Sallie Mae| Competitive Advantages

Added on - 16 Sep 2019

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Table of ContentsA. Introduction...................................................................................................................2B. The applications portfolio.........................................................................................3B.1. Strategic Grid..............................................................................................................3B.1.1. Factory (dependency)..........................................................................................4B.1.2. Strategic....................................................................................................................5B.1.3. Support.....................................................................................................................6B.1.4. TurnAround............................................................................................................6C. Business benefits and opportunities......................................................................6C.1. Index Matrix................................................................................................................6C.1.1. Individual.................................................................................................................7C.1.2. Function....................................................................................................................8C.1.3. Organisation............................................................................................................9D.1. Business transformation levels.........................................................................10D.1.1. Localised exploitation.......................................................................................11D.1.2. Internal integration...........................................................................................11D.1.3. Business process redesign...............................................................................12D.1.4. Business network redesign.............................................................................12D.1.5. Business scope redefinition............................................................................12E.1. Strategic information plan...................................................................................12E.1.1. Enhancement of the Eagle II guarantee system.........................................12E.1.2. Enhancement of the Advanced call center routing system....................13E.1.3. Strategic factors...................................................................................................14E.1.4. Feasibility factors................................................................................................14E.1.5. Strategic factors...................................................................................................15E.1.6. Feasibility factors................................................................................................15F. Conclusion....................................................................................................................16References.........................................................................................................................17
A. IntroductionStarted as the Student Loan Marketing Association, in 1972 Sallie Mae was created toserve as the second market for student loans, increasing their liquidity, and alsomaking it attractive for investors to finance student lending. As an aim, The Nixonadministration created Sallie Mae to be able to catalyse private investment in studentloans in order to convert illiquid loans into bonds relatively that could be backed witha specific guarantee coming from the United States Government. Sallie Mae wascapable of securing a financing from the Federal Financing Bank in addition to itsgovernment guarantee that could allow it to easily borrow more money at better termsthan non-GSE financing institutions. As a GSE, Sallie Mae was able to enjoy lowcapital requirements that could help operate at a high leverage than the competitors,which is another competitive advantage for the company. And Sallie Mae waslikewise saved from the state and local taxes on its franchise, capital and income.Thismix of government-presented benefits gave Sallie Mae a chance to expand rapidly,changing from a new company to a big financial institution in just a couple of years.Even if trying to compare with the other fast growing student loan industry, SallieMae’s growth was really fast much more like a double in size each five years. TheCongressional Budget Office stated that Sallie Mae was able to hold 27% of thefederally guaranteed student loans by 1991, which resulted in total domination of itsnext competitor Citibank that was holding only 4% (Piazza & Nava, 2013 ).Known to be the leading provider of student loans worldwide, Sallie Mae made acommitment to makeeducationin such an accessible and affordable way for all theAmerican students. However that did not stop the company from wanting to expandinto more new and lucrative sectors, like the financing of home purchase and themanagement of debt(Alchin, 2016).As a mission, Sallie Mae just want to help the American students and families’dreamof achieving a higher level of education a reality.Sallie Mae made an Objective toinvest in the future of the students in order to help develop programs that are capableof saving, planning and paying for college of the students’ by their families (SallieMae, 2016).
B. The applications portfolioApplication portfolio serves as a means to assess how the existing, planned andpotential of applications can contribute to the achievement of business goals (Ward &Peppard, 2002)(Kellerman and Löfgren, 2008).Sallie Mae created all the systems in order to facilitate the contact and transactionsbetween their customers and manages to give them an easy way to access thecompany’s services.B.1. Strategic GridAt Harvard, Warren McFarlan developed a called the Strategic Grid that is dividedinto four broad groupings based on the applications within the portfolio upon thecurrent and future contribution to the business objectives (Warr, 1990).FactoryThe Eagle II guarentee agency systemAdvanced call center routing systemClass loan servicing systemLoan processing on Unity systemConfigured ERP systemStrategicUnity loan servicing systemCustomer facing systemPeople SoftSupportWeb-based version of the packageCall center routing applicationTurnAroundRetroactive changes UpdateSource: (Warr, 1990)
B.1.1. Factory (dependency)1. The Eagle II guarantee agency systemIt is a system that tracks all the loan origins which means it keeps tracks with all theborrowers and it guarantees the activities that are being carried out by Sallie Mae. It isin Factory because it has a highdependancynow because it is needed to keep asustainable environment for the company not to ignore the fact it help them be intouch with their finances flows.2. Advanced call center routing systemIt is a system that was implement to have an interactive voice and be able todetermine the caller’s question based on their loan record. It is also able to route thecalls to the available call center representative and balance the calls numbersoperating in different cities with different timings. It is on factory because it has ahighdependencynow knowing that Sallie Mae needs to interact with customers asthey are their target market. This systems seems to make it easy for the company todeal with their customers’ requirements.3. Class loan servicing systemIt is a system that could reduce the time to review all the records and make thepayment of the loans for the lenders. Thedependancyis high because it helps thecompany save time and run their payment activities.4. Loan processing on Unity systemIt is an advanced system of Class that is designed for lenders who may or have aunique request decisions on payments. It is a system that could help them pay theirloans timely so thedependencyis high as it help the company keep its sustainablegrowth.5. Configured ERP systemERP is an information system within an enterprise that is able to facilitate the flow ofinformation and coordinates all resources and activities within the business
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