The Commonwealth Bank plans to end a
silo-based approach to IT that has seen the financial services
giant's businesses act as up to six different customers when
procuring products and services, chief executive Ralph Norris
In a market update today, Norris unveiled the new
approach as part of a broader IT plan to be implemented by
incoming chief information officer Michael Harte.
The cost to the CBA of the silo approach had been identified
in a review and benchmarking exercise undertaken in November and
December last year.
The approach had seen multiple desktop solutions and call
management systems installed in the CBA, while different
procurement arrangements had seen some businesses paying more
than others for equivalent products and services.
"In essence we've failed to leverage off the scale of our
organisation," Norris said.
"We've effectively been four or five, maybe six different
customers rather than act as one customer and get the benefits of
The CBA's senior management had worked hard to "get their arms
around" the problem and ensure the organisation was standardising
its technology platforms and ensure the solutions being put in
place were "appropriate from a group perspective".
The new IT plan and tackling of "poor quality spend" across
other areas of the CBA should help redirect AU$200 million into
capital expenditure, Norris said.
The CBA's annual expenditure on IT is reportedly in the
vicinity of AU$1.1 billion.
The chief executive also said the CBA was in the final stages
of renegotiating its AU$5 billion, 10-year IT outsourcing
contract with partner EDS, which is due to expire next financial
While commenting directly on the outcome of those
negotiations, Norris flagged the CBA's desire to adopt a best of
breed approach to sourcing while retaining strong internal
expertise and intellectual property.
"I know there has been a lot of speculation in regard to the
EDS partnership," Norris told the briefing.
"EDS are a very good organisation in regard to the operation
and management of large scale systems.
"…They have provided the bank with a much stronger
reliability and more robust underpinning of its processes and
systems in the way that they have managed that particular set of
systems over the last several years than was the case when the
bank ran those processing centres themselves.
"It's fair to say that EDS is not an expert in every part of
the business, or every part of the IT supply chain.
"So therefore we have to make sure that we are using IT
suppliers who can provide us with the best fit and with the best
experience level behind them that we can find.
"We are in the advanced stages of renegotiating the EDS
contract and I believe that we will come to a satisfactory
Norris also flagged a crackdown on the use of consultants at
"We have to make sure we're using consultants for things that
are important, imperative and things we can't do ourselves," he
said. At the moment, consultants were often used to provide an
imprimatur for work undertaken within the institution.