First Fidelity Bancorporation (C): Managing an Outsourcing Relationship With EDS
(8 pages of text)
First Fidelity Bancorporation had outsourced its information systems conversion and on-going data centre management to Electronic Data Systems (EDS) on a ten-year contract. The EDS-FFB relationship was one year into the arrangement (1991) when several challenges had surfaced, the most urgent of which was an $8 million cost overrun on the conversion project. The EDS account manager had the choice of absorbing the costs, seeking compensation from the bank or suggesting a compromise. Several other challenges would also have to be addressed in the relationship, such as an incompatible software platform, resistance, difficult communications and flexibility to accommodate future bank directions and acquisitions. Background cases First Fidelity Bancorporation (B): Selecting an Outsourcing Vendor
and First Fidelity Bancorporation (A)
) are available.
- To explore both the economics and strategic implications behind a potential outsourcing decision.
- To examine the complicated technical, political, and cultural factors involved in transforming and rationalizing a hierarchical holding company of independently managed business units into an integrated centrally managed firm.
Finance and Insurance
USA, Large, 1991
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