Financial Services

[Steve Bennett]

Changing of the guard: Commonwealth Bank

Liam Tung, ZDNet.com.au
08 May 2009 10:45 AM

Commonwealth Bank of Australia is the only one of Australia's four top-tier banks not to have experienced dramatic change in its technology leadership team in the last year. And the bank's chief information officer Michael Harte is taking advantage of the chance to get ahead.

Harte currently has two major projects on the boil — the bank's soon-to-be-released Web 2.0 online banking platform, Finest Online, and a core banking systems overhaul that promises to cut financial product development time from months to hours.

CHANGING OF THE GUARD

This extensive overview of the Commonwealth Bank of Australia's technology operation is part of ZDNet.com.au's Changing of the guard series, which looks in detail at the use of technology in Australia's four largest banks, following a series of executive appointments that have resulted in an almost complete turnover of banking technology tsars. The remaining profiles will be published over the next few weeks.

It's been three years since the executive grabbed the reigns of arguably the largest technology operation in the country. Roughly a quarter of Australia's population depends on the systems that Harte was hired in 2006 to remedy. His leadership has shown in the new direction CBA has taken after bedding down its $1.5 billion "Which New Bank?" technology revamp.

The CIO has manned the helm during an era in which the bank aligned new IT technologies to the business via platforms such as CommBiz, First Choice, CommSec and NetBank.

"These are all now the very best in the industry," Harte says of the platforms during a recent interview with ZDNet.com.au. "Think of NetBank being in the top 1 per cent of financial services websites in the world. Think of CommSec being the first brokerage on the iPhone. Think of FirstChoice as the largest asset management platform in the country."

These are the legacies that Harte has brought to the bank over the past years, leaving it in what would appear to be a strong state when it comes to technology. And if Harte ever left? "There are many heirs in line," the CIOs says, although he declines to name them.

"The organisation has a really strong bench and some of them are in IT and some are across the business. There are plenty of people that would step into the breach if I was hit by the bus, or if I decided that surfing was the thing that I finally wanted to do," says Harte.

But while he stakes claim to these platforms, the CIO credits his predecessors for developing the CommSee application — the single lasting legacy of the "Which New Bank?" strategy — which he says was critical to two major IT investments underway that address the front and back end of its business.

Core banking means days, not months

The much-publicised $580 million SAP core systems overhaul, headed up by former Accenture executive Dave Curran, is one example. CBA leapt into the project with all guns blazing at a time when Westpac was tied up in its $340 million integration with St George, and National Australia Bank (NAB) and Australia and New Zealand (ANZ) Banking Group were both amidst major leadership transitions.

But the "first mover advantage" that Norris claims it to be, is one that the bank has been willing to sit on for a number of years. Harte says former CBA leaders — chief David Murray and CIO Bob McKinnon — knew the core systems required an overhaul. But instead they chose to invest in CommSee.

Why they chose to attack those systems first, Harte doesn't explain, but he says: "They did us a big favour. That allowed us the time to attack those back-end monoliths. While it's not complete insurance, having a single front end means that we can stay in business as we replace the back end."

But the question remains: what does the SAP core systems replacement mean for the bank?

"It takes product development off the critical path. And that's a big statement," explains Harte. "Today it can take six to 12 months for some products, depending on how big and complex they are." New products currently mean writing new applications or altering processes that are hard-coded in the mainframe, followed by months of testing.

The new architecture behind the SAP platform will give product owners the power to treat IT as a utility. "You have a very open, highly configured, set of code where you're basically switching on and off options," says Harte. "That gives the market-focused people the ability to offer, in real time every single day, new features so they can go and experiment with new offers rather than wait for product developers and IT people to get their act together."

Still, the project has only reached the six-month milestone. While CBA's term deposit products have been launched, with more releases to come in May, there remains three pressurised years of complexity on the table.

"There's a very strong will to get this done within three and a half years. It's an extremely challenging and exciting program of work, and it's not without its complexities," says Harte. "There's some very large scale launch and migration work to do, so we have to keep this thing in fast forward to reach that target, because we're talking about the main franchise value of the group."

But another project also has its roots in CommSee — the soon-to-be-released Finest Online campaign, which will deliver a new front end to NetBank that is set to fire up the race for online banking supremacy in Australia. "We've invested significantly over the past two years in what we've termed Finest Online," says Harte. "This is about taking the service components that were for the teller and service centre employees to manage their interactions and transactions with the client."

Put simply, Finest Online is the CBA's Web 2.0 romp intended to boost the attractiveness of self-service by exposing information it already holds, but has only just now integrated, via a single web interface.

"We've always watched the Web 2.0 patterns and innovations to understand customers' preferences and behaviours."

CBA CIO Michael Harte

In doing so, CBA and Harte have staked claim to several firsts in the Australian banking sector by incorporating JavaScript pop-up help screens, click-to-chat messaging, loan application progress reporting, and its so-named "universal inbox" that contains communications between the bank and customer such as loan approvals or new statements.

The project also tackled simple obstacles, for example, single password access to every banking product. "Customers can do that very conveniently with one password, one log-in and one place to access all the products and services of the group," says Harte. "Where they want to personalise it, and put their own look and feel on it, they can do that too."

The initiative is the first major attempt in Australian banking to draw together disparate systems under a single interface; and in the context of CBA's recent deployment of banking platforms across all mobile operating systems, it arguably positions it as the leader in the technology stakes.

"We've always watched the Web 2.0 patterns and innovations to understand customers' preferences and behaviours. At the most basic level, people want to be mobile and have the convenience to do anything at any time without programming in two hours of the week to go to the supermarket, and one hour to go to the bank. It's much easier if they have the ease to do it when they remember it," says Harte.

But the investments also signify a new dawn for banking — one that will be marked by accelerated change as online banking services supplant the branch in terms of convenience and functionality. Harte nods to that future when he says: "We want that ease of use and high level of convenience as we drive more and more customers online."

Outsourcing and cloud computing

The recently inked $1 billion, 10-year managed network services contract CBA signed with Telstra was perhaps the cornerstone piece it had to set in place for the coming decade — a period in which Harte believes cloud computing will become "enterprise ready".

CHANGING OF THE GUARD

This extensive overview of Commonwealth Bank of Australia's technology operation is part of ZDNet.com.au's Changing of the guard series, which looks in detail at the use of technology in Australia's four largest banks, following a series of executive appointments that have resulted in an almost complete turnover of banking technology tsars. The remaining profiles will be published over the next few weeks.

"Some [suppliers] would sit back and say, 'Well, we met the 99.98 per cent SLA'. But we could lose 6000 calls in a morning and they would say, 'Tough luck'. What part of that would make our customers happy?"
CBA CIO Michael Harte

At the announcement of the deal three weeks ago, Telstra and CBA released a joint statement saying it would provide outcomes for customers. But what exactly did this mean? According to Harte, the terms were remarkably different to previous contracts in that they ditched Service Level Agreements (SLA) — a move which reflects how critical uninterrupted uptime is for CBA's strategy.

Harte described a typical scenario under which SLAs were relied upon: "Some [suppliers] would sit back and say, 'Well, we met the 99.98 per cent SLA'. But we could lose 6000 calls in a morning and they would say, 'Tough luck'. What part of that would make our customers happy?"

With the bank's online platforms shored up for a future in which the internet dominates its business, the telco deal leaves zero room for a supplier-caused outage. "To the extent that they can go beyond what most companies regard as an SLA, they get paid. If they blow it, they don't," Harte explains of the terms Telstra faces.

The deal with Telstra, however, is just one key component of the bank's IT outsourcing strategy for the coming decade.

Prior to the reign of Harte and Norris, CBA bought stakes in its suppliers. These include former telco provider Telecom New Zealand (Gen-i's parent) and a stake in the local operation of its major outsourcing partner, EDS.

But in 2007, the expiration of contracts inked by the old guard in the mid-1990s gave the bank the chance to change tack. Rather than single source with EDS as it had in the past, CBA embarked on a multi-sourcing strategy, which emphasises "competitive tension" rather than cost-cutting by increasing the scale of outsourcing deals.

The new structure broke infrastructure deals into four stacks: desktop computing, application services, network services, and centralised computing. Under the new regime, EDS was retained for "enterprise processing services" and "end-user computing" until 2012, deals worth $114 million and $74 million per year respectively; however, it was dropped for application services, worth up to $200 million a year. This work was put to a panel of providers that consists of IBM, HCL and Tata.

But while large scale conventional infrastructure outsourcing still constitutes the bulk of the bank's technology budget today, Harte has for some time trumpeted the rise of cloud computing. His views, however, are mixed in terms of their potential for CBA. In 2007 he appeared to be envious of the computing models delivered by global banks such as HSBC, perhaps longing for the scale of operation of his former employer, Citibank, which could leverage the concept of grid computing.

Today, that focus has shifted to cloud service providers, such as Salesforce.com, and the influence that buyers such as CBA can have on the future of cloud services.

"That's the next advance from grid or utility computing into that dimension people call the cloud. The cloud is not that far off," says Harte. "If you think about layers of services — infrastructure, processes or applications — the most mature form of services across networks are available as infrastructure services. For example, you can go buy storage, or test and development server environments, provisioned on a pay as you go basis," he says.

The other shift that has occurred over the past few years is the rise of web services or services-oriented architecture. The ability to drag services from the cloud has triggered a renewed focus on the ability for IT to automate business processes, which has manifested at an organisational level, according to Harte, as the merging between operations and technology, and dissolving the line between IT and "the business".

"We are an enabler at the end of the day. But as platforms are valuable strategic assets, and as those platforms are increasingly mission-critical, the division between IT and the business is blurred," he says.

The SAP core systems overhaul dovetails with the merging of IT, the business and the concept of technology as a service.

Despite Harte's conviction that cloud computing is inevitable, he maintains it's not mature enough today — and that includes services from the world's largest software-as-a-service providers: Salesforce.com and Google. CBA famously rejected Google Apps Premier Edition package as "not enterprise ready" and continues its reliance on Microsoft Office 2007. Meanwhile, according to Harte, Salesforce.com remains a point solution.

"There is still some distance to get those platforms mature. But we are able to buy those services across the network. Right now we're not at that wholesale basis, but we're doing that point by point. But," he concedes, "it's foreseeable in the future that we could apply it as an enterprise service." Interestingly, Harte reckons this issue will not be overcome by vendors, but buyers from large corporations.

"It will be up to the buy-side community to force the market to go down that path. The supply-side will be less inclined to offer it in a format other than one-off solutions. You know, we can see probably hundreds of new start-ups that offer niche services on-demand in this manner, but it's not until they become enterprise-ready that we will see a tipping point occur. Maybe it's three years away."

In the meantime, Harte's getting on with the job. Next time, we take a look at how his predecessor Bob McKinnon is finding life on the other side of the fence at Westpac as the bank wrestles one of the largest technology integration projects in Australia: the digestion of St George.

[admin]

Amex gets social with CRM

Credit card giant announces Web 2.0 integrations in Salesforce.com system at CeBit

Computerworld, Kathryn Edwards and Tim Lohman 12 May, 2009 15:52

American Express is turning to social networking sites Facebook and Twitter in an effort to better manage customer relations and boost customer service levels.

Speaking at CeBit in Sydney today, Jeffrey Evans, head of business intelligence and data management at American Express, said the company is to begin trialing an integration of Facebook and Twitter into its Salesforce.com CRM system with the goal of capturing customer feedback unavailable through traditional channels such as its call centres.

The trial, expected to begin within a week and run for up to two months, follows customers’ increasing use of social media as an outlet for their frustrations in life, such as dealing with banks and credit card agencies, Evans said.

“Customers are more likely to use social media to discuss their dealings with financial institutions, rather than talk directly to the institution itself,” he said.

“When people talk about American Express [on Twitter or Facebook]... and are frustrated with our service, we can actually pick that up in our service area and start to then deal directly with those people.”

Evans said the new capability would provide a way of increasing connectivity between the financial institution via its call centre staff - who would be trained up on using social media as a customer service tool - and customers.

IDC research suggests Australian companies are expressing above-average interest in how to adapt CRM to reach customers through social media, with approximately 65 per cent of large Australian companies factoring some form of usage or assessment into their plans for CRM.

"Certainly companies are more enthusiastically assessing social media applications as part of their marketing and customer management mix," IDC Australia's Tim Dillon said.

"In the current environment with ITC budgets under pressure, organisations are looking at any and all means of increasing touch points, interaction and customer care through multiple options."

[admin]

From FST website:

An Interview with Bobby Lehane, Chief Information Officer, Zurich Financial Services

By Tala Jahangiri, Journalist, FST Media, 10 Jun 2009

Jahangiri: We interviewed you last year when you started as CIO at Zurich. Since then what progress have you made in your role; and can you share with us some of the key highlights?


Lehane: When last interviewed I’d been in the role just six months and to that point had focussed on re- engaging both the business and the IT team; on defining an IT strategy that really underpinned the business; on getting the right team in place; and in ensuring predictable and repeatable delivery across our various initiatives.

Since then I’ve had a satisfying and successful 12 Months. Once the strategy was agreed upon we focussed on putting compelling and robust business cases in place to address operational efficiency, customer centricity and growth-orientated business imperatives. We’ve had continued success in securing the necessary funding and in delivering these strategic projects.

Highlights include the delivery of “My Zurich”, our customer portal; the successful launch of LifeXpress our risk illustrator and automated underwriting platform supporting the Life business. We’ve made huge progress in the area of enterprise business intelligence (EBI) having delivered a suite of industry strength decision making tools across our three businesses. In addressing our legacy platforms we’ve developed containment strategies as well strategies to work around the limitations of legacy systems, utilising tools such as business rules management systems (BRMS) to reduce our dependency, while empowering the business and enabling agility across our products and pricing.

Personally watching the team gel, genuinely seeing the whole become greater then the sum of the parts has been immensely satisfying as has receiving the unwavering support of the Zurich Financial Services Australia (ZFSA) Leadership Team and Board.

Finally my role has been expanded to include responsibility for business architecture and our corporate solutions office (CSO). The CSO is charged with delivering all projects and programs, IT and non IT, across the business. This has proved an interesting addition.

Jahangiri: Zurich Financial Services has a strong presence worldwide. What are some of the innovative IT initiatives undertaken by Zurich in Australia?

Lehane: In true Australian fashion we punch well above our weight from a thought leadership and innovation perspective.

Let’s start with infrastructure. I was fortunate to inherit a very innovative infrastructure team; we’ve led the group in virtualisation, remote desktop, next generation storage systems, network acceleration technology and a very advanced disaster recovery capability. Even our approach to high quality low cost video conferencing is innovative.

Elsewhere our EBI stack is seen as a leader across the group, LifeXpress delivers efficiency to advisers and ourselves, while also providing enhanced end user experience. Z.Stream was and continues to be a great innovation, highly regarded by the broking community. The work we’re doing with our BRMS and rich internet applications are likely to be key differentiators in the future.

I think our technology principles take into account who we are, taking advantage of all that we can leverage from our global capability while maintaining the agility necessary to compete locally.

Jahangiri: Can you draw on some parallels between your role as Group General Manager IT & T at Multiplex and your current position?

Lehane: It’s a very different type of environment and, of course, given the extraordinary turmoil at Multiplex during my tenure it’s not that easy to draw parallels. As CIO at Multiplex I initially reported through Finance. That, of course, is not unusual in non financial services organisations; however, I think it made the job of understanding and influencing the business more challenging. At Zurich I report to the Chief Executive, have full visibility across the business and have a real seat at the table. I feel more empowered to drive change and I do.

Traditional industries tend to have less dependency on IT for competitive advantage, so returning to financial services after my time in property has been really positive. In this sector technology plays and business plays continually converge; it’s a great place for a CIO.

Interestingly, after my first year at Multiplex Bob McKinnon joined as CFO and, as board member, he subsequently became Joint Managing Director. Fortunately, I reported to Bob and benefited not only from his insight, having previously been a CIO, but he did a lot to raise the awareness across the business of the criticality of IT investment.

Jahangiri: What are your key IT priorities for the year ahead?

Lehane: Another thing that’s happened since my last interview has been the onset of the global financial crisis, I’m glad to say that Zurich has fared better then most, however, like everyone we’re looking at opportunities for improving operating efficiency and, of course, containing costs. Areas like automation of manual tasks and workflow are priorities, reducing travel costs through deployment of advanced video and web conferencing solutions and optimising our delivery platforms.

On the growth side, we will continue to leverage our investment in enhanced distribution capability across all our businesses while extending usage and deriving further value from our EBI investment.

Jahangiri: While the retail banking sector continues to provide multi-channel access to its customer base (online banking; mobile banking; branches and ATMs), what do you consider will be the future channel of choice for insurance customers and why?

Lehane: It’s difficult to draw parallels between Banking and Insurance as customer behaviour is significantly different. Having said that, the online channel is rapidly gaining more significance as both intermediaries and insurers seek further efficiencies in the sales and distribution processes, and retail customers migrate more of their procurement activities online.

The SME and middle market segments will increasingly see a move towards online distribution. Much of the movement will lean towards integration between intermediary and insurers systems via the internet or independent distribution platforms. Movement to electronic distribution channels will be slower in advice intensive insurance lines.

Jahangiri: For some financial services organisations IT budgets are among the first casualties of the economic downturn. How has this held true at the Zurich IT department?

Lehane: We’ve gone to press with an expense reduction target across the Group, at this stage, however, we anticipate the impact on the ZFSA IT spend to be minimal. This reflects the real priority that our business heads have placed on investing in platforms to support the growth of these businesses. It sends a powerful message to the IT team on the critical role they play in securing future business success.

Jahangiri: From a global standpoint what are the technology trends you see emerging in the upcoming year?

Lehane: There will, of course, be a focus on platforms and technologies that enable operating efficiencies and cost reduction. Business Process Management (BPM) and associated technologies such as Enterprise Content Management (ECM) will, therefore, gain prominence. Video and web conferencing will finally get the attention and opportunity they deserve. I’m also expecting to see a few more Telepresence rooms across Australia by the end of 2009.

Legacy systems and their complications will continue to haunt the industry and we might see a focus on delivering business agility without large scale legacy modernisation projects, possibly through innovative use of web services and tools like BRMS.

Jahangiri: As CIO how do you keep abreast with the demands of the technology curve?

Lehane: It’s more important for a CIO to be a strong leader with commercial acumen then a strong technologist, although a blend is ideal. I believe in having a strong architecture capability within the organisation and I surround myself with people that are both technically strong as well as commercially astute. Fortunately, at both a group and a local level we have some great talent and information so I am continually exposed to and being educated on new and emerging technologies and challenges.

I receive a lot of pitches from vendors and consultants and I generally find these opportunities quiet informative. I use members of the CIO network I’ve built up over the last number of years as a sounding board and that’s been really great. I spend time on the internet and I also have a few regular publications that keep me abreast of what’s happening.

Jahangiri: What skill-set do you look for in an IT protégé?

Lehane: Influencing and communication skills are critical; someone that can engage well at all levels in an organisation with the ability to delegate and an ability to lead. It’s important to have a real sense of ownership and commitment to delivering, commercial acumen, good instinct and ideally a strong technical background.

Of course, it’s not easy to find all of this in one person; however, if someone can tick most of the boxes then the gap can often be bridged. My current management team range in age from 30 to nearly 50 so obviously have large differences in terms of experience, however, they all demonstrate different combinations of the aforementioned skills.

Jahangiri: Every IT leader, particularly at your level has a legacy they wish to be remembered for. As CIO, what is yours?

Lehane: This has not materially changed since we last spoke; it’s still about people and business outcomes. As a member of the Zurich Leadership Team, I am keen to leave an empowered, engaged workforce and an engaged and very successful business. As CIO I want Zurich to be the benchmark with respect to how technology and the business collaborate to deliver industry best business outcomes.

[admin]

An Interview with Paul Newham, Chief Operating Officer, Product and Operations, Westpac

By Tala Jahangiri, Journalist, FST Media, 28 May 2009

Jahangiri: As Westpac’s Chief Operating Officer, Product and Operations, what does your role predominantly entail; and what will be your three top focus areas for the year ahead?

Newham: I’m responsible for supporting the bank’s consumer and business lending, transactional and collections processes, as well as functions such as sourcing, property and security for the Westpac Group. The next three-to-five years in operations are strategically important to the group. We’ve set out to transform the business, and deliver changes resulting from merger between St.George and Westpac.
The next 12 months is about laying the foundations of our integrated operating model – how we bring together the best of both worlds to accelerate the momentum our organisations have achieved to date. This will be overlayed with a defined technology roadmap, consistent data management disciplines across all our teams and a premises strategy which maximises the Group’s property footprint as a result of the merger.

Jahangiri: You are one of eleven new executives to join Westpac, charged with leading the merger integration. Are you able to disclose what stage the current integration program is at for Operations?

Newham: The integration of our operations businesses will take time and investment and it’s something we need to get right. We won’t be rushing into any large-scale integration without the appropriate level of business assessment. Our focus is on understanding how our business model will support the multi-brand strategy of the Group, whilst delivering the efficiencies and scalability expected by bringing these businesses together. We’ve appointed single business leaders to head up our core operational areas for both brands and they are now identifying synergies between teams.

Jahangiri: To what extent is your involvement in IT-related discussions and decision making?

Newham: My role is to ensure the operations business gets the technology required to achieve its business objectives. While I’m not the CIO, I do see myself accountable for holistic service delivery, which includes IT. We also have CIO representation on my Leadership Team to ensure the technology needs of operations are considered in IT planning and decision making.

Jahangiri: One of Westpac’s main priorities is to improve customer experience. Can you specify areas and techniques that the Operations team will focus on to deliver its enhanced customer service initiatives?

Newham: At the divisional level, we’ve brought the product and operations functions together, led by one Group Executive for both brands. The rationale being that this will enable us to ensure product design takes operational fulfilment into consideration – creating easy-to-understand products backed by simple operational processes. At the Operations Team level, our focus is on driving operational excellence. That is, nimbleness, efficiency and the right cost balance which doesn’t compromise service, but enables growth and investment in our frontline businesses – those who are interacting with our customers everyday.
We’ll drive this in a number of ways. Firstly, the progressive integration of our operational teams will deliver scalability, efficiency and process outcomes to make it easier for our frontline colleagues to deliver for our customers. At a more tactical level, it’s about data-driven management – equipping the operational leaders who are close to our teams with the tools to run their businesses by fact. This will enable us to respond to the evolving needs of the business and be on the front foot when things change, particularly as we operate in an economic downturn.

Jahangiri: Your immediate past position was CIO of St George. Today you join a unique yet growing league of CIOs whom have made the successful transition into more business-centric C-level positions. What thus far have you found to be the most significant parallels between the roles of CIO and COO?

Newham: The parallels between a CIO and COO role are significant, largely because both roles are customer-outcome focussed ie delivering visible uplifts and enabling differentiation. Both functions have the fundamental goal of balancing investment against cost and continuous improvement.

Jahangiri: Do you think it’s still possible to effectively implement leading-edge innovation whilst adhering to the current pressures of cost-reduction directives?

Newham: Yes, provided the approach recognises that service, process and cost are not mutually exclusive. Good service is driven by good process and will ultimately drive the right cost outcome. Above all, we need to ensure we’re focussing on the right customer outcome upfront.
We often overlook a fundamental source of innovation, which is the knowledge stored in our people’s heads. They are close to the systems and processes and are best positioned to pick up nuances which affect our service delivery. We recently rolled out an idea generation tool for our people to submit and discuss what they think will enhance the way we do business – not only for our customers, but in the way we interact with each other. It’s an empowering proposition, and we’ve already implemented improvements based on what our people are telling us. The key is to never underestimate the value of listening to people’s ideas.

Jahangiri: Who would you consider to be (or have been) your professional mentor?

Newham: I’d have to say it’s the people I’ve chosen to surround myself with throughout my career. Mentors aren’t necessarily people more senior, or with a high profile. Professional growth is equally about opening yourself to the capabilities your own team bring to the table.

Jahangiri: Every leader, particularly at your level, has a legacy they wish to be remembered for. What is yours?

Newham: Every leader’s legacy should be the team they leave. The fundamental leadership objective is to grow the people who run the business. When I reflect on the capability of my team, I’d like to think that Operations is acknowledged as the strategic centre of the organisation – not the cost centre, but the profit enabler.

[fgeorge]

By Ry Crozier
itnews, Aug 21, 2009 6:00 AM

Business intelligence project could hit 5000 users.

Westpac will simulate the impact of interest rate rises on its products from next year using business intelligence software deployed in its finance transformation project.

Project director for finance transformation and integration, Angelo Koulos, told delegates at the IBM Cognos Forum Asia Pacific that Westpac wanted to simulate the Reserve Bank rate rises in part to determine the extent to which they are passed on to customers.

"We'll start that [project] sometime next year. We're really excited about it," he said.

Koulos described the transformation as being at "only a step two of about 220 steps".

It included setting up a financial data mart within the existing data warehouse structure from which regulatory, budget and forecast reports, balanced scorecards and dashboards could be created and delivered using software from IBM Cognos.

"It'll probably be another year or two before we look at balanced scorecards or dashboards," Koulos said.

Some Cognos-generated reports would also be surfaced in Microsoft applications such as Word or PowerPoint using Cognos 8 Go! Office.

The product eliminates the need to cut and paste or manually load Cognos report data into spreadsheets or presentations.

Westpac already had 2750 IBM Cognos users with a further "350-500" at St George, but would need to migrate a large number of users from versions seven to eight of the software to take advantage of new features.

"We'll be migrating about 2000 people from version seven to eight of Cognos," Koulos said.

"In two years we could be touching 5000 business intelligence users and we haven't even started performance [management] or planning [projects]."

Koulos said one of the challenges of the project was limiting it to what he called Westpac's "finance competency".

"Where does ‘finance' begin and end in Westpac?" he said.

[Doug Heywood]

From the New York Times. I wonder what our local banks would score?

Even best-run banks feel world economic pinch

Gretchen Morgenson
August 24, 2009
Solidly improving banking operations is vital.

AMERICAN financial stocks have more than doubled from their March 1, 2009, lows. And with the northern hemisphere autumn - generally a rocky season for the markets - fast approaching, it's a good time for a reality check on the banking sector. The goal: to determine whether fundamentals in the industry support the rocket-fuelled surge in bank shares.

To be sure, the stock market and smart money often try to anticipate recoveries long before they are evident in the numbers. But a ''relief rally'' - that is, the exuberance that accompanied the fact that the US economy appears to have avoided another Great Depression - won't have the same staying power as a move based on solidly improving operations. So understanding what's going on in banks' financial statements is worthwhile.

With that in mind, Christopher Whalen, managing director at Institutional Risk Analytics, a research firm, has analysed financial data from the second quarter of this year that almost 7000 banks submitted to the Federal Deposit Insurance Corporation. The data includes 90 per cent of institutions with federally insured deposits but excludes reports from the 19 money-centre banks like Citigroup, Bank of America and Wells Fargo. Those reports are filed later to the FDIC.

Even with the big guys missing from the analysis, it is an illuminating look at the health of regional and community banks and a fairly comprehensive assessment of the industry's well-being.

Unfortunately, that assessment shows that the number of financially sound banks is declining and that the ranks of troubled institutions are growing. Indeed, Mr Whalen said his figures show more stress in the banking industry in the second quarter of 2009 than in the immediately previous periods.

For example, Institutional Risk Analytics gave 4234 banks a rating of A+ or A (as a measure of their financial soundness) as of June 30. That total was down 21 per cent from the end of March and 25 per cent from the end of 2008. Meanwhile, it slapped a failing grade on 1882 banks as of June 30, up 16.5 per cent from the end of March; the number with failing grades had dropped a bit in the first quarter.

This downward migration is a sign that more banks are feeling the effects of economic conditions regardless of their business models, Mr Whalen said. In other words, even the best-run banks are having trouble escaping the impact of a sluggish economy and high unemployment.

Based on his preliminary review of individual bank reports, Mr Whalen said the greater stress in the industry resulted from the large number of banks being affected by losses or charge-offs.

The figures, Mr Whalen said, called into question assumptions made by the Government this year, when it put major banks through ''stress tests''.

In short, the tests may not have been tough enough.

''The stress tests said that through the two-year cycle, big banks had to have enough capital plus earnings to withstand a 9 per cent loss rate,'' Mr Whalen said. ''But what we're seeing with the levels of stress in the industry is that we are there now and we are not at peak of cycle yet.''

The Government's stress tests also assumed that the third quarter would show a bit of an improvement, and Mr Whalen does not necessarily disagree. But any reduction in losses in that quarter may also be short-lived. ''The third quarter may be a little rah-rah in terms of loss rates,'' Mr Whalen said. ''But if the economy isn't dramatically improving, then the fourth quarter of this year and the first quarter of 2010 will be another leg down.''

The good news is that some banks have raised capital in the past few months of investor optimism. But a host of operational problems remains at many institutions. In addition to loan losses and rock-bottom recovery rates on assets they're trying to unload, for example, banks also face rising expenses.

All of this cuts significantly into earnings.

With banks short on revenue, they cannot apportion enough for reserves against future loan losses.

NEW YORK TIMES

[admin]

Business Intelligence Project Manager (Cognos) – CBD Location – Up to $200k pack - cross post on the People Wanted forum.

[admin]

This from AustralianIT.

What I don't get is that if this is performance management tied directly to your bonus, then how come crappy service only has the effect of 'limiting' his pay to the same pay he got last year - a boom time for Bank profits and bonus'?

Is this the usual case of the C** looking after themselves and constructing a performance management system to make themselves look like they are performance managed??

Here's the article:

Netbank outage hits CIO's pay

Mahesh Sharma | September 10, 2009

COMMONWEALTH Bank executives' pay-packets were clipped because of a key performance indicator which links 40 per cent of remuneration to a number of outcomes connected to customer satisfaction.

CBA's popular online platform Netbank suffered an outage in June when bank's technology systems were overloaded by internet traffic which has affected the pay of chief information officer Michael Harte and some of his top technology executives.

Mr Harte said the KPI applies both to CBA employees and contracted technology companies. CBA did not disclose the specific amount deducted.

In the bank's annual report released yesterday, it was revealed that Mr Harte was paid about $2.8 million in the year ending June 30, which included around $1.2m in short-term bonuses.

It is unclear whether the effect of the outage was included in this year's pay but his total remuneration was approximately 0.03 per cent higher than in 2008 at $2.69m.

According to the annual report, Mr Harte took home a short-term cash payment of $800,000 in 2009, down around $66,000 from the previous year.

"We want all the people in that supply chain to be focused on the same things as we are and feel the upside and downside of those types of events and that's what we're working today,'' Mr Harte said.

"It will affect increasingly more if we have failures in software, hardware, in the network, to deliver reliable and responsive service.''

Executive general manager Nick Holdsworth said KPIs encourage better performance by giving employees and contracted companies a stake in deliverables.

“We’re more interested in the account team turning up on a day-to-day basis saying 40 per cent of my at-risk pay is about how happy I keep people in the bank and about how happy they keep their customers,” Mr Holdsworth, who's also the project lead for CBA's core banking transformation program, said.

“At the end of the year if I haven’t achieved my targets in that respect then potentially 40 per cent of my pay will disappear.

“As an individual that helps to focus the mind on a daily basis around understanding what needs to be done to deliver the right outcome, not just go through the motions and see the service level agreement as something that ‘oh as long as we’re operating at the service level, we’re ok’,” Mr Holdsworth said.

[Jo Vincent]

More detail admin (Steve?).

I agree with what you say and all of this nice story below cannot (and does not) deny the facts that his pay went up this year.

Tough times ...

CommBank increasingly tying pay to customer satisfaction and IT performance

Bank's CIO, IT executive team, and partners Telstra, HP, IBM and Oracle being placed on 40 per cent of 'at risk' pay model

Tim Lohman (CIO) 11 September, 2009 11:13

While an increasingly common phrase in management parlance, ‘customer delight’ is, for the Commonwealth Bank, a real concept with hefty financial strings attached for failing to deliver on customer service standards.

Speaking at a recent roundtable in Sydney, the bank’s CIO and group executive enterprise servces, Michael Harte, said that the Commonwealth Bank’s approach to customer satisfaction had seen the creation of a '40 per cent' standard across the organisation’s management teams.

The standard sets that 40 per cent of management’s ‘at risk’ pay — which is also judged on performance indicators such as financial and project delivery — is reliant on reaching specific customer satisfaction targets.

“Everyone across the Enterprise Service team is measured by a 40 per cent customer satisfaction KPI — if our customers are not happy with the reliability of a system, ease of use and access, richness of features and function, then our staff will be penalised,” he said.

An example of this approach in action could be seen in the outage of the online banking portal Netbank earlier in the year, which had affected Harte's pay packet.

"Yes, it affected mine, and it affected a lot of people in this room (Tim Whiteley, executive general manager, Dave Curran executive general manager, Nick Holdsworth executive general manager) and will affect us increasingly as we have failures in software, hardware, the network and failures to deliver reliable and effective service."

The bank has extended this approach through its supply chain so that partners are being held to the same standard, Harte said. This includes new partners such as Telstra.

“Increasingly we are building deeper relationships with strategic partners such SAP and Acenture, Oracle, IBM and HP,” he said . “Partners are also increasingly involved in our sales and service methodology to become more reliable and responsive.”

Service level agreements (SLAs) tended to punish for non-performance, but the 40 per cent model rewarded partners for performance and involvement in the business, said executive general manager, Nick Holdsworth.

“We are interested in having the [partner’s] account team turn up to work every day and think that 40 per cent of their pay is dependent on how happy they keep the bank and how happy they keep the bank’s customers,” he said.

“It changes the conversation with partners at the time of review from: 'I’m sorry about that outage, but we still met the SLA,' to: 'I’d really like to understand what effect that outage had on customers as it has a direct impact on me'."

The inadequacies of the SLA model could be born out by a simple statistic, Harte said.

“The lunatic situation… is that you could have a telephony availability statistic of 99.98 per cent availability that still lets the carrier have dead air that loses 6000-8000 calls in a morning,” he said. “That amounts to a lot of very disgruntled, dissatisfied customers. Having [the 40 percent model] changes the way they make decisions and the way they behave as they do work for us.”

To ensure that the new model was working properly, the bank had hired Roy Morgan to independently audit retail customers on their satisfaction and was using Assert and Insight for its business banking and wealth management operations, Harte said.

“Each business has an external measure… they are not an internal arbitrary set of measures,” he said. “The drive for the organisation for the last four years with [CEO Ralph Norris’] leadership has been squarely on the customer.”

[admin]

Suzanne Tindal, ZDNet.com.au
10 September 2009 03:15 PM

Most Commonwealth Bank customers will see real-time banking next year as the bank's main products are switched over onto its new core banking platform.

Real-time banking allows the bank to process transactions as they happen, rather than in batched groups as most banking is currently done.

"The main set of retail deposit and transactions accounts will be switched over in the next calendar year so that's obviously where the bulk of our customers will start to notice real time and what that means," Commonwealth Bank's executive general manager core banking modernisation Dave Curran said at a briefing yesterday.

There were already three products — first home saver accounts, Colonial First State term deposits and staff savings accounts — on the new platform. The users of those products were already experiencing real-time banking, he added.

The bank is currently a third of the way through its four-year core banking modernisation program, which it has been carrying out with the help of SAP and Accenture. It has completed the first three major releases and will complete another this year.

The idea of the modernisation has been not to think in products, but instead to use "industrialisation" — making standardised pieces of products that could be used to customise services to user needs. This meant that instead of keeping tabs on which siloed products went online, the bank kept track of which capabilities were on line, which in turn controlled which products could be moved to the new platform. Curran said the bank was currently working through the deposit and transaction standard pieces. The next hurdle would be lending.

The scope of the program has increased since the core banking project was first announced last year, adding another $150 million to the original expected spend. The added scope of the platform made it capable of accommodating the bank's new acquisition BankWest.

Despite the increase in scope the project will run to schedule, according to Curran. "We've taken a very strong focus on schedule," he said. "These programs are huge and if you allow yourself to get bogged down within them you can actually just spin your wheels. We've watched a number of organisations globally both before the program and during the program that have got into that space of just getting bogged down [in] analysis paralysis."

Part of the bank's schedule success might come from its complete leadership of the program, keeping partners SAP and Accenture under the thumb. "The program would be led like the bridge of a ship ... CBA is the captain. We have SAP as an engineer on the bridge and Accenture as the navigator on the bridge: [they're] helping us, but the accountability sits with the captain," Curran said.