The complexity of merging information systems has delayed the integration of Morgan Stanley and Citigroup's $14 billion-a-year brokerage joint venture, known as Morgan Stanley Smith Barney. We consider ways in which the problems with the integration could have been avoided.

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 has delayed integration. The joint venture was completed on 1st June 2009 and acts as a distribution channel for the marketing and cross-sale of investment products to Citigroup's retail deposit base. The financial advisers of the new business had expected to be able to sell a full suite of products from both Morgan Stanley and Citigroup to their wealthy clients but the difficulties of integrating IT systems will mean that Morgan Stanley’s financial advisers will not be able to access products from Citigroup’s capital markets business, and vice-versa, for months.

The Morgan Stanley Smith Barney example illustrates the importance of achieving a smooth integration of IT systems. Here are some tips which should help to avoid the problems that Morgan Stanley Smith Barney is currently experiencing:

  • Structure and Management: a strong project structure or management team, together with identification of a project sponsor to oversee the project on a regular basis (can be external or internal);
  • Project Planning: a quality planning process including ongoing assessment of whether the plan is complete and addresses issues such as identification of key deliverables and milestones, support of infrastructure development, sufficiency of training of relevant personnel and business continuity planning;
  • Risk Management: an adequate project risk identification and monitoring process to avoid "scope creep" and ensure changes to planned deliverables are managed appropriately; and
  • Performance Monitoring: formal performance monitoring activities, including independent status reports to senior management identifying progress against project plan, changing risk profiles and emerging issues.

Morgan Stanley Smith Barney is now looking at a wait of up to two years before the IT systems will be smoothly integrated. Companies contemplating similar projects should consider the factors outlined above to ensure that the Morgan Stanley Smith Barney problems do not plague their own IT systems integration plans.