From the Top Down… | Article

World networkBest Niche Deal

1997 Editor’s Choice Award
Merrill Lynch/ AT&T Solutions

Merrill Lynch and AT&T Solutions could give lessons in how to make a niche deal work. Merrill Lynch had specific network needs, so they turned to the vendor dominating that segment of the industry. AT&T Solutions responded not only with the services the customer needed, but with expertise and input that has helped expand the relationship into a working partnership. Today, the companies are 18 months into a five-year contract, and the results have exceeded expectations. One key to that success, said Howard Shallcross, Merrill Lynch senior vice president, is that he and AT&T Solutions President Rick Roscitt have been committed to the relationship from the beginning.

“Rick Roscitt and I had a good meeting of the minds and really understood the strategic benefits of both companies,” said Shallcross. “That makes it work. The key thing with having a partnership at the top is that Rick and I could intervene when things started to get bogged down in the first six months.”

The path was not an easy one for either of the executives. Both faced challenges and opposition within their own ranks. Through perseverance, they have crafted this award-winning relationship.

Playing to Strengths

As the basis for the deal, Merrill Lynch hired AT&T Solutions to do three things. The first was to build a fast, wide bandwidth frame relay network for Merrill Lynch’s Trusted Global Advisor Project, which delivers a high-powered desktop tool set to all of the company’s financial consultants in the U.S. AT&T Solutions also took over Merrill Lynch’s legacy private voice network and the approximately 75 people doing voice and data network operations. As the final element, AT&T became the company’s long distance provider.

Shallcross said AT&T was chosen because they were the only company that could provide a full end-to-end solution themselves. “That, plus what we perceive as the quality of their network,” he said.

Reaping the Benefits

The relationship has added value to Merrill Lynch in a number of ways, according to Shallcross.

“Clearly there was an economic benefit from the standpoint of pricing,” he said, “but more importantly there’s a huge cost avoidance in our not having to chase the hot telecom data networking engineer market. We were able to ride the resources of all of AT&T, including their labs and testing facilities.”

The deal with AT&T has enabled Merrill Lynch to introduce disciplines more readily available to a large telephone company than a brokerage firm.

“They are going forward, and the quality of the network continues to improve because that’s their business,” said Shallcross. “Anything new that we want to do or hang off the network, we have instant access to the resources, the technology and the engineering staff.”

Bye-bye, Vendor — Hello, Partner

The structure, said Shallcross, is what makes the relationship work.

“The first thing we did was throw out the old vendor-customer relationship and make it a partnership,” he said. “What we basically did was bring AT&T into Merrill Lynch, as opposed to our outsourcing to AT&T.”

The general manager of AT&T Solutions is on Shallcross’ management staff and is present at management meetings. He is entrusted with proprietary information and bound by the same insider obligations as an employee. The AT&T personnel working on the Merrill Lynch account also are considered part of the team.

“They really feel that their job, when they come in here, is to work for Merrill Lynch and their needs,” said Shallcross. “I think the biggest challenge that you have in an outsourcing deal is getting the employees of the supplier to feel like they are part of the customer’s company and culture. One of the things that made this work is that we are both very people-oriented cultures.”

Another important element in the relationship structure is the way Merrill Lynch interacts with AT&T. Roscitt had to get AT&T to understand that their services were going to be delivered through AT&T Solutions. Shallcross underscored that position by insisting that all presentations come through Solutions.

“That was a challenge on both sides,” said Shallcross. “Clearly we have commodity type technology like voice networks or hardware, but the services side is going to be so important going forward. So being able to come into Merrill Lynch and provide us with services around the technology is going to be more important than the technology itself.”

Once the structure was in place, the two parties settled into the day-to-day give-and-take of business. “Then it was just finding the equilibrium between roles and responsibilities of both companies,” said Shallcross. “It’s not a 50/50 deal. Sometimes it’s 70/30 for us and sometimes it’s 70/30 for them. Over the 12- to 18-month period of time, we finally reached that equilibrium. Now we are working on expanding the relationship, and the quality improves every day.”

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