Australia's banks get IT transfusion

Australia's banks get IT transfusion

Summary: National Australia Bank took the knife to its long-time chief information officer Michelle Tredenick this week, but was this a reflection of her perceived incompetence or simply a consequence of the manoeuvring at higher levels that seems endemic in Australia's incestuous banking IT community?

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commentary National Australia Bank took the knife to its long-time chief information officer Michelle Tredenick this week, but was this a reflection of her perceived incompetence or simply a consequence of the manoeuvring at higher levels that seems endemic in Australia's incestuous banking IT community?

Liam Tung

ZDNet.com.au journalist Liam Tung (Credit: ZDNet.com.au)

It's fair to say Tredenick was caught off guard by the Satyam financial scandal. NAB, like its fellow Melbourne bank, ANZ, was on the cusp of launching its second round of technology cost-cutting by draining its headcount offshore to Bangalore.

It's fair to say Tredenick was caught off guard by the Satyam financial scandal.

Unlike ANZ, however, NAB had also gone public on the overhaul of its core banking systems, which would see it dip a measly $30 million toe into the water in the first year of the project, but plunge $1 billion over five years.

Perhaps Tredenick should never have selected Satyam, but neither Qantas nor Telstra had any better idea than NAB about the Indian giant's hidden problems — the only difference was that NAB was depending on it for what could soon have been a critical cost-cutting initiative.

As for the core banking strategy, was it a poor move on her part? It's too early to say, but if so, then the bank's board should also be held responsible since these decisions are rarely, if ever, made by one person.

A more likely cause of Tredenick's ousting was former Bank of New Zealand CEO Cameron Clyne's ascension to the leadership of the bank. Clyne likely wanted a familiar loyalist by his side when it came to technology, no matter what. As CommBank's David Murray reflected in 2006 (soon after he left CommBank), "I learned that the IT system can make or break the bank".

There are at least two good examples of similar blood lettings occurring. NAB's was reminiscent of events soon after CommBank seconded its New Zealand subsidiary's CEO Ralph Norris to replace Murray in 2006; only back then, the knife slipped into the arterial vein of Westpac's current CIO Bob McKinnon.

Had Norris simply allowed McKinnon a dignified exit, which covered up the real reason for his departure, or was it merely the new CEO wanting to build a team that was loyal to him?

Norris punched a hole through the wall on his arrival with a review of CBA's $1.5 billion IT transformation plan, according to sources who worked there at the time. Six months later McKinnon was out and young-blood Michael Harte was in. Just as Tredenick's last words were "core banking", McKinnon's were "Which new bank?"

Whatever the truth, McKinnon has found that new bank in Westpac. And similar to Clyne's Bennett-transfusion, it's thanks to Westpac's CEO Gail Kelly that he was resurrected to banking sector prominence.

His appointment at Westpac was coupled with the hosing out of old blood, Diane Sias and former group CIO, Simon McNamara. St George's former head of technology, Peter Clare, meanwhile was brought in, as was Brad Cooper, in yet another Kiwi transfusion, which will see the former Westpac NZ CEO head up the $600 million integration strategy with St George, which he is expected to have come up with in a fortnight.

This week's resignation of former Westpac CTO David Backley sheds some light on the conflicting messages that arise when senior executives are concerned. Backley left of his own accord and was well-regarded, Westpac spokespeople said.

Sure, he left of his own accord, but after moving from a strategic role to general manager of application service delivery, is it any wonder why he had taken a self-imposed sabbatical to research the impact of technology on the work-life balance? As Backley had said at a recent conference regarding the matter of whether his new position was a demotion: "You can read into that whatever you like".

But there is cause, and then there is effect. It was well known McKinnon and Kelly worked together at pre-Norrisian CommBank, but what's not known widely is the profile of McKinnon's strengths across business, internal politicking, and his official remit, group technology.

Sources close to Westpac say McKinnon is a take-no-prisoners businessman, while others at CommBank during McKinnon's rein say his crown was propeller-less

Sources close to Westpac say McKinnon is a take-no-prisoners businessman, while others at CommBank during McKinnon's rein say his crown was propeller-less, which might explain Westpac recently hiring IT gun, Sarv Girn. And this is where the picture gets interesting.

Girn, one-time chief technology officer of CommBank, was said to have been a likely candidate for the top tech job there, according to sources. That was until — if this was in fact Girn's ambition — CommBank got its Harte transplant.

Since then Girn has served not as CommBank's CTO, as he was before Harte's arrival, but as its chief information security officer until at least early 2008. With Girn's move to Westpac, he surely takes some sensitive knowledge, having walked behind the curtain of CommBank's $580 million SAP core banking systems overhaul. Or did Harte keep Girn away from the crown jewels after McKinnon landed at Westpac?

Girn is described by some within banking IT as a "genius", a quick thinker who can wrap his head around a bank's systems faster than you can say the words "Which Bank?" and would surely be a good ally to McKinnon, having worked with him before.

NAB's blood transfusion, meanwhile, is still streaming across the Tasman as Adam Bennett clears his Bank of New Zealand desk to rejoin his former boss, Cameron Clyne. NAB appears to be in a holding pattern over the issue of Satyam, but like Tredenick, Bennett will need to lance the bank's rising technology bills and find an alternative to Satyam, to complete its second wave IT offshoring to Bangalore.

Which brings me to the mystery of ANZ. What is it doing? Why was Peter Dalton assasinated as the CIO? Did he do something wrong? Was he a weak leader? Does the bank even intend to replace him? All we have heard so far is that it wants to cut technology costs, and plans to use its Bangalore release valve to expel around 2,500 litres (500 IT staff) of blood by the end of the year.

And the merry-go-round continues.

Topics: Banking, IT Employment

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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16 comments
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  • Oz Banking IT Underbelly

    Good article, Liam. You pretty much have sum up the bickering within the Australian Banking IT underworld and the saga continues... Looking forward to your next write-ups, is it going to be called "A tale of two nations" or "The kiwi invasion"?
    anonymous
  • Transfusion can lead to banking AIDS

    Liam - clearly you have some good sources. I agree about Sarv, have worked with him. While maybe genius is too strong a work, he can wrap his brain around subtleties that most of his peers cannot. The sort of guy who constantly plays with his Blackberry (as he does) while talking to you all the while able to ask and answer complex questions. The problem is our banking sector is so small that when you shift one to another you acquire other bank's information and secrets both good and bad. A sort of AIDS. As to Tredenick - the truth is this the new CEO needed someone he could get along with - and anyone who's worked with her (as I have) knows she ain't got too many friends. Diane was the same - and was once forced by her WBC CEO to personally apologise to each member of a high level meeting for her aggressive verbal behaviour. When it all comes down to it, it's not what you know but who you know that matters in the Australian banking industry.
    anonymous
  • the bankers club

    If McKinnon and Sarv are so great, why was CBA IT such a basket case? The outsource to EDS was a joke. The contract was unworkable and to the bank's disadvantage. Cost expolded, process was non existant, quality deteriorated. certainlt It did not deliver on time, to budget and meet business requirements. Still doesn't with the current bloated arrangement.
    Why are these executive decision makers never held accountable for the mess they make? They continuw to do the rounds regardless. IT in these big Banks has not improved greatly in twenty years. They still struggle with legacy issues, they are still expensive and not world best practice. They are still monolithic, beaurocratic nightmares.
    anonymous
  • Sarv to the rescue!

    The truth of the matter is that McKinnon must be struggling to keep the wolves at bay when being asked what is he doing to truly resolve the integration issues of St George & Westpac. I can almost hear the voices inside McKinnon head saying GET SARV HERE QUICKLY OR I WILL BE SACKED AGAIN!. How the highest paid CIO in the country can ever get by in IT and have his employers believe that he knows what he is doing is a mystery. This is why he relies on people like Sarv to protect him. As Mckinnon has never even looked at how IT works, I believe his back-up plan to Sarv is to have his kids educated in IT so that they can coach him.

    All this for a guy that has been sacked from his last 3 gig’s makes me wonder;, what pictures or information does Bob hold that could possibly put his employers in a position of having to hire him?. Why is that Sarv prefers to stand behind the guy that knows nothing.

    Sarv is close to being a genius in banking and has tremendous knowledge on building large scale systems to support the most complex and secure banking environments. Without him, I think CBA will suffer. He is a rising star and I hope that Westpac soon recognises the value they have in Sarv and the lack of value in Bob to then make a decision that not only benefits the Bank and shareholders but recognises and rewards those whom are worthy.

    It's been a long known fact that Banking and Executives in Australia have a very incestuous relationship and no-one can afford to be caught short. Sarv is going to make a great impression at Westpac and when thats done, Maybe ANZ should look to why Dalton wasn't right and start looking to the have understanding and intelligent people like Sarv on their team.
    Great article Liam
    anonymous
  • Offshoring will be the end of the banks

    While offshoring of jobs continues to prosper in the name of corporate profits, local unemployment will continue to rise. The time will come when most of the banks customers are unemployed because of this, and consequently the corporate profits will fall.
    anonymous
  • Sarvation

    It wasn't until Bob brought Sarv to WBC that the bank even had an enterprise wide PMO in their technology division. Can you imagine it? One of the largest integration programs in Australia ($600M) - now 12 months on - and they didn't even have a PMO in technology. It's like trying to build a heathrow airport without a control tower - madness. they had to get an external organsation, PM something or other, can't remember the name - to build them a proper PMO and hold their hand in doing it. They have done a great job finally helping Westpac get a control of their out of control project management issues. That's why I bank with CBA.
    anonymous
  • PMO

    The organisation Sarv brought in is PMWorks, I think based in St Leonards. Yes, WPac has poor project controls but so do almost all the banks. You can bag Bob as much as you want, but smart people don't do all the work themselves, they surround themselves with people smarter than themselves. it's called Leadership.
    anonymous
  • and what about the consultants?!

    Liam, great article and I agree with your overall view that the Australian banking IT community is incestuous. However, one leg of the stool that you have not mentioned is the consultants, system integrators and software hacks. Talk about incestuous! Talk about having naughty pictures from offsite retreats that they can use to blackmail... Would be interested to get your view on what role IBM, Accenture, to a lesser extent EDS...and of course the Indian shops play in the whole lurid and shareholder scam that is Australian banking.
    anonymous
  • Called Leadership!!!!

    I will remember that comment next time I sit and contemplate how I create a similarity between Bob and other leaders. Maybe build the similarity of how a US president can have the smartest people in his Cabinet but still not have any idea of what he is doing and why. Is Bob any relation to George Bush as they both seeem to talk the talk but never walk the talk.
    anonymous
  • Consultants

    Isn't it strange that Ececutives bring in business consultants to advise on strategic and tactical business matters? Why have these execs in the first place? Maybe consultants should be paid from the engaging executive's own salary, since they are doing their job? This might slow down the river of cash flowing to the big consultancies. Given the state of the current market, consultant's value would have to be suspect., if not completely worthless. Talk about low productivity!
    anonymous
  • The Value of Consultants

    I believe that some consultancy staff adds great value when they are asked to analyse impacts and approach in an area of their expertise. I would expect that CIO's know what they are looking for from a Consultancy rather than be lead by a consultant which happens in a lot of cases. The answer is about the level of expertise that the CIO has and how he/she can tell good work when they see it. They should be able to manage what a Consultancy will do for the business, for how much and why and be able to clearly articulate how this will compliment their in-house skills deficiency. In the example of Westpac and Sarv, he knew he needed a PMO and there were no skills to do this internally, that is why PMWorks were engaged. In the example of where Accenture were engaged to review the fallout of Satyam in NAB, The question of why Accenture and how independent will their recommendations be given that they a competitor to Satyam for that business begs questions.

    The value of a consultancy and the recommendations or deliverables from the engagement will only be as good as the people doing the work. Don't be fooled into engaging a brand, you are engaging people and it the credentials of those people that matter.

    Boston Consulting group should have learned by now (but they haven't) that you can't put a Uni Graduate on a client site and demand $8K per day, no matter how good the brand is.
    anonymous
  • wrong timeframe

    The outsource to EDS was prior to the tenure of both McKinnon and Gurn - and both worked to try to fix the mess in the environment - with varying degrees of success.
    anonymous
  • ?

    McKinnon wrote the contract and Sarv was there in 2002 so had five years as CTO.
    anonymous
  • ALL CIO are RUBBISH

    including SARV. Lets face it if IT CIO was that legendary, they would be DIRECTORS of the company and perhaps Running the Banks. Yet IT have and always been stuffed by these Financial Accountats Genius/wizards that have made the banks balance sheet not so BALANCED. A systems that require constant tweaking everyday, 24/7, 100 years is a flaw of the operations and accounting practice.....1 + 1 =2 and not some funny figures that can be distorted by Accountants!
    anonymous
  • Visionary Leadership Does Exist

    Not sure I agree with you there. Having been at CBA during the transition from McKinnon to Harte I have to say that while dubious at first, Hasrte brought a whole new level of strategic thinking and doing to the company. I think some CIO's can play such a visionary role that they help drive engagement amongst staff and a can do culture at all levels and start to partner with the business to become a strategic driver rather than order taker. I think CBA should be really applauded for the changes they have undertaken in the last 3-4 years.... although admittedly they still have a way to go.
    anonymous
  • Bob was NOT sacked

    This comment above that Bob McKinnon was sacked from CBA is total rubbish. Even the official press release of his resignation to take up his role at Multiplex clearly shows it was unexpected and not what the Bank would have hoped for http://203.194.162.10/listco/au/cba/press/p20051128.pdf. It is obvious he was being groomed by Multiplex to eventually take the CEO role (which is what happened) so as to sell Multiplex to Brookfield in due course (which is what happened).

    There is no press on the issue of Bob being sacked so clearly the above writer has a dishonest axe to grind or is ill informed. There is not a whiff of controversy on the Net about Bob�s departure from CBA and I doubt he would be given the #1 paid CIO role in the nation if he was so hopeless an individual. Clearly this author does not know Gail Kelly either.

    Ask anyone around at WBC at the time (as was and am I): Diane Sias was a professional and leadership liability for WBC as evidenced by the many horror stories regarding her style (silver back) and her sudden but welcomed departure after barely 12 months in the role. Bob clearly was an obvious choice.
    anonymous