Looking to change the world with technology? If so, choose your employer wisely: business transformation isn't necessarily the remit for many IT departments.
IT teams in Australia tend to come in two flavours: those tasked with transforming the business by planning and building new systems and those tasked with simply running IT.
Knowing which phase your next employer is in can be crucial - and paying close attention to the role and the language of the organisation's CIO may provide your first clue.
While objectively there is no right or wrong job description for a CIO, understanding their role tends to determine the range and nature of IT projects available to staff.
Consider the contrasting scenarios at two of Australia's largest employers of IT staff, the Commonwealth Bank and Westpac.
CommBank chief information officer Michael Harte reports to chief executive officer Ian Narev and spent the past five years leading a $1 billion core banking upgrade.
In an investor briefing last October, Narev described IT as the first of four key pillars driving CommBank’s success.
In contrast, Westpac’s Australian Financial Services chief executive officer Brian Hartzer told investors in March of this year that IT was unlikely to create ‘genuine competitive advantage’ for banks.
“How many sources of genuine competitive advantage from technology have you seen any big bank create in the last 20 years?” he said, “I can’t think of many – I don’t think that’s a coincidence.”
Sources from inside the bank told iTnews that Westpac technologists have been charged predominantly with keeping systems running since a major restructure in late 2011.
The restructure, which promoted former service delivery manager Clive Whincup as chief information officer, moved IT one step down the reporting chain and is said to have sparked a string of senior IT departures.
Similarly, an ANZ Bank restructure last year saw CIO Anne Weatherston moved under the direction of COO Alistair Currie instead of chief executive Mike Smith, and a more recent NAB restructure combined technology and operations responsibility under former personal banking head Lisa Gray.
Whincup describes IT as the bedrock of Westpac’s business, and the company has invested in laudable initiatives to attract young talent to its IT teams.
Many of the bank's existing technologists tell a different story: expressing frustration with both red tape and the bank's extensive use of outsourcers.
Since the restructure, Westpac has farewelled group head of technology Peter Harvey, information management head Chaminka De Silva, mobile development head Deon Ludick, chief technology officer Sarv Girn, institutional bank CIO Donna Vinci, BT CIO Tony Forward and engineering heads Michael Gindy and Randy Fennel, among others.
Westpac, when asked to comment on these departures, did not directly respond. A spokesperson for the bank said Westpac maintains “great retention amongst our employees" and is "also increasing female participation across IT".
Horses for courses
Forrester analyst Tim Sheedy said the Westpac IT change of guard did not necessarily reflect poorly on the organisation.
“For every organisation there is a right technology structure,” he said. “Depending on the archetype of the organisation, the CEO, directors, minister, or whoever it is that runs it - these are the factors that will dictate the right person for running the IT organisation.”
Sheedy highlighted the ongoing rivalry between supermarket giants Coles and Woolworths as an example of how IT did not wholly define success.
In 1999, Woolworths embarked on a $1 billion end-to-end refresh involving the upgrade of its supply chain and supporting systems, as well as nine regional and two national data centres.
The effort saw Woolworths named one of Gartner’s top 15 supply chain companies last year – a list that excluded Coles’ parent company, Wesfarmers.
Coles, meanwhile, embarked on a similar, $670 million project in 2002 but according to Sheedy, focused efforts more on marketing than its competitor.
“Coles went down the approach of marketing its fresh food. They looked at the customer experience as opposed to just technology,” Sheedy said.
“Is one better than the other? No – it depends on the organisation and what they think is going to drive the difference.”
As of Wesfarmers’ retail sales results announcement last week, Coles has outperformed Woolworths on sales growth from existing stores for almost four years.
"IT isn't the be all and end all," Sheedy said. "It can be a differentiator for those organisations that choose it to be a differentiator, like the Commonwealth Bank. And its those organisations that will attract the type of people who want technology to change the world."
Banking sector analysts agree.
Reflecting on Westpac’s Hartzer’s comment, one equity analyst noted that IT projects typically only deliver a temporary competitive advantage to banks because competitors can usually follow suit quickly.
He noted, however, that core systems upgrades – like those undertaken by the Commonwealth Bank and NAB – would deliver a “longer-than-usual period of temporary competitive advantage”.
CIMB analysts have separately indicated that CommBank would “maintain its claimed [approximately] two-year IT advantage over peers once the core modernisation is complete.”
The investment bank told its clients in January that the big four banks needed to invest in IT to stay in business. But equally, “tight cost control” would drive their performance this year.
According to CIMB’s report, Westpac had the lowest cost-to-income ratio (40.8 percent) in 2012, followed by NAB (43.0 percent), and CommBank and ANZ (both 45.6 percent).
Read on to page two to find out what the top technologists are demanding.
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