1) Merrill Lynch needed to update its IT infrastructure in order to remain competitive. The IT system is one of the most critical components of Merrill Lynch’s operations. IT infrastructure has played a major role in the company’s gains in the past 5 years. Merrill Lynch needed to create internet based applications that gave customers access to their portfolios and tools to work with them. Merrill Lynch needed to create such applications while leveraging the processing power and wealth of data in its mainframe.
2) Information technology is at the heart of Merrill Lynch’s business strategy. They internally develop new IT systems that give them a great competitive advantage. Its Web services initiative was integral to that strategy. Merrill Lynch constructed a proprietary Web development platform from the ground up. Merrill Lynch created its own set of in-house proprietary tools that enable its mainframe legacy programs and the functions they perform to be exposed as Web services. Merrill Lynch’s system has a lack of middleware which means that the system’s users could request information directly from the mainframe from their desktops. Merrill Lynch’s investment in Web services saved the company $41 million in application development costs. The company obtained even more value by selling X4ML. Merrill Lynch has a long history of selling internally developed technology and selling X4ML was a great move.
4) Merrill Lynch’s decision to sell off its successful technology initiatives was a good idea. Merrill Lynch has a long history of selling internally developed technology, and the sale of X4ML optimized its investment. The company obtained even more value out of X4ML by selling it. Merrill Lynch most likely obtained a great amount of money during the sale of X4ML. This money can be invested back into the company to develop a more efficient system and grow the company even further.
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