A Few Quick Takeaways From A Speech By Morgan Stanley's Jim Rosenthal

I had the privilege of hearing an after-dinner speech by Jim Rosenthal, COO of Morgan Stanley Smith Barney and Head of Corporate Strategy for Morgan Stanley overall.  The speech was particularly interesting because of Jim’s almost accidental IT experience; Jim’s background is in strategy, not IT, but he nevertheless served for two years as Head of Firmwide Technology at Morgan Stanley.  This made the speech, delivered to an IT audience,  all the more interesting because it was something of an exposé:  an outsider’s inside view of IT.

I don’t have time to provide comprehensive notes, so I’m just going to jot down some of the key things I took away:

  • Technology is second biggest expense in banks next to producer compensation.  Banks should treat it as such.
  • Regulators are our friend.   If anyone is going to push technology up the importance agenda, it’s going to be the regulators.
  • IT execs need to earn the right to participate in the business conversation.  This is done through delivery on both strategic and myriad tactical items.
  • IT needs to steep senior management in technology.  Technology is critically important to banks and technology leaders have an obligation to educate senior management to relevant technology issues.
  • Put performance metrics on change.  Don’t just put metrics on operations but also define and measure key metrics related to strategic change.
  • Kryder’s law:  magnetic disk storage areal density doubles annually.  While I’m not sure I understand the math in either the referenced article or the Wikipedia entry, this means that stored information grows even faster than processor speed (i.e., Moore’s law).
  • Data architecture is the key to coping with Kryder’s law.  Data architecture lets you control what would otherwise be an uncontrollable wave in the future.
  • We will never put our data in the public cloud.  We love cloud computing, but for private, internal clouds.
  • Technical skills and quant skills are converging.  It’s not about the technology anymore, it’s about what we can do with the data.
  • IT is odd in the sense that it seems to feel it deserves more respect than it gets.  There is an odd tension about whether IT is a first- or second-class citizen.  IT needs to be a first-class citizen and CIOs need to learn to work senior executives and the board to make it such.
  • Banks need to think of themselves as technology companies that happen to work in financial services.   (This is analogous to Google who considers itself to be a technology firm that happens to be in media/advertising.)

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