today, only 0% of the IT budget can be devoted to supporting new business opportunities, resulting in lost opportunities and revenue. The business unit managers are very upset with the IT organization. They see the IT organization as providing little or no value to FED’s business. The pressure was intense on the CIO, Mr. Justin Time, to provide more IT support for new business initiatives. Three months ago, he resigned in disgrace.

Current Situation

A new CIO, Mr. Ike Cohnduet, has been on board for one month. Mr. Cohnduet comes from a small but aggressive company, Dollar Deli Inc. (DDI) that uses project management as a competitive edge. Before assuming the position of CIO at DDI, he led major IT projects to successful completion. He gained his Project Management Professional (PMP®) certification in 1992. He is taking over an organization of 120 people who are organized by business units for support purposes. A...