delivering it value during challenging times: a financial services perspective shelley leibowitz,...
TRANSCRIPT
Delivering IT Value During Challenging Times:A Financial Services Perspective
Shelley Leibowitz, Morgan Stanley
Managing Director and Company CIO
October 30, 2002
Agenda
The Landscape
Today’s IT Value Proposition
The Strategic Response
Final Thoughts
The Landscape
Morgan Stanley as an Enterprise
* Revenue FY2001
Institutional Investment Management Individual Investment Management Trust Services
$2.4 BN in Revenue * 100 K Accounts 400 BN Assets Under Management
Investment Management
Seoul
Toronto
SanFrancisco
Los Angeles
LondonParis
Hong Kong
Tokyo
Taipei
Singapore
Melbourne
Mumbai
Sydney
Mexico City
Johannesburg
Menlo Park
Dallas
Luxembourg
WashingtonNew York
Boston
Austin
São Paulo
Bangkok
BuenosAires
Atlanta
Denver
Chicago
Montreal
Madrid
GenevaMilan
Zurich MoscowFrankfurt
AmsterdamStockholm
Beijing
ShanghaiTel Aviv
Investment Banking Sales and Trading (Institutional and Individual)
$15.9 BN in Revenue * 5.5 MM Accounts 600+ Branch Offices
Discover Financial ServicesDiscover Card
$3.6 BN in Revenue * 50 MM Accounts 4 MM Merchants
Credit Services
Securities
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
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
Business Climate
Retrenchment
20012000
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
Financial Services Marketplace
Margins
Market Conditions
Transactional Volumes
Product Complexity
Industry Consolidation
Competition for Client Relationships
New Entrants Into the Broker/ Dealer Space
Today’s IT Value Proposition
Living in a Post-9/11 World
Business Continuity Planning Redefined to Business
Resumption Separate people centers from
technology centers Maintain geographic diversity Broad business diversification
Security Increased threats Information security critical Threats internal and at the
perimeter Partner security
Human Capital Supplier Risk
Living in a Post-9/11 World
USA Patriot Act Signed October 26, 2001 - passed in the
wake of Sept. 11
Grants additional powers to law enforcement and intelligence agencies
Significant new requirements on US Financial Services firms to detect money laundering, fraud, and other suspicious activities
Main program components for Financial Services
Anti-money Laundering Program Customer Verification and Identification Suspicious Activity Surveillance and Reporting
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 ConfidenceAccounting and Disclosure Scrutiny
Conflicts of InterestGuardianshipGovernance
Risk Exposures
• Business Practices & Controls
• Documentation
• Legal & Compliance
• Regulatory
• Disclosure
• Audit
Legal &Regulatory
Risk
RiskManagement
CounterpartyRisk
Market Risk
OperationalRisk
• Operations Processing
• Financial & Tax
• Technology
• Supplier Risk
• Business Interruption
• Manpower & Intellectual Capital
1999 2000 2001
25%Growth
6%Growth
~20%Growth
2002 (est)
0 - (10)%Growth
Leveraging the IT Investment
Spending Trends
20% average growth of IT spend (1995 through 2000)
Estimates forecast IT spend for 2002 down 5-10% YOY
Multi-Year hangover of capital outlays
Source: Morgan Stanley, Office of the CTO
Morgan Stanley Firmwide IT Spending
The Strategic Response
The Strategic Response
Culture and Human Capital
Partner Leverage and Creative Sourcing
Structural Integrity
Managing the Project Portfolio
Guardianship Initiatives
Culture and Human Capital
Focus on the Client
Ethicsand
Integrity
Firm Vision
Communication
Teamwork
RiskManagement
Excellence
Culture and Human Capital
Talent Management
Mentoring
Career Development
Skills Assessment
Professional Development Plans
Peer Reviews
Flexible Work Arrangements
Partner Leverage and Creative Sourcing
The Leverage
Strategic Partnerships
Service Providers
Domain Experts
The Risks
Service Levels
Viability
Geo-Political
Partner Leverage and Creative Sourcing
Co-sourcing and Outsourcing
Cost Leverage Core Competencies Diversification Smoothing Demand
Goals
Business Process Technology
Options
Development Maintenance Testing
System Monitoring
ASP
Financial Connectivity Tools Security
Responsibilities Audit Drug Testing
& Employment
Company ITCompany IT
InstitutionalInstitutionalSecurities ITSecurities IT
Discover ITDiscover ITInvestmentInvestmentManagement ITManagement IT
InstitutionalInstitutionalInvestor Group ITInvestor Group IT
Company Structure
Agility
Alignment
Empowerment
AccountabilityTHE 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
LawAdministration & Planning Finance
* Office of the CTO
Structural Integrity
Transparency
Cost Allocation
PMO
Governance
Managing the Project Portfolio
• Planning
• Reporting
• Governance
• Financial Management
• Metrics
PMO
A Holistic Approach to Rationalizing and Optimizing
Standards Based Approach
ApplicationsData • System Integration
• Product Platforms• Application Suites• Middleware & Interoperability
• Accuracy• Consistency• Timeliness• Integration
• Controls• Workflow/Reengineering• STP• Self-service• Shared Service
• Reliability• Stability• Capacity• Connectivity• Collaboration
Business Process
BusinessImperatives
Infrastructure
Guardianship Initiatives
Importance of the Infrastructure
Patriot Act
Compliance and Controls
Transparent and Meaningful Disclosure
Risk Management
Business Continuity Planning
Audit
Final Thoughts
Keys to Success
There is notechnological
silver bullet
It’s all about the people
The real keys to success lie in leadership and
culture
Align with yourbusiness partners
Protectthefranchise
Q&A