Banker Sours

It was Australia's equivalent of "IT Doesn't Matter" and a shot heard 'round the world: Commonwealth Bank CEO David Murray's bitter critique of IT at the World Congress on IT in Adelaide. In 2002 debate raged as to whether his tongue-lashing was directed externally at the industry or internally at his own shop. In this exclusive interview with CIO, Murray explains what prompted those strong words.

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Frustration Bubbles Over

Murray became CEO of the CBA in 1992, eventually retiring from the position in 2005. By 2002 he was convinced that the promises of IT were not being matched by reality. After a lifetime in banks he understood that "banking is only information transfer, but we'd had our share of things going wrong. Know-how and technology are at the heart of business strategy. But routinely it didn't deliver."

Murray's frustration bubbled over in Adelaide when he told the audience that in IT, "the outcome falls well short of the promise and we need a return in our investment.

"The same technology that was supposed to make us 'paperless' has allowed the proliferation of papers in various forms that has limited productivity." Murray called for investment in technology to be justified "on the basis of fulfilling customer needs, providing productivity and a shareholder return and enhancing the existing business strategy".

Yet Murray maintains he was never anti-technology per se. "In my long experience at the bank I learned that the IT system can make or break the bank. It can be a source of competitive advantage or a big mess-up," he says.

The Adelaide address sent the signal that there were not going to be any more mess-ups on his watch.

A year after making his speech, Murray embarked on the $1.5 billion "Which New Bank" initiative that aimed to provide front-line staff with a single view of the customer and their dealings with the bank, a strategy that was technology intensive. By then Murray had reorganized the bank's IT division, enforced much tighter management of all IT decision making, installed a new CIO, Bob McKinnon, and made sure that the bank's technology vendors understood its language.

With Which New Bank the information challenge was acute. "We had to move to a more collaborative model," he says. "Different divisions in the bank faced very different market segments, but really there is only one bank balance sheet and one information system supporting it." The tension in supporting the information needs of different divisions at the same time as having a single information system was "very difficult to manage", Murray acknowledges, adding that there was a time when IT vendors were attempting to "pick off" the individual divisions rather than taking a holistic approach to the bank's information needs. That was not going to be tolerated under the new regime, and nor was any mismatch in understanding what the systems had to do, and how they were to be measured.

Murray worked to drum into vendors that it was the bank's customer experience that was important - not the system itself. "We re-engineered [the relationship] so that rather than the bank being the IT vendor's customer, it was the bank's customer they recognized as the client." Replaced by Ralph Norris as CEO of the CBA last year, Murray believes this focus on the need for greater understanding between IT and the business will grow under Norris, who was until 1991 CIO of New Zealand's ASB Bank before rising to become its CEO.

It is also possible Norris will engage in the same level of micromanagement of IT that Murray initiated after 2002. Murray, for example, was intimately involved in selecting which information systems were to be implemented for Which New Bank. "I chose a small system that we were using already to be the design of the big system," Murray recalls, commenting that "all singing all dancing systems never work". Transitioning the small system to a major front-line application was not easy and there were scale issues, but Murray says Microsoft took "a great interest in us" and helped solve some critical issues. "Bill Gates himself took interest in it and talked with my divisional people."

Language Mismatch

Although Microsoft had been a focus for the 2002 tongue-lashing, Murray today maintains his berating had little impact on Microsoft's subsequent support. It was just good business on their part he claims. Whatever the motivation, Microsoft would have been looking to earn back the stripes Murray had ripped from it so publicly in 2002.

Murray says one thing that did surprise him after his speech was the number of people from the IT vendor community who contacted him to compliment him on his stand, adding that it had needed to be said. "I think it forced a rethink on whether the whole industry was too arrogant and that technology had been running ahead of capability. I wasn't just targeting Microsoft," Murray says.

While the IT industry was rethinking its relationship with corporations, Murray says the bank was maturing as an IT user. "We got better at connecting the language of systems reports to our service requirements," he says. "Typically you pay for CPU usage in CPU hours. But you don't count your customers' experience in CPU hours, you count it in transactions per hour. There was a mismatch."

Murray believes that part of the problem in the 1990s and early 2000s stemmed from the fact that the language of technology was different from the language of technology users. He credits his CIO McKinnon for much of the progress in that area. He also cites McKinnon's implementation of a reporting system that provided to the bank's executive committee a regular overview of how IT was progressing along with the group's financial reports, which provided the executive with a clear view of the trends in the bank's IT.

Success could only come when everyone spoke and understood the same language, and also when more effort was put into understanding how new technology would affect work processes, Murray says. Change management was the catalyst for productivity improvements; without it information technology would just smoulder away, refusing to ignite improvements.

Murray says too few corporations recognize that "any new technology fractures work", and changes the work processes. "When you introduce a new technology you have to rework the way people do work," and in many cases this critical change management element was missing in technological upgrades, stalling any anticipated productivity benefits.

Today he thinks things have improved considerably. "Strangely I think the speech had an effect," he notes.