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Seminar Strategic Planning & Marketing

July 12, 2014

Nexus Financial
You are the CIO of Nexus Financial, a financial services company that services the retail,
corporate, and institutional market segments with brokerage and banking products and services.
This 200-year-old company is publicly traded and headquartered in New York City. You joined
the company 11 years ago as the VP, Product Management and were promoted to CIO in the
past year. At the time, you were reporting to the CEO, Sarah Olsen. In the past 24 months, you
successfully executed a turn-around in the department by reducing extraneous cost while
implementing revenue-enhancing efforts for line business units. You migrated to a single Oracle /
Unix based network architecture, deployed a redundant data center, rolled out a successful
salesforce automation / CRM effort, and launched a balanced scorecard which was adopted by
additional business units. You earned the respect of the management team by consistently
delivering projects on-budget, on-time, and to-standard. As a result of a recent re-organization,
you are now reporting to the CFO, Zach Dylag.
Your board recently approved a corporate strategy that includes a plan to identify and acquire
select competitors, enhancing organic growth, and driving profitability through merger synergies.
Nexus Financial is looking to acquire a like-sized peer in order to get bigger at what it does. The
territories are basically contiguous, and the goal is to retain the target's customer base while
eliminating as much cost as possible. This type of acquisition presents the biggest challenge to
your business unit but offers the greatest potential savings.
Sarah Olsen assigned you to the due diligence team and spend a week on-site in Boston, the
headquarters for Slate Bank. Zach selected a rising star out of finance in the organization to act
as the integration manager. You attend the first meeting and are selected as the leader for the
Technology Task Force. Each department is tasked with coming back in a week for a first cut at
an integration plan with a target total cost savings of 30%.
Question 1.
A. What items will be included in your due diligence checklist?
B. What are your top three objectives while on-site for your week in Boston?
You discover that Nexus Financial differs from Slate in many ways. Unlike Nexus Financial, Slate
was only founded 20 years ago and has a more aggressive and entrepreneurial culture. You
arrive in Boston and meet Rich Fernandez, CIO from Slate. Rich has been with Slate for three
years and appears quite reserved. He walks you through the one of the data centers, provides
you a list of the various applications / licenses deployed, and a general overview of his
organization and staff. Both teams are deployed in UNIX environment however, the software
applications are quite different in terms of ERP, CRM, etc. You are scheduled later in the week to
examine the product mix. In addition, the business unit was surprisingly nimble with little extra
overhead and had just implemented a BEA web services application that linked the front office
and back office systems and was also providing a very detailed reporting tool to the management
team. Slate was significantly ahead in the arena of on-line services and banking relative to
Nexus. Your assessment is that the Slate Bank infrastructure from an application perspective is
more advanced than Nexus Financial. Richs people are competent, and they have developed
some innovative systems to support the business units. As you head out to lunch, Rich appears
nervous and asks you what your thoughts on evaluating and making the people decisions.

Seminar Strategic Planning & Marketing

July 12, 2014

You head to the airport and your mind is racing. Sarah is going to push you hard on achieving
the cost synergies and you recognize that there will be a series of cultural issues and barriers you
need to work through quickly. You are going to de-brief Sarah the following morning and would
like to provide a solid overview of your observations while also managing his expectations.
Question 2.
A. How do you respond to Richs question?
B. Develop a merger-integration plan to include people, process, technology, and
infrastructure--outline your top 5 objectives.
C. Which changes can be mandated, and which must be affected organically?
D. What do you intend to message to Sarah?
The most recent earnings call for Nexus was dismal. The company missed the earnings target by
30% and lost 20% of its market capitalization in a single day. Sarah Olsen subsequently calls a
meeting with the executive team to make a series of announcements. First, she is stepping down
as the CEO. Sarah submits she is doing so voluntarily. Second, Zach Dylag is assuming the role
of interim CEO while the board conducts a search for a new CEO candidate. Third, the
acquisition of Slate is now on hold in light of the recent events. Zach further outlines that the
company has a mandate to cut 10% on the expense line in the next 90 days. The company is
missing the mark on sales projects. Within five business days, he is asking each business unit
manager to produce a plan to achieve this hurdle.
You recently realigned your team and are concerned that additional headcount reductions will
significantly impact your teams ability to deliver on your short and long term plans. 70% of your
budget is committed to maintaining the current operating systems. 20% of your budget is
allocated to four new projects that are mid-stream and were designed to enhance the companys
effectiveness and efficiency. You had the business unit managers sign off on the projects using a
detailed NPV analysis. The remaining 10% of your budget is dedicated to two areas in which
Nexus requires investment in order to be competitive in the marketplace as it relates on product
and service offerings. Finally, you completed an exercise last quarter on identifying areas to outsource and recognize there is an opportunity on the network front that could preliminarily deliver
33% of the target number that Zach has mandated. As you walk by to your office from the
meeting, you realize the next five days are critical to the company, your team, and your career.
Question 3.
A. Identify five areas outside of personnel and the outsourcing option to identify cost
savings.
B. You hold a meeting with your managers the same day that Zach is appointed interim
CEO. What are your talking points?
C. You intend to walk Zach through the entire scope of your budget. How will you
prepare Zach for the meeting and what information will you present to him?