"[Today] we spend about 10 to 11 percent of our total business expenses on information systems. It was 12.75 percent previously. I've brought that down but at the same time delivered a lot of business projects." (The focus on three core businesses has reduced the number of systems required and hence reduced operating cost.)
Goh favourably compares Challenger's spending to its peers. "In the financial services sector less than 8 percent [of expenses going to IT] is an under-investment and anything above 16 percent - which I have seen when doing due diligence on another company - is highly over-invested."
Goh adds that if more than 50 percent of your spending is non-discretional - that is, spending to keep the lights on - then your IT set-up is too expensive. "Our non-discretional spend is now less than 50 percent," he says, although he declines to reveal the actual amount. Whatever the dollar figures, it has to be better than the previous 80 percent impost.
As well as migrating onto a new integrated platform, Goh also established four key performance areas that could be measured and against which the IT division tracked: infrastructure services, application portfolio, IT finance and compliance.
Within two years of accepting the Challenger challenge Goh struck gold, travelling to New York this May to accept the international Stevie Award for the best MIS and systems organization in 2005. That award recognized the IT group's success in transitioning the firm successfully off legacy and onto newer IT platforms in two years and delivering significant savings to the business.
He is continuing the pace, and recently took just five weeks to migrate products Challenger inherited when it bought HSBC Asset Management in March this year onto the SimCorp Dimension investment management system, which supports Challenger's life and wealth management businesses and treasury unit. He may be spared one other quick change, however. While the company had planned to move out of the high rent Aurora Place premises in Sydney and find cheaper digs, that plan was apparently abandoned by the board in September, so his information systems can stay put for the moment.
Best and Brightest
Goh now runs what he describes as, "very much a Microsoft shop" with .Net. "In the financial services industry the skills set in .Net is better. There is no shortage of people. It's a bit different in the UK where they prefer J2EE and the US where it's a mix of J2EE and .Net."
That said, developing and keeping the right blend of skills has been one of Goh's great challenges for the past two-and-a-half years. When Goh joined Challenger he inherited 110 IT people, and although that number rose as high as 130 while he moved the firm off legacy and onto the newer platform, he is now back down to a team of 110 to support around 950 people and computing operations in Sydney, Melbourne and Hobart. Of those 110 people about 70 percent were with Challenger when Goh joined, although he says there has been a "transformation of the skills set and the emphasis on capabilities". In fact he has doubled IT training expenses in order to keep the skills base current and yet still claims his IT expense budget is tracking 10 percent below budget.
Recognizing that the job needed a strong support team to work with him, Goh installed a hand-picked team of IT people from his own network of contacts when he first arrived at Challenger. It has clearly been an intense couple of years for everyone on the team. Goh admits that the heavy demands on the IT team have meant lots of hours and lots of pressure. "Most leaders call for work-life balance," he says, "but when you are trying to turn a start-up around that wasn't my priority. The last two years have been very tough." Goh himself averages 10 to 12 hours a day. "But I have a lot of people who work much harder than I do," he acknowledges.
Nevertheless he still believes that although the past years have been hard he is effecting a transformation of Challenger's computing department that will see it attract the best and the brightest among financial IT personnel. "Three years ago, if someone was looking to join Challenger IT - well, it was just another IT shop. It wasn't like joining Macquarie or Colonial. Now I think we are becoming an employer of choice and in return our people feel they will have contributed," Goh says.
"That is recognized by the market. Just recently one of my people was approached and offered a 33 percent increase in salary. It is a challenge and a financial challenge. I like to think we are paying top-tier salaries and mostly we are. But it's not always about compensation because statistics show that 65 percent of IT employees leave because their job is no longer challenging."
Goh is not prepared to get into a bidding war to retain his people and is resigned to losing the staff member who is being poached. "That person probably will go because I don't believe in matching salary offers for retention. The company that is offering the role is far greater than our size, with more depth and scope than we can offer."
Goh doesn't believe in severing all ties with employees when they leave. He likes to keep a few strings loosely attached. "We wish them well," he says, "and they might become a spy for us in another business."
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.