Suncorp CIO schools CEO

When Suncorp's new chief executive Patrick Snowball stepped on board in late 2009, the tier two banking and insurance firm's chief information officer Jeff Smith wasted no time showing his new boss the ropes.

Jeff Smith, CIO, Suncorp
(Credit:Renai LeMay/Delimiter)

In Snowball's first week, Smith says, he took the CEO to see one of his software developer teams building a new claims system. Smith asked one of his developers to change a parameter and run the full associated test scenario through the thousand micro-tests required to see if it passed.

The system didn't pass the test — because of the changed parameter. But that was the point. Smith wanted to demonstrate to the CEO the Agile software development methodology that he says has spread "like a virus" throughout Suncorp since he first introduced it.

The reason? It's this revolutionary programming technique that is allowing Suncorp to think on its feet in an industry which so often struggles when it comes to implementing technology quickly and easily. And Smith's demonstration is already paying off.

"The biggest promoter of Agile now is Patrick," Smith says. "He thinks that this is the culture of the company that we want."

Sitting down for a coffee with Smith at Suncorp's recent half-yearly results briefing, it's easy to forget that he's a veteran of Australia's IT industry with 25 years of experience under his belt and the former CIO of one of Australia's largest and most complex companies — Telstra.

This is because he talks about huge banking development efforts with the excitement of an entrepreneur who's involved in their first start-up company. The years fall away and he gets a gleam in his eyes as he talks about a subject that he is passionate about.

Not for Smith the staid, boring, half-decade-long IT projects that will see technological change delivered over a period of 10 years. The CIO wants his IT operation to be flexible enough to move with the needs of the modern banking environment — not lag it.

Becoming agile

Key to Smith's approach since he started at the bank after its mega-merger with insurer Promina has been the introduction of the Agile software development methodology.

The core idea in Agile is iterative development, rather than the traditional "waterfall" approach to building technology. Waterfall projects start off with a plan, which then becomes a series of milestones, and eventually becomes a final product — with testing done at the end of the cycle. It's the way most software developers in the 1990's were taught to code.

Agile development, by comparison, utilises a disciplined approach which sees constant iterations: testing and improvements made daily to code bases built by small teams constantly communicating with each other and adapting quickly.

For example, Smith says that his teams have visual storyboards for every project they're working on, and they constantly get updated.

"Every day the team meets in the morning and looks at all the iteration planning and says: 'What did we do yesterday? What are we doing today? What roadblock exists?'," says Smith. "These are the three questions asked. You can't have PowerPoint and you are not allowed Gantt charts, you have to talk to people."

There are also other changes that Smith has enforced as part of the Agile process.

In traditional projects, he says, representatives from the "business" side of the company visit IT departments, outline their requirements and leave, because they don't believe they're required — the attitude is that the IT department will build what's needed.

This results in a situation where the developers build something that is not quite right, the business complains about it and tries to organise a fix, and the cycle goes around and around. At Suncorp things are done a little differently.

"We force the business users there full time," says Smith. "Because if you have iterations running every two weeks they can't really leave."

And the development teams are small — the team that does Suncorp's internet and mobile banking development is just seven people.

"You don't have to have size," says Smith. "You've got to have high intellect and very engaged people. If you are going to run a huge program and need 100 people to do it, what you find out is that smaller teams are more productive. If you get beyond seven or eight people then you need a program manager. You get to 20, and you add more overheads and project officers and pretty soon you've got 10 people managing one guy doing work."

The Agile philosophy has flat development structures. Smith says it's important that the teams working on a certain issue are able to make decisions about it. For example, the CIO says Suncorp has adopted the Hudson and Selenium testing tools.

But those decisions aren't mandated from above by a dedicated central technology architecture group. Instead, Smith says his teams are using communications tools like Yammer and Microsoft SharePoint to stay constantly in touch with each other — even with other parts of the business.

"Our job as leaders is to give them advice but not to make decisions," he says. "Now as communities meet over Yammer or SharePoint or that kind of thing, they make the decisions once a month, and they come to me and my leadership team and they make their recommendations and ask for funding."

Smith says if you're in a manufacturing industry like automotives or televisions, economies of scale work with large teams. But in IT it's the opposite. "You want very few people and the team self-directed," he says.

The result of all this fresh thinking has been a different kind of psychology inside Suncorp than you would find inside a lot of other financial services organisations. Smith says that when he first joined the bank many industry conversations would revolve around concepts that were a bit outmoded.

For example, he said, the conversation around banks implementing anti-money laundering controls was one of big picture spending. "[People] would look at all the banks and say: 'Well X bank is going to spend a hundred million and we are half their size, so we should spend 50'," he said. "'But maybe we should only spend two!'."

It's a similar situation when it comes to internet banking.

"Look at the big numbers — a hundred million to put new banking portals out," he says. "That is ridiculous! You have to change the psychology that things can be done for a lot less money and we have focused on that. You can't afford to spend 20 or 25 million on every new brand internet channel. Let's figure out a way to do it for a million."

Smith laughs about massive banking programs with proponents which declare they are going to spend a billion on a project. "Then the next ones come out and say: 'We are going to spend a billion and a half'," he says. "These are bragging rights! I wouldn't be bragging about spending a billion dollars! I would be bragging about what I did with it."

In Suncorp's case, the bank is now taking an existing internet banking platform and replicating it for its various brands instead of building new ones each time.

"It probably costs less than a tenth of the money it used to cost. Everyone is shocked and they wonder how we can create a whole new internet portal for a couple of hundred thousand," he says. "They are used to spending 25 million."

Now Suncorp is applying that methodology to other areas of his business. iTnews recently documented how the group is fast-tracking what it describes as its "building blocks" IT transformation, which will touch several projects within the bank's general insurance division. The bank also recently completed a payroll integration process, which Smith says was completed "very quickly" in one conversion roll-out for all Australian employees.

And Smith says that when Snowball stepped on board, he realised that a major factor in the bank's IT operation was the Agile methodology Smith was driving. "It is quite invigorating that he is that interested in it," the CIO says. "We really want to leverage that more across the business."

In the long run, says Smith, the Agile methodology even changes how the finance department thinks about its IT brethren. "They are less worried about the cost flow about something getting done — so you don't have to waste all that time trying to justify why you are doing the project. You just say: 'Well, let's go and do it'."

How to start

When you ask Smith how other CIOs can get in on the Agile secret and make their own organisations more flexible, his eyes glaze over as he goes back to the early days. It's important, he says, to incubate the methodology inside the organisation: "We didn't start doing every project Agile."

Instead of trying to force it on Suncorp as a whole, Smith picked several "very visible" projects in areas like anti-money laundering and internet banking, the dispersion of Suncorp's IT architecture group and the move to IPSAN storage technology and made his stand there.

"I think the CIO has to size up the situation they have got," he says. "I incubated some things in infrastructure, with JBoss and open source, and then incubated some things in development areas and projects."

It wasn't all easy going. Smith advises other CIOs to have a simple, clear strategy and to repeat the Agile message over and over. But once a few successful projects have been landed, he says, the methodology spreads like a "virus", or like "fruit that grows from the inside out".

Once some of the ideas spread through Suncorp, Smith also started to see internal Agile "champions" outside of the bank's IT department — staff from the mainstream business. Then things start to get easier.

"They won't run a project unless it is done that way," he says. "They know how it has to be formed. They know the role. They know what iteration management is. They know that we do retrospectives every week and we do stand-ups every day. They know the language."

Smith says he sees a fair amount of CIOs who are conducting just one or two projects using the Agile system — a fact which disappoints him, because he'd like to see the mindset gain mainstream acceptance in the IT community.

One of the problems, he says, is that CIOs are scared of failure and so try too many proof of concepts, because they all have a wallet full of project failures in the past and are wary. "They are trying to prevent failure rather than create success," he says — noting it could be this problem that is behind the question of why few CIOs take the next step up to become a chief executive.

Instead of creating proof of concepts, he says, CIOs should be looking at the best in the industry — companies like Amazon, Apple and Google — to see how they do their in-house development.

"Financial services companies shouldn't benchmark themselves against other financial services companies," he says. "They are IT companies. They are building, and they should be bench-marketing themselves against the best-run IT groups. When you do that, you can reset the bar."

"Should we do a proof of concept to see whether Google's development environment works?" he asks.

The heart of the matter

When you really get down to it many of Smith's ideas can potentially be traced back to his history working in start-ups — a history that many corporate and government chief information officers do not share.

Lean development with small, focused teams in constant communication, trying to do more with less capital, thinking outside the box and the concept of personal responsibility and self-management — these are all ideas that are key to running any sort of start-up.

There are the obvious years that Smith spent working for local cloud computing start-up Majitech in between his time at Telstra and his current role at Suncorp. But what many don't realise about the executive is that his start-up history goes back even further.

"I worked in the only start-up that Toyota has ever done," he reveals. In the late 1990's, Smith was given a mandate by then-Toyota chief Yoshi Inaba to build a team to resolve some supply chain problems the car manufacturer was suffering.

"We had a certain amount of seed capital and the CEO of Toyota, Yoshi Inabi, was very direct and said 'Jeff, I don't want you guys inside the Toyota facility because you will be constrained by all of our processes and culture. You need your own'," said Smith.

So the team went to Orange County outside Toyota's headquarters in Los Angeles, and in four months built a product where automotive retailers could see each other's inventory — resolving a problem where dealerships were stocking identical parts and creating a more efficient and effective network.

"That is when I really started thinking about Agile and lean systems," says Smith. "You have to treat something like it is your own money and it is a start-up. You have to keep the company's capital like it is venture capital."

In other words, the Agile development methodology is not just about making good technology. It's also about making and keeping money — a concept core to the heart of any business, whether it be a start-up or a giant — and one which should see it continue to have pride of place in Smith's toolkit at the heart of one of Australia's major banks.