St George IT boss lashes out at poor governance
John Loebenstein, group executive, information technology, told a conference in Sydney today that "too often" corporate governance had been allowed to become a poorly-asked question -- "did IT give us the value we expected?"
"Governance should rightly examine the benefit to the organisation from technology...but the verdict on whether the actual return was satisfactory must not -- and cannot -- be an indictment on IT alone.
Loebenstein decried the "knee jerk industry" that had "sprung up under the cloak of governance" as a result of catastrophic business failures overseas such as Enron and Worldcom and HIH locally, arguing governance was in fact "just proper management".
"It has to be a performance indicator pertaining to the whole organisation... Because maybe the technology part wasn't correct.
"But was the training sufficient? Wasn't marketing on target, wasn't the design of the product attractive to consumers, was it properly priced? All these factors come into play when you leverage an investment," he said.
The characteristically outspoken executive also told Australians to "not squeal" when it came to the offshoring of jobs to countries like India: "While the argument against the so-called exporting of jobs from Australia can become quite [emotional] there is a strong, rational economic argument that supports it."
"Australia's economic wellbeing depends on us exporting as much as possible... It's natural for the nations we export to, to desire some reciprocal trade and in some cases that reciprocal trade is in labour and skills. We should accept this and not squeal when it affects our very own backyard," he said.
St George has outsourced some application development work to Indian companies over the last four years with what Loebenstein described as "excellent results".
However Loebenstein said cost, not quality of work, was the driver: "What is valid is that in some offshore locations it is possible to achieve an equivalent in quality and productivity to the home market, with some significant cost advantage."
Loebenstein stressed that there is very little wrong with the skillset and quality of Australian work in technology, whether that work is done inhouse, by inhouse staff, or externally by some vendor.
"Too often we do ourselves here in Australia a great disservice by stating that offshoring this or that achieves a quantum leap in quality. Except for a very few isolated examples, I am at issue with that statement."
However, Loebenstein believes that not all locations and functions are safe to offshore.
He said he regards offshoring technology production to "some locations" as "too risky," while in other locations where the risk is managed and minimised, there was generally no competitive cost advantage.
Loebenstein said it was essential that some experts are retained in-house to oversee and control the IT function: "These are the people who resolve queries [and] intimately understand the business, the integral details of the business process and the rules to be followed. [These experts] form the core of knowledge should the function ever be removed, abolished or moved internally".