ANZ is on a multi-year path to reshape its technology organisation into a “service provider” to the rest of the bank, with hopes to rein in business-as-usual IT spend and free up funds for innovative pursuits.
Group executive of technology Gerard Florian told last month’s TBM Council ‘21 conference that the effort has been underway for four years so far and remains a work-in-progress.
“The biggest thing that we are focusing on within technology at ANZ over the next three years is maturing our service operating model so that we do act and operate like a business within a business,” Florian said.
“We are trying to shift from an organisation that builds projects, manages assets and deals with tickets, to being an organisation that provides services that are highly valued by our internal customers but [that are] also enjoyed by our external customers.”
To act as more of a service provider, Florian said the technology organisation first needed to understand how a “service” out in the business, such as for mortgage or credit card approval, worked end-to-end.
Technology could then work collaboratively with the business to “continuously take friction out and improve that service”, and optimise the actual technology costs embedded in that service without impacting on the experience it delivered.
Florian said that both employee- and customer-facing services would be targeted for improvement.
“We’re equally focused on our internal end user services and we support basically the broader 40,000 people who work at ANZ Banking Group, as well as the business services to our retail and institutional customers,” he said.
“As we think about our move towards this service model, both ... sides are getting equal attention.
“We can’t only focus on the [staff-facing] side and sometimes that can be what happens - the tech shop becomes very internally-focused, thinking about desktop-as-a-service and printing-as-a-service and those areas, which are important.
“At the same time if you only focus on the [business services offered to external customers] but forget about your internal customer, you end up very quickly with an unhappy user base and that has other consequences.
“So I do think it’s important to have a balance between both of these families of service as you move down this path.”
Florian anticipates a number of benefits for ANZ once the technology “service provider” model matures.
The “number one” outcome it is hoping for is to drive more “efficient behaviours to optimise technology spend.”
“[There’s not an] organisation or a CIO that I speak to at the moment in any industry really that’s not under some level of cost pressure,” Florian said.
“As tech becomes a larger part of your OpEx and in particular, as we use more cloud, for example, there is more of a consumptive input of costs, we need to make sure that everybody in the organisation understands their role in the overall tech spend and how we can provide people with information that’s there to actively influence their consumption.
“That’s not necessarily to say stop [consumption] - they may want to go harder - but they have the data that they need in order to make those decisions.”
Technology cost transparency product owner Luke Waring told a separate session at the conference that the bank wanted to be able to display and allocate its technology costs “in a more intuitive way that’s going to change the behaviour of the business”.
Waring said that the bank is “managing to keep business-as-usual [BAU IT] budgets flat - despite an increase in demand” for technology services generally.
He added that an “ageing application fleet” and increased use of public cloud is placing added pressure on BAU spend.
But, he said, the broader ANZ business today lacked “the levers to help [IT] manage this problem.”
Specifically, the bank currently uses showback to demonstrate to parts of the business approximately how much IT cost they are responsible for generating. ANZ is hoping to move to a chargeback model - where the business will actually need to pay its technology costs - over time.
“The tech cost base is a collective problem for the business and technology to manage,” Waring said.
“By getting their help with managing their consumption, we believe this is our path on changing the way we manage our finances and freeing up more BAU for [other technology] investments.”
Florian hopes the bank’s efforts will produce additional outcomes, including an ability to “flex” the bank’s technology costs to deal with the “ebbs and flows” of general business, such as to accommodate future acquisitions, expansions or “possible divestments”.
He also hopes to be able to better quantify and maximise the value of different IT investments - and that is likely to build on associated efforts in the bank to stand up platforms that can be multi-tenanted to reduce overall operating costs.
“If we’re looking at an underlying platform - it might be a CRM platform, it might be a risk decisioning system or a general ledger - if we are able to plan that platform across a large enterprise and then look at getting value in many areas, we’re going to be able to move a lot faster rather than a number of discrete projects that are each running with their own tech stack,” he said.
“That planning and getting clear on the value that the organisation is after is a key outcome of all of this.”
Florian said that one only needed to look in the direction of ‘big tech’ to see that platforms “are all the rage”.
“The idea within an organisation that you can share an asset so everybody doesn’t get their own one [brings] huge benefit from a complexity point of view from a technology perspective, so we are certainly promoting more shared assets in our organisation,” he said.
“We’re getting people’s heads around the idea that we need to share because we simply can’t afford for everyone to have their own systems.”
Florian indicated that there may be incentives - and eventually disincentives as well - to encourage greater sharing of technology assets and platforms within the broader bank.
“It’ll be a combination of carrot and stick in some ways,” he said.
“Just to clarify, a shared platform might be our cloud platform. Like many organisations, we’ve got a hybrid strategy with two hyperscalers providing us with cloud capabilities.
“Obviously on top of that we have to basically overlay what we call our managed cloud platform to support all the controls we need to have in place to satisfy the regulators and so on. To set that up costs money and then we’re going to have many different tenants sitting on top.
“We need to think about incentives to get people to move to cloud faster once we’ve set it up but we also need to think about disincentives that say, ‘If you haven’t moved in a certain period of time are there additional costs’.
“And we are still - to be transparent - working through some of that.”
One of the incentivisation challenges to be dealt with is what Florian called “first mover disadvantage” - essentially where an early adopter might otherwise have to shoulder a high upfront cost to pay for setup.
“Often the organisation or the team who uses the platform first ends up paying for a lot of the [setup] costs,” Florian said.
“That’s where we’re having to work with the finance team - can we look at a different way of dispersing the setup costs to then incent people to move quickly onto these platforms?”
Florian said ANZ has a joint team of technology and finance working on the program.