Title: Technology Horizons in Financial Services ANZ
1Technology Horizons in Financial ServicesANZs
path to IT effectiveness
- Presentation to INSTO eScape Technology
Conference - 22 October 2002
- Peter Dalton
- Chief Technologist, Consumer Business
Technologies - Australia and New Zealand Banking Group Limited
2Agenda
- Technology is changing its focus
- ANZs strategies
- Outsource or Excellence?
- ANZs current focus - improving our IT efficiency
- Outcomes to date
- The next wave of IT productivity improvements
- Conclusion
3Technology is changing its focus
- IT in general has had a number of years of high
investment and big projects. - Focus has been on Customer Relationship
Management, new systems and new infrastructure.
- Different companies took different paths in
achieving their outcomes - outsource or in-house
with a focus on operational excellence. - The world has now changed - IT is being asked to
contain or even reduce spend. Project money is
harder and harder to come by return on
investment is key. - The new word is efficiency. How well can you
reduce costs and not lose quality outcomes? What
kind of productivity improvements can you get?
4ANZs Strategy
5ANZs Technology Focus
- Putting technology to work to
- Provide our customers with a personalised,
consistent experience - Empower our customers and our people with real
time information access and online applications
via web-based technology, anywhere and anytime - Ensure our technology is robust, flexible and
cost effective - Aggressively reduce costs, improving
productivity, increasing straight-through
processing, simplifying and automating
administrative functions - Provide low-risk, high-efficiency
state-of-the-art payment capabilities
6Four years ago, we established the foundations
for technology and IT excellence
1998 Low satisfaction, inward focused, weak
process, complex infrastructure (compared with
best practice)
- Starting in 1998 we made and delivered some key
commitments involving People, Customers, Process
and Infrastructure - People Alignment, collaboration team work.
Environment where individuals can excel. Retain
critical individuals. - Customers Customer feedback processes
accountability, meaningful service levels, align
with BU, implement TQM. - Process Consistent project management standards,
strict criteria for new investment in
applications, rationalise standardise
operational processes. - Infrastructure Reduce costs, rationalise,
consolidate automate networks platforms.
Position for the future. Reposition back-end
product functions behind integrated service
front-end.
7People Skilled committed
Management tertiary qualifications policy
Breakout cultural transformation workshop
- pcs_at_home heavily subsidised packages for staff
to acquire PCs
Online training courses
Half yearly staff survey with action teams to
address issues raised
Casual dress policy instituted
8Customers Commitment to focus technology on
business unit objectives
Customer survey/ feedback process on 6 monthly
basis. Linked to individuals performance
measures.
Electronic timesheet capture for IT project
tracking, reporting billing
9Process Commitment to improve execution
capability
- Capability Maturity Model
- Significant productivity quality improvements
- CMM level 2 certification 1st Australian Bank
- Bangalore, India - level 4 certification
- Project management training
- Generic training courses tailored with ANZ
specific content latest Project in a Box tools
10Infrastructure Commitment to rationalisation
standardisation
Core Systems
IP network
1998 6 major systems
1998 Multiple data networks
- Single IP Network provides universal connectivity
- Simpler systems platforms reduce cycle times
Servers Desktops
Platforms
1998 8 major platforms
2002
1998
2002
W2K
UNIX
MVS
- Greater ability to leverage new technologies
- Lower hardware, software licence fees support
costs
- Provide all staff with best tools possible
- Low cost of ownership through standard solution
11Outsourcing An important consideration in
achieving IT effectiveness
12Core context has been suggested as a basis
for outsourcing decisions
Objectives
Execution Control
CORE Any process that contributes directly to
competitive advantage in target markets
- Extend or create competitive advantage
- Existing markets
- New opportunities
- Minimise disadvantage
- Find someone else to do it for you
- Look to create new opportunities advantages
- Make a context process core
- Internal
- In-house
- Strategic joint venture
- External
- Outsource
- New venture
CONTEXT All other processes required to fulfill
commitments made to one or more stakeholders in
the enterprise
Source Geoffrey Moore, The Chasm Group
13Three other considerations when making an
outsourcing decision
Cost
Innovation
Teamwork, collaboration service levels
- How will outsourcing achieve competitive
advantage? - What will be the impact on the ability to create
innovative IT solutions? - How will open architectures new technologies be
funded deployed?
- Can you achieve at or near world class best
practice? - Can you achieve efficient reliable services?
- Are you willing to pay away a margin to an
outsource vendor?
- Are there impacts on alignment with BU customers
? - Will collaboration teamwork improve?
- Will service levels decline or improve?
GST 10
Illustrative
Return on Investment 15-20
Margin you pay away
Sales Marketing 5-8
Outsource providers cost to serve
Cost of outsourced IT
14Our outsourcing experience
- What we have we outsourced
- Property management
- Components of procurement
- Components of telecommunications
- Desktop support/help services
- Training development support
- Components of legal services
- Majority of functions are not outsourced, but are
under periodic review - Major operations
- Data centres and IT operations
- IT development
- Cheque processing
- Cards back office
15Outsource or excellence?
- To date, no compelling opportunities have been
identified for outsourcing a significant amount
of our technology functions - But, we continue to actively benchmark our
operations to best practice to ensure continued
IT effectiveness review potential selective
outsourcing opportunities
16Agenda
- Technology is changing its focus
- ANZs strategies
- Outsource or Excellence?
- ANZs current focus - improving our IT efficiency
- Outcomes to date
- The next wave of IT productivity improvements
- Conclusion
17Improving our IT efficiency
Findings from a recent independent benchmarking
study on our server environments
-
- Current environment is very efficient by Industry
Standards - ANZ staff efficiency (staff numbers compared with
number of servers) is very good to excellent in
MVS, Unix and Wintel - Server utilisation is very high in mainframe and
at, or above, industry levels in Unix and Wintel - Study conducted by IBM
18Improving our IT efficiency
- Attained CMM level 4 certification from the
Software EngineeringInstitute (USA) for our
India Software Development centre placing it
in the top 1 of software organisations in the
world - First Australian Bank to attain CMM level 2
certification this was achieved by the
International Systems Teamin Melbourne, placing
it in the top quartile of softwareorganisations
worldwide - To achieve this, we displayed a very high
standard of processdiscipline in all areas of
software development, includingthe rigorous use
of metrics for tracking of quality of outcomesat
all stages
19Improving our IT efficiency some examples from
our continuous improvement program
- Bar-coding at Output Services Increased
productivity and cost savings, and reduction in
operating costs. - Renegotiation of Optus inbound costs cost
saving. - ANZ Common Disk Platform Review reduction on
total cost of ownership. - Decommission the ANZPAC Service in Australia
cost saving. - Mortgage Origination System (MOS) Navigator
Support Tool One-off and ongoing savings. - Efficient, cost effective processing of Telstra 2
Instalments
20Outcomes to date
- Focusing on people, customers, process
infrastructure, we achieved - Better IT outcomes for our Business Unit
customers - High IT staff satisfaction rate
- High quality, more productive staff
- Simpler infrastructure - robust processes
supported by a continuous improvement focus
21Outcomes to date - business improvements
Cost savings
Improved system robustness
22Outcomes to date - business improvements
Operations, Technology Shared Services staff
satisfaction
Staff satisfaction
Customersatisfaction
23Next Steps Cost leadership provides capacity to
reinvest in growth
Cost leadership
next wave productivity improvements
- Continuous improvement
- Componentisation and reuse of Technology
- Straight Through Processing through
reengineering and simplification
24Next wave productivity improvements
25Conclusion
- Good progress to date on improving our IT
efficiency through innovation, renegotiation,
cost savings and new tools - Successfully rationalised and simplified
infrastructure - Strong improvement in staff satisfaction
- Improved and more consistent customer service
- Increased robustness in systems
- Lower costs
- Now focusing on next wave of productivity
improvements for technology - Continuous improvement
- Technology componentisation and reuse
- Re-engineering and straight through processing
26Copy of presentation available on www.anz.com
27The material in this presentation is general
background information about the Banks
activities current at the date of the
presentation. It is information given in summary
form and does not purport to be complete. It is
not intended to be relied upon as advice to
investors or potential investors and does not
take into account the investment objectives,
financial situation or needs of any particular
investor. These should be considered, with or
without professional advice when deciding if an
investment is appropriate. For further
information visit www.anz.com or contact Philip
Gentry Head of Investor Relations ph (613) 9273
4185 fax (613) 9273 4091 e-mail
gentryp_at_anz.com