As the Commonwealth Bank’s Wired for Wonder conference came to a close, CIO caught up with the bank’s chief information officer, Michael Harte, to discuss innovation in IT, delivering competitive advantage and technologies that will have an impact over the next year.
CIO There’s been talk for quite some time about the shifting IT away from being a cost centre to a profit centre. How realistic is this and what is the perception of IT within CBA?
Harte: The talk of cost or profit centres sometimes misses the point. It should be about delivering value, competitive advantage and customer experience.
Perhaps most of all Commonwealth Bank has always strived to change the way that it delivers IT services. This effort has redoubled to gain advantage in the past seven years. We have modernised our infrastructure by rolling out a new data IP network, building a new IP telephone network, modernising our mainframes, consolidating our data centres from 23 down to two and introducing security and privacy solutions. And of course, we undertook to modernise our core banking platform.
You could say that ‘trust-as-a-service’ will begin to emerge as an important part of the online and mobile interactions of consumers.
All of these decisions have been driven by a focus on customer experience. For us, it is about real-time relationship value. We have transformed our IT approach with a focus on moving from 'product' to 'relationship' value. This has seen us move from 50 per cent of IT spend being on infrastructure six years ago to 26 per cent today.
We have delivered a new core banking platform, which is delivering real-time banking and moved more to the cloud and adopted infrastructure-as-a-service. We have moved our IT investment and human capital closer to customers, shareholders and staff.
CIO: There's tension between being operationally focused and creative/innovative. Is IT responsible for innovation? Can this tension be reconciled?
Harte: I challenge the notion that IT department cannot be innovative. Instilling a culture of innovation is good business practice. Ideas are powerful things [and] as leaders we have got to create sufficient space for people to feel they have a safe environment in which they can test and learn.
We focused on creating a culture that encourages change [and] for us the competitive edge is in the ability of our people to make quick decisions and adapt.
CIO: How do you, as a CIO, help develop a culture focused on innovation?
Harte: We have lots of initiatives designed to deliver productivity, innovation and creativity benefits. Naturally, we look to recruit bright and creative people. We have designed great work spaces and places to work in some of our new campus-style buildings.
We use different processes and methods when building new products and services such as 'agile' and 'design thinking' methodologies to ensure our products and services are simple and easy for our customers to use, and are delivered to market quickly.
Commonwealth Bank has internal and external innovation and ideas initiatives, events and forums. These are designed to actively encourage a test and learn environment; rapid high frequency low cost experimentation drives high value outcomes with greater reliability. In addition, we also tap into the innovation of our partners as well as with universities and industry associations.
We know that the scientific method produces improvement and new efficient and effective ways to do things. But that alone is not enough. Real innovation happens at the nexus of creative thought and scientific rigour.
CIO: Is there a disconnect between the pace of technological change and the uptake of new technology inside organisations? Is enterprise IT always one or many steps behind? If that’s the case, how do you fix that?
Harte: Enterprises are complex. There’s a variety of factors from internal policies, external regulations, risk assessments, and privacy and security compliance that means any new IT technology or application needs to be properly assessed before it can be introduced into an IT environment.
Can a large enterprise be faster in its adoption of IT? Possibly. There’s a variety of ways to achieve this. Ensuring you’re across your vendors roadmaps. Finding out who the new industry players are and whether their technology is compatible. Ensuring your organisation uses open standards. Negotiating more flexible licensing, using cloud more. There’s many ways to help improve the pace of uptake.
Ultimately, you need to strike the right balance between what is good for the business and what will help your people do the best work they can do for their customers.
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