CommBank to kill silos

Summary:The Commonwealth Bank plans to end a silo-based approach to IT that has seen the financial services giant's businesses act as up to six different customers when procuring products and services, chief executive Ralph Norris said. In a market update today, Norris unveiled the new approach as part of a broader IT plan to be implemented by incoming chief information officer Michael Harte.

The Commonwealth Bank plans to end a silo-based approach to IT that has seen the financial services giant's businesses act as up to six different customers when procuring products and services, chief executive Ralph Norris said.

In a market update today, Norris unveiled the new approach as part of a broader IT plan to be implemented by incoming chief information officer Michael Harte.

The cost to the CBA of the silo approach had been identified in a review and benchmarking exercise undertaken in November and December last year.

The approach had seen multiple desktop solutions and call management systems installed in the CBA, while different procurement arrangements had seen some businesses paying more than others for equivalent products and services.

"In essence we've failed to leverage off the scale of our organisation," Norris said.

"We've effectively been four or five, maybe six different customers rather than act as one customer and get the benefits of that scale."

The CBA's senior management had worked hard to "get their arms around" the problem and ensure the organisation was standardising its technology platforms and ensure the solutions being put in place were "appropriate from a group perspective".

The new IT plan and tackling of "poor quality spend" across other areas of the CBA should help redirect AU$200 million into capital expenditure, Norris said.

The CBA's annual expenditure on IT is reportedly in the vicinity of AU$1.1 billion.

The chief executive also said the CBA was in the final stages of renegotiating its AU$5 billion, 10-year IT outsourcing contract with partner EDS, which is due to expire next financial year.

While commenting directly on the outcome of those negotiations, Norris flagged the CBA's desire to adopt a best of breed approach to sourcing while retaining strong internal expertise and intellectual property.

"I know there has been a lot of speculation in regard to the EDS partnership," Norris told the briefing.

"EDS are a very good organisation in regard to the operation and management of large scale systems.

"…They have provided the bank with a much stronger reliability and more robust underpinning of its processes and systems in the way that they have managed that particular set of systems over the last several years than was the case when the bank ran those processing centres themselves.

"It's fair to say that EDS is not an expert in every part of the business, or every part of the IT supply chain.

"So therefore we have to make sure that we are using IT suppliers who can provide us with the best fit and with the best experience level behind them that we can find.

"We are in the advanced stages of renegotiating the EDS contract and I believe that we will come to a satisfactory arrangement there."

Norris also flagged a crackdown on the use of consultants at the CBA.

"We have to make sure we're using consultants for things that are important, imperative and things we can't do ourselves," he said. At the moment, consultants were often used to provide an imprimatur for work undertaken within the institution.

Topics: Banking, Government : AU

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