Morgan Stanley dwarfs average businesses with $4B annual IT budget

Dive Brief:

Morgan Stanley reserves $4 billion of its budget to IT annually, CEO James Gorman said Tuesday, reports Business Insider. Morgan Stanley technology investment equates to about 40% of the bank's overall $10.3 billion expense budget last year, save compensation expenses, according to the report. However, it's unknown if the tech budget includes the salaries of its tech workforce.
Gorman said managing such a large budget comes with some challenges, including where to direct spend. The CEO said the company has to decide between "maintaining the ship" as it is or investing in future technologies, according to the report.
Part of the bank's tech budget goes to in-house solutions. Morgan Stanley also showcased its new integrated technology platform aimed at aiding advisers in their conquest for new clients and bettering current services, according to InvestmentNews. The platform is designed to broaden the goals of clients, while creating transparency between clients and advisers.

Dive Insight:

Morgan Stanley's IT budget is far more than the average IT business spend but serves as a prime example showcasing the importance of IT funding for overall business strategy. But for now, the cost center stigma of IT persists.

Morgan Stanley's technology budget represents about 10.6% of its $37.9 billion in net revenue for FY2017. To put that in perspective, companies of relative size to Morgan Stanley only spend about 3.2% of their revenue on IT, according to a 2015 Techvera report.

Less than one-third of organizations have a current digital strategy in place to execute companywide. With such a low bar for digitalization, the formality and importance of tech is reduced, if not ignored entirely.

CIOs need a more formal seat at the C-suite table to engage in conversations about overall business strategy. To do so, they need help articulating what funding they need and that begins with how CIOs approach their fellow superiors. "It's not what you tell them, it's what they need to know," that drives a conversation articulating technical improvements, said Tony Young, CIO of Sophos, speaking at a Gartner event this month.