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Technology Horizons in Financial Services ANZ’s path to IT effectiveness Presentation to INSTO eScape Technology Conference 22 October 2002 Peter Dalton.

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Presentation on theme: "Technology Horizons in Financial Services ANZ’s path to IT effectiveness Presentation to INSTO eScape Technology Conference 22 October 2002 Peter Dalton."— Presentation transcript:

1 Technology Horizons in Financial Services ANZ’s 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

2 Page 2 Agenda Technology is changing its focus ANZ’s strategies Outsource or Excellence? ANZ’s current focus - improving our IT efficiency Outcomes to date The next wave of IT productivity improvements Conclusion

3 Page 3 Technology 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?

4 Page 4 ANZ’s Strategy Specialise Building a portfolio of stand-out businesses with distinctive business leadership and a sustainable top 3 position that work as one ANZ eTransform Embracing technology to drive radical change, boost productivity, accelerate innovation and dramatically improve service and value Perform Ensuring “best in class” performance for shareholders, customers, staff and the community Grow Demonstrating strong growth momentum in core businesses and positioning ourselves in attractive new high growth categories Breakout Being bold and different, a high performance culture with a human face, technological leadership and a strong domestic and regional strategic position

5 Page 5 ANZ’s 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

6 Page 6 Four years ago, we established the foundations for technology and IT excellence 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’. 1998: Low satisfaction, inward focused, weak process, complex infrastructure (compared with best practice)

7 Page 7 People: Skilled & committed heavily subsidised packages for staff to acquire PC’s Online training courses Management tertiary qualifications policy Half yearly staff survey with action teams to address issues raised Breakout cultural transformation workshop Casual dress policy instituted Fixed pay increases no longer the main strategy

8 Page 8 Customers: Commitment to focus technology on business unit objectives Electronic timesheet capture for IT project tracking, reporting & billing Detailed billing to Business Units for IT services Customer survey/ feedback process on 6 monthly basis. Linked to individuals’ performance measures. Service level agreements in place for each Business Unit Average SLA for major systems Average Average Average Partnership model between Technology & Business Units

9 Page 9 Capability Maturity Model Significant productivity & quality improvements CMM level 2 certification – 1 st Australian Bank Bangalore, India - level 4 certification Project in a Box ‘Best of breed’ project management tools Central repository for all project reporting Open access to all users Process – Commitment to improve execution capability Project management training Generic training courses tailored with ANZ specific content & latest Project in a Box tools Reengineering in a Box Standard tools, templates & process for re-design of business processes Continuous improvement programme Driving real culture change Series of workshops for all staff Resulted in $53m benefits

10 Page 10 Infrastructure: Commitment to rationalisation & standardisation 1998: 6 major systems MVS UNIX W2K CBS Hogan : 8+ major platforms Core Systems Platforms Provide all staff with best tools possible -Low cost of ownership through standard solution OS/2 Win 3.1 Win NT DOS Servers & Desktops 1998 Multiple data networks 2000 IP network -Single IP Network provides universal connectivity -Greater ability to leverage new technologies -Lower hardware, software licence fees & support costs -Simpler systems & platforms reduce cycle times

11 Page 11 Outsourcing An important consideration in achieving IT effectiveness

12 Page 12 Core & context* has been suggested as a basis for outsourcing decisions CORE Any process that contributes directly to competitive advantage in target markets CONTEXT All other processes required to fulfill commitments made to one or more stakeholders in the enterprise 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 ObjectivesExecution Control *Source: Geoffrey Moore, The Chasm Group

13 Page 13 Are there impacts on alignment with BU customers ? Will collaboration & teamwork improve? Will service levels decline or improve? Three other considerations when making an outsourcing decision Cost:Innovation: Illustrative Outsource provider’s cost to serve Cost of outsourced IT Sales & Marketing 5-8% Return on Investment 15-20% GST 10% 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? Margin you pay away

14 Page 14 Our 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

15 Page 15 Outsource 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

16 Page 16 Agenda Technology is changing its focus ANZ’s strategies Outsource or Excellence? ANZ’s current focus - improving our IT efficiency Outcomes to date The next wave of IT productivity improvements Conclusion

17 Page 17 Improving our IT efficiency 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 Findings from a recent independent benchmarking study* on our server environments:

18 Page 18 Improving our IT efficiency Attained CMM level 4 certification from the Software Engineering Institute (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 Team in Melbourne, placing it in the top quartile of software organisations worldwide To achieve this, we displayed a very high standard of process discipline in all areas of software development, including the rigorous use of metrics for tracking of quality of outcomes at all stages Capability Maturity Model

19 Page 19 Improving 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

20 Page 20 Outcomes 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

21 Page 21 Outcomes to date - business improvements Total Mainframe Unit Cost 94/9595/9696/9797/9898/9999/0000/0101/02 $ / MIPS MIPS Number of MIPS at Year EndTotal Cost/MIPS $/MIPS inc GST 97.0% 100.0% Average Average Average Average – 200 (YTD) Average SLA for major systems Cost savings Improved system robustness

22 Page 22 Outcomes to date - business improvements Operations, Technology & Shared Services staff satisfaction 50% 55% 60% 65% 70% 75% % 85% Staff satisfaction Customer satisfaction Internal Customer Satisfaction (out of possible 10) Mar-99Sep-99Mar-00Sep-00Mar-01Sep-01Mar-02Sep-02

23 Page 23 Next Steps: Cost leadership provides capacity to reinvest in growth Continuous improvement Componentisation and reuse of Technology Straight Through Processing – through reengineering and simplification Cost leadership…next wave productivity improvements:

24 Page 24 Next wave productivity improvements: CONTINUOUS IMPROVEMENT Develop ANZ group- wide & continuous improvement mindset Rewards based on outcomes not ideas Standard set of quality measures Large number of small wins COMPONENTISATION & REUSE Similar processes across Business Units can use same infrastructure & software components Components assembled rather than built Shortened delivery time at lower overall cost Flexible customer-centric solutions STRAIGHT THROUGH PROCESSING Improve customer experience by automating manual processes Standardise processes across Business Units – such as product origination Leverage “best class” processes through organisational learning Technology driven solutions to eliminate re-entry of information

25 Page 25 Conclusion 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

26 Page 26 Copy of presentation available on

27 Page 27 The material in this presentation is general background information about the Bank’s 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 or contact Philip Gentry Head of Investor Relations ph: (613) fax: (613)


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