The Commonwealth Bank of Australia has cut its IT spending to the tune of AU$80 million, the financial institution revealed in its latest set of annual results.
With technology listed as one of Commonwealth CEO Ralph Norris's top five priorities for the year, the company has seen its IT bill plummet year on year -- from AU$985 million in 2006 to AU$907 million in 2007 -- following a renegotiation of a number of key contracts with suppliers.
Among the savings wrung from vendors are a AU$15 million per annum cut on its telecoms bill, spread across Optus, Telstra and Gen-i. CBA spent AU$113 million with Gen-i over the course of the year ended 30 June after renewing its contract with the company earlier this year, extending the deal between the pair until 2009.
The bank also cut its bill with EDS, trimming the cost of its enterprise processing services by between AU$12-AU$14 million a year annually and the charge for end-user computing, including desktops, service desk and ATMs, by between AU$14-AU$19 million per annum. The company has also realised savings by in-sourcing some services over the year, including access and identity controls, from EDS.
CBA's "technology and operational excellence" program has drawn an investment of AU$218 million during the year ended 30 June 2007 -- expenditure which includes IT infrastructure and telephony platform upgrades.
However, despite a rise in investment, IT is now taking up a smaller piece of the bank's operating expenditure: down from 20 percent in 2006 to just over 16 percent in 2007.
Despite the reduced IT bill, the bank's operating costs increased by around five percent across its banking business division, driven by the cost of additional front line customer service staff and other sales and service related investments.
The bank has also invested money in IT to manage risk and compliance during the last year -- including outlays around Basel II, computer and business continuity centres and a collateral management system upgrade -- totalling AU$184 million.