Delivering IT Value During Challenging Times:

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Delivering IT Value During Challenging Times:

  1. 1. Delivering IT Value During Challenging Times: A Financial Services Perspective Shelley Leibowitz, Morgan Stanley Managing Director and Company CIO October 30, 2002
  2. 2. Agenda <ul><li>The Landscape </li></ul><ul><li>Today’s IT Value Proposition </li></ul><ul><li>The Strategic Response </li></ul><ul><li>Final Thoughts </li></ul>
  3. 3. The Landscape
  4. 4. Morgan Stanley as an Enterprise * Revenue FY2001 <ul><li>Institutional Investment Management </li></ul><ul><li>Individual Investment Management </li></ul><ul><li>Trust Services </li></ul><ul><li>$2.4 BN in Revenue * </li></ul><ul><li>100 K Accounts </li></ul><ul><li>400 BN Assets Under Management </li></ul>Investment Management Seoul Toronto San Francisco Los Angeles London Paris Hong Kong Tokyo Taipei Singapore Melbourne Mumbai Sydney Mexico City Johannesburg Menlo Park Dallas Luxembourg Washington New York Boston Austin São Paulo Bangkok Buenos Aires Atlanta Denver Chicago Montreal Madrid Geneva Milan Zurich Moscow Frankfurt Amsterdam Stockholm Beijing Shanghai Tel Aviv <ul><li>Investment Banking </li></ul><ul><li>Sales and Trading (Institutional and Individual) </li></ul><ul><li>$15.9 BN in Revenue * </li></ul><ul><li>5.5 MM Accounts </li></ul><ul><li>600+ Branch Offices </li></ul><ul><li>Discover Financial Services </li></ul><ul><li>Discover Card </li></ul><ul><li>$3.6 BN in Revenue * </li></ul><ul><li>50 MM Accounts </li></ul><ul><li>4 MM Merchants </li></ul>Credit Services Securities
  5. 5. Company Structure Administration & Planning Finance THE COMPANY Securities Investment Management Credit Services Institutional Securities Individual Investor Group Discover Financial Services Traditional Investments Alternative Investments Retirement Services Advice Other Investment Banking Institutional Sales & Trading Research MSCI Investor Advisory Services Private Wealth Management Independent Investor Services Law
  6. 6. The Morgan Stanley Story Great positioning for long- term secular growth trends Global presence Innovation Great franchise Vision Sophisticated technology Leadership position in all business segments Outstanding people
  7. 7. Business Climate Retrenchment 2001 2000 Hyper Growth 2003 Cautious Optimism Themes: Time to market E-commerce Changing business models Themes: Efficiency Cost management Themes: Rethinking Doing more with less Productivity Governance 2002 ? Themes: Risk management New opportunities Regulation Oversight
  8. 8. Financial Services Marketplace <ul><li>Margins </li></ul><ul><li>Market Conditions </li></ul><ul><li>Transactional Volumes </li></ul><ul><li>Product Complexity </li></ul><ul><li>Industry Consolidation </li></ul><ul><li>Competition for Client Relationships </li></ul><ul><li>New Entrants Into the Broker/ Dealer Space </li></ul>
  9. 9. Today’s IT Value Proposition
  10. 10. Living in a Post-9/11 World <ul><li>Business Continuity Planning </li></ul><ul><ul><li>Redefined to Business Resumption </li></ul></ul><ul><ul><li>Separate people centers from technology centers </li></ul></ul><ul><ul><li>Maintain geographic diversity </li></ul></ul><ul><ul><li>Broad business diversification </li></ul></ul><ul><li>Security </li></ul><ul><ul><li>Increased threats </li></ul></ul><ul><ul><li>Information security critical </li></ul></ul><ul><ul><li>Threats internal and at the perimeter </li></ul></ul><ul><ul><li>Partner security </li></ul></ul><ul><li>Human Capital </li></ul><ul><li>Supplier Risk </li></ul>
  11. 11. Living in a Post-9/11 World <ul><li>USA Patriot Act </li></ul><ul><li>Signed October 26, 2001 - passed in the wake of Sept. 11 </li></ul><ul><li>Grants additional powers to law enforcement and intelligence agencies </li></ul><ul><li>Significant new requirements on US Financial Services firms to detect money laundering, fraud, and other suspicious activities </li></ul><ul><li>Main program components for Financial Services </li></ul><ul><ul><li>Anti-money Laundering Program </li></ul></ul><ul><ul><li>Customer Verification and Identification </li></ul></ul><ul><ul><li>Suspicious Activity Surveillance and Reporting </li></ul></ul>
  12. 12. Enron and Beyond Accounting's role in Enron crash erases years of trust Is Arthur Andersen's Number Up? Tyco shares plunge as CEO resigns under a cloud WorldCom Woes Put Spotlight on Qwest, Sprint Adelphia joins list of corporate crashes Memo Indicates Global Crossing Chief Knew of Troubles Xerox forced to restate revenues More cheats are hiding in America, says Bush More Firms on Brink? One more big scandal comes as no shock America's Corporate meltdown Trust and Confidence Accounting and Disclosure Scrutiny Conflicts of Interest Guardianship Governance
  13. 13. Risk Exposures Risk Management <ul><li>Business Practices & Controls </li></ul><ul><li>Documentation </li></ul><ul><li>Legal & Compliance </li></ul><ul><li>Regulatory </li></ul><ul><li>Disclosure </li></ul><ul><li>Audit </li></ul>Legal & Regulatory Risk Counterparty Risk Market Risk Operational Risk <ul><li>Operations Processing </li></ul><ul><li>Financial & Tax </li></ul><ul><li>Technology </li></ul><ul><li>Supplier Risk </li></ul><ul><li>Business Interruption </li></ul><ul><li>Manpower & Intellectual Capital </li></ul>
  14. 14. Leveraging the IT Investment <ul><li>Spending Trends </li></ul><ul><li>20% average growth of IT spend (1995 through 2000) </li></ul><ul><li>Estimates forecast IT spend for 2002 down 5-10% YOY </li></ul><ul><li>Multi-Year hangover of capital outlays </li></ul>Source: Morgan Stanley, Office of the CTO Morgan Stanley Firmwide IT Spending 1999 2000 2001 25% Growth 6% Growth ~20% Growth 2002 (est) 0 - (10)% Growth
  15. 15. The Strategic Response
  16. 16. The Strategic Response <ul><li>Culture and Human Capital </li></ul><ul><li>Partner Leverage and Creative Sourcing </li></ul><ul><li>Structural Integrity </li></ul><ul><li>Managing the Project Portfolio </li></ul><ul><li>Guardianship Initiatives </li></ul>
  17. 17. Culture and Human Capital Focus on the Client Ethics and Integrity Firm Vision Communication Teamwork Risk Management Excellence
  18. 18. Culture and Human Capital <ul><li>Talent Management </li></ul><ul><li>Mentoring </li></ul><ul><li>Career Development </li></ul><ul><li>Skills Assessment </li></ul><ul><li>Professional Development Plans </li></ul><ul><li>Peer Reviews </li></ul><ul><li>Flexible Work Arrangements </li></ul>
  19. 19. Partner Leverage and Creative Sourcing <ul><li>The Leverage </li></ul><ul><li>Strategic Partnerships </li></ul><ul><li>Service Providers </li></ul><ul><li>Domain Experts </li></ul><ul><li>The Risks </li></ul><ul><li>Service Levels </li></ul><ul><li>Viability </li></ul><ul><li>Geo-Political </li></ul>
  20. 20. Partner Leverage and Creative Sourcing Co-sourcing and Outsourcing <ul><li>Cost Leverage </li></ul><ul><li>Core Competencies </li></ul><ul><li>Diversification </li></ul><ul><li>Smoothing Demand </li></ul>Goals <ul><li>Business Process </li></ul><ul><li>Technology </li></ul>Options <ul><ul><li>Development </li></ul></ul><ul><ul><li>Maintenance </li></ul></ul><ul><ul><li>Testing </li></ul></ul><ul><ul><li>System Monitoring </li></ul></ul><ul><ul><li>ASP </li></ul></ul><ul><li>Financial </li></ul><ul><li>Connectivity </li></ul><ul><li>Tools </li></ul><ul><li>Security </li></ul>Responsibilities <ul><li>Audit </li></ul><ul><li>Drug Testing & Employment </li></ul>
  21. 21. Company Structure Agility Alignment Empowerment Accountability THE COMPANY Securities Investment Management Credit Services Institutional Securities Individual Investor Group Discover Financial Services Traditional Investments Alternative Investments Retirement Services Advice Other Investment Banking Institutional Sales & Trading Research MSCI Investor Advisory Services Private Wealth Management Independent Investor Services Law Administration & Planning Finance Company IT Institutional Securities IT Discover IT Investment Management IT Institutional Investor Group IT * Office of the CTO
  22. 22. Structural Integrity <ul><li>Transparency </li></ul><ul><li>Cost Allocation </li></ul><ul><li>PMO </li></ul><ul><li>Governance </li></ul>
  23. 23. Managing the Project Portfolio <ul><li>Planning </li></ul><ul><li>Reporting </li></ul><ul><li>Governance </li></ul><ul><li>Financial Management </li></ul><ul><li>Metrics </li></ul>PMO A Holistic Approach to Rationalizing and Optimizing Standards Based Approach Applications Data <ul><li>System Integration </li></ul><ul><li>Product Platforms </li></ul><ul><li>Application Suites </li></ul><ul><li>Middleware & Interoperability </li></ul><ul><li>Accuracy </li></ul><ul><li>Consistency </li></ul><ul><li>Timeliness </li></ul><ul><li>Integration </li></ul><ul><li>Controls </li></ul><ul><li>Workflow/Reengineering </li></ul><ul><li>STP </li></ul><ul><li>Self-service </li></ul><ul><li>Shared Service </li></ul><ul><li>Reliability </li></ul><ul><li>Stability </li></ul><ul><li>Capacity </li></ul><ul><li>Connectivity </li></ul><ul><li>Collaboration </li></ul>Business Process Business Imperatives Infrastructure
  24. 24. Guardianship Initiatives <ul><li>Importance of the Infrastructure </li></ul><ul><li>Patriot Act </li></ul><ul><li>Compliance and Controls </li></ul><ul><li>Transparent and Meaningful Disclosure </li></ul><ul><li>Risk Management </li></ul><ul><li>Business Continuity Planning </li></ul><ul><li>Audit </li></ul>
  25. 25. Final Thoughts
  26. 26. Keys to Success There is no technological silver bullet It’s all about the people The real keys to success lie in leadership and culture Align with your business partners Protect the franchise
  27. 27. Q&A

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