Managing Information Technology

department was ready with a detailed severance package
program for the people in Reston who chose not to move
to Indianapolis. IT jobs in the Mid-Atlantic area were
plentiful at the time, and Sallie Mae’s Reston data center
was just across the street from Oracle’s East Coast
headquarters.
One-third of the Reston IT staff (the most critical IT
employees) were offered generous retention bonuses on
top of severance pay to encourage them to stay until the
merger was complete. Performance measures, including
successful knowledge transfer, were built into the retention
bonus contracts for the Reston staff.

You can’t pull off a project like this just through a

project plan. Good people make the difference. Even

if people were losing their jobs, they needed to know

they had value.

—John Bennett, Project Manager for Data Center

Relocation

The company decided to err on giving too much, and

that left a good feeling in the company—that you

can’t be a loser in this merger.... When you do the

right thing with employees, they pitch in and make

sure that the merger is successful.

—Hamed Omar, Senior Vice President,

Technology Group

The team had pride in what it had built and wanted to

turn it over with their heads held high. The severance

packages and retention bonuses were certainly better

than industry standard.... Members of my team

also knew early on when their jobs were scheduled to

end.... All of these factors contributed to the suc-

cess of the transition.... We leveraged what could

have been negative into something positive....

Several took their severance money and used it to

start a business and pursue a dream. Others took a

year off to do something that was important to them

personally.

—Cindy Gunn, Vice President of Computer

Operations for Sallie Mae

Only a small number of Indianapolis staff (e.g., crit-
ical Unity team members) were offered retention pack-
ages, because other IT jobs in the company were likely to
be available to them. USA Group was viewed as a great
place to work by people in central Indiana. Since there
was a high differential in skill costs between Indianapolis
and the DC area (e.g., $65 in Indianapolis compared to

$75 or more in DC for application developers), the IT

leaders could expect to retain the Indianapolis-based

IT employees that they wanted to keep.

Placing the Bet on Internal Project Management

The McKinsey consultants strongly recommended that IT

consultants be brought in to help with the data-center

consolidation project and put forth several conditions for

selecting the consulting firm. This narrowed the field to

five very large players. Reston VP Cindy Gunn strongly

encouraged hiring a specific IT firm because of an

already established vendor relationship with Sallie Mae

and the firm’s recognized expertise in risk management.

The IT consultants were brought in at the end of

November 2000 to work on a plan for moving the Reston

data center. The consulting team hosted an IT integration

kickoff meeting in Reston, during which they provided

instruction on how to move equipment and applications

effectively across the country. But the meeting did not go

well.

Their approach was not received well by those of us

who had to carry out this move. The approach

seemed generic, and they weren’t showing us how

their tactics could be applied in our situation.

—John Bennett, Project Manager for Data Center

Relocation

From the beginning, we felt as if we were stretching

them. They had one methodology, and if we wanted

to succeed, we needed to adhere to it pretty closely.

From day 1, they said it would take 12 to 18 months.

We asked if we could accelerate the methodology,

and they were uncomfortable with approaching it

that way.

—Becky Robinson, Director of Systems

Management

Following the kickoff meeting, the IT consulting

team lead advised Sallie Mae’s executive team that the

aggressiveness of the Indianapolis group’s (FastTrack)

approach was high risk. Instead of attempting to complete

the data center move in 7 months, as proposed by the inter-

nal team, the consultants recommended that it be sched-

uled across 12 to 18 months, under their leadership.

This event proved to be a catalyst for the

Indianapolis and Reston IT leaders to join together and

take over the leadership for the data-center relocation proj-

ect from the consultants. CIO Clancy presented to his

Chief Operating Officer a counterproposal prepared by the

Case Study IV-2 • FastTrack IT Integration for the Sallie Mae Merger 617