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An article relating to this blog post on Finextra:

IT woes hit Morgan Stanley, Citi joint venture - FT

Morgan Stanley and Citigroup will have to wait up to two years to gain the full benefit of their $14bn-a-year brokerage joint venture as the complexity of merging information technology systems delays...

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Opportunity at Risk

According to the Financial Times story cited in this article, Morgan Stanley and Citigroup will have to wait up to two years to gain the full benefit of their $14bn-a-year brokerage joint venture due to the complexity of merging information technology systems.   But what will the industry look like in two years?  That's anyone’s guess but one thing we can reasonably be sure of it that it will not look like it does today.  The fact of the matter is that delays in integration can cost organizations in more than just time and money.  They can also cost them competitive advantage.

In technology, two years can be a lifetime.  So a delay—particularly an extended delay presents a tremendous risk to opportunity—opportunity in terms of not only technological advantage but also and more importantly risk to opportunity revenue.  I want to be clear that I’m not just talking about risk to opportunity in the traditional risk opportunity definition?  

It’s not just the probability of loss when resources are committed and a better opportunity comes along.  What I mean by risk to opportunity is the very real likelihood that while these companies struggle with an extended timeline for integration, they are risking more than just money.  They are also putting at risk customer satisfaction and retention. 

If Morgan Stanley and Citigroup are strong alone, they are potentially stronger together.  Stronger meaning that they have an opportunity to capture a greater share of the market due in large part to the benefits of their combined operations, expertise and capabilities to deliver greater customer satisfaction to the marketplace.  However, as the timeline for integration of their systems and operations lengthens, whatever competitive advantage they might have achieved is up for grabs because their competitors are not standing stagnant while they get their “collective act together”. 

The speed of integration is key to mitigating opportunity at risk.  However, too many financial institutions rely on the belief that they can do more and do it better in-house regardless of the fact that it is not their core competency or area of expertise. They  fail to plan for the future when building in-house systems and buying pre-packaged applications.  They build or modify applications to meet an immediate need. Too often they buy and modify without remembering or realizing  that at some time in the future integration may be necessary or required. All of which makes it difficult if not impossible to integrate with speed.  

Maybe the fault lies not with the financial institutions but with their vendor partners.  Perhaps vendors who specialize in integration are not working hard enough to remind financial institutions that sometimes, the best way to solve a problem is to have an outside perspective.  Or that sometimes the best way to speed integration is to have professionals manage the work.  Or perhaps vendors are doing a great job telling this story and financial institutions just aren't listening.  Right?



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