Up to the Challenge

Challenger Financial Services aims to be a bright star in the financial firmament. Effective information systems are its greatest ally.

"You do always have to keep asking if the investment we are making will hit the right target when the ground is moving."

For CIOs of fast-paced businesses that uncertainty is a constant concern. Still, at some stage you have to take a punt on the strategy that the board is going to adopt and develop information systems that will then support that strategy. Fortunately for Derek Goh, executive general manager of information technology and facility management for Challenger Financial Services, most of his punts have paid off so far. But he acknowledges that it is a lot harder trying to transform IS when the business is also transforming. "There's a lot of guesswork and calculated punts," he says.

That is particularly the case when the business is new, the strategy is a work in progress and senior management changes midstream.

In its current incarnation Challenger is a relative newbie; it was formed in mid-2003 as a result of a merger between Challenger International and CPH Investment Corporation. After 15 months the foundation CEO, Chris Cuffe, stepped aside, although he stayed with the business to lead the wealth management unit. He was replaced by the current CEO, Mike Tilley. While it was Cuffe who personally brought Goh into the Challenger fold, Goh has since developed a rapport with Tilley to whom he reports. Goh has also built relationships with the managers of the three service lines in the group, and their teams, in order to work out what information systems are needed.

"I go the traditional way and have coffee and an informal chat with the business each week - and it's not just the one person," he says. "When things are chaotic you don't look for a formal way to communicate. You adopt a spy-like approach so that your intelligence comes from multiple sources. Sometimes a decision is made at the very last minute and you have not seen the symptoms along the way. You can't cater for all possibilities, but you need to narrow it to a set of possibilities.

"I learned that from experience and observation and from Colonial First State, where I was also CIO."

Even so, Goh acknowledges that at times he feels "like throwing a dart is a better way to make an informed decision". As yet Goh has no dartboard in his office, instead he's opted for the more classic route of gaining management expertise and business acumen via higher education. In 2000 Goh received an MBA from the Australian School of Management (AGSM), which he says has helped him formulate and plan for different business models. "When you see ideas, it's really like seeing many stars in the sky. With an MBA you can link the stars into constellations and articulate that and then influence other people," he says.

On first arriving at Challenger there was not much time for stargazing. Challenger was home to legacy systems from 13 business units that had been cobbled together as a result of the merger of Challenger International and CPH.

"The problem was that there was a high cost of support. It was non-discretional spending to ensure we complied with requirements, but we weren't adding value. If you've got an airline running eight different planes you need eight maintenance engineers and eight sets of parts. There were more IT dollars spent just on keeping the systems alive than we wanted," Goh says.

In fact four in every five dollars went towards just supporting the host of legacy systems. According to Goh, the inherited technology base was made up of multiple layers of legacy systems, none of which were integrated. In the wealth management business alone there were eight different unit registered systems running. Shortly after forming the new company, however, the board decided to streamline around three core business units: Challenger Life, which provides retirement products; Challenger Wholesale Finance, which now claims to be the sixth largest mortgage company in Australia with a book of around $18 billion; and Challenger Wealth Management, with funds under management of $7 billion plus.

"When we moved to the three core businesses as our business model there was quite a lot of commonality; therefore we could have some common technologies," Goh says. That meant some certainty about strategy and the opportunity to start building a single underpinning information infrastructure. And that meant savings.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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