Will ANZ Bank ever appoint a new CIO?

Is Australia and New Zealand Banking Group suffering from a lack of strategic IT leadership as its year-long search for a new chief information officer drags on?
Written by Renai LeMay, Contributor

news editor
Renai LeMay

(Credit: CBS Interactive)

commentary For the past year, the team here at ZDNet.com.au has been playing a little game with the Australia and New Zealand Banking Group.

The game mainly goes like this: we call up the bank every few months to ask them whether they've yet appointed a replacement for its former chief information officer Peter Dalton, who was reassigned almost 12 months ago.

Since that time, Dalton's role has been jointly filled by group managing director of operations, technology and shared services, David Cartwright, and deputy CIO Kieran Griffiths, while a replacement is sought.

Usually (as it did this morning), the bank responds by stating that the search for a new CIO is ongoing. Today, for example, a bank spokesperson said it hoped to have something to announce by the end of 2009. Then we put a note in our diaries to repeat the same phone call in two months or so. And the game goes on.

But I feel it's about time to start raising the broader question of why the ANZ Bank hasn't appointed a new CIO over the past 12 months, and looking into the potentially negative repercussions of the lack of action on this front.

The bank's technology strategy has differed markedly from that of its rivals over the past several years.

The other pillars of Australia's banking industry, the NAB, Commonwealth and Westpac (including St George) groups, are all currently pursuing ambitious core banking system revamps that aim to deliver new functionality to staff and customers, with benefits to percolate out through the various systems which sit on top.

The Commonwealth Bank alone is spending $750 million on its platform, which is being constructed with the help of SAP and Accenture.

In comparison, ANZ is advocating a course of simplification and spending its IT dollars on projects that will bring in more profits — for example, adding customer-facing internet and mobile phone banking functionality. The bank has experimented with core banking technology, but only in the Asian regions that it also operates on — not in its core Australian business.

ANZ differs from its brethren in one other significant way: more so than any other bank, it is increasing the amount of technology work it does offshore, predominantly in its Indian facility. Late last month the bank's chief executive Mike Smith estimated the bank had 4000 staff working at the Bangalore facility — 500 more than the latest released figure. The offshoring exercise has caused significant concerns amongst ANZ's unionised workforce.

In March — just six months ago — the bank had announced the number was increasing from 3000 to 3500 as it cut staff at its Melbourne headquarters.

All these moves start to bring a fairly clear picture of the bank's technology division into focus. In my opinion, ANZ is currently lacking in the really senior strategic technology leadership that is required to give its IT operations a lasting vision — and execute on that vision — for the five to 10 years ahead.

My impression of the previous CIO, Peter Dalton, is that while capable, he didn't have the sort of industry gravitas and skill at getting initiatives through the bank's board that his counterparts at Commonwealth Bank of Australia (Michael Harte) and Westpac (Bob McKinnon) have in spades.

During Dalton's tenure he appeared to mainly be focused on the kind of sexy surface-level initiatives which get both press and approval from within your organisation (such as green IT), but not the ugly, multi-year, expensive system overhaul projects that most of the senior IT managers in banks know are crucial to their daily operation.

That approach is consistent with his history at the bank immediately before taking the CIO role — he was previously a chief technologist for the bank's personal division. One wonders just how much interaction Dalton truly had with the real "guts" of the bank's technology?

If you look at the career of deputy CIO Kieran Griffiths, indications are a little more encouraging. According to this article by CIO Magazine, he was previously the bank's general manager of enterprise services, a role which saw him oversee the infrastructure, service management and enterprise applications.

However, one cannot help but feel that Griffiths' influence on the bank's IT strategy will be heavily overshadowed by group managing director of operations, technology and shared services David Cartwright, previously the CEO of iPSL, a cheque processing services company in the UK, as well as a former technology and services delivery executive with Barclays. There is no doubt that Cartwright has the technology background to come to grips with ANZ's critical underlying platforms.

There is little evidence that ANZ is really investing in its technology and preparing for the next wave of services in the five- to 10-year time frame.

Though one can't help but feel that at the moment it's the operations and "shared services" side of his job that is dominating his thinking. There is little evidence that ANZ is really investing in its technology and preparing for the next wave of services in the five- to 10-year time frame. But there is a fair degree of evidence of cost-avoidance and cost-cutting going on at the bank.

This sort of cost-minimisation approach to an organisation's IT department is often the one taken by chief operating officers, as opposed to the typical chief information officer approach which is typically far more expansionary and developmental.

And Cartwright is in essentially a chief operating officer role.

Let's be clear — I'm not arguing that ANZ is likely to run into many (if any) short-term problems from the lack of a permanent chief information officer in the company. Unlike the Commonwealth Bank, for example, it hasn't suffered any major outages recently, and it has even gone to the extent of re-negotiating a major $500 million contract with Optus for telecommunications services.

But it is in the long term that the bank — which declined to comment on the issue for this article — will suffer without a strong, technology-oriented CIO to deliver it a strategic IT vision.

We've seen this sort of problem play out many times, in many different organisations, when the chief information officer has been marginalised or been absent altogether. The modern chief information officer role evolved from the old "IT manager" or "IT director" position of the 1990's for a reason.

In 2009, CIOs are there to provide a bridge between business management and the technology division, in an environment in which technology is critical to the operation of almost every large company.

Forgetting that lesson has the potential to cost any business dearly.

Editorial standards