CBA evaluated the 2,200 enterprise applications it uses to understand what to keep, digitize or delete as part of a technology simplification work program.
The bank has spoken at a high level about the job several times this year, with CEO Matt Comyn saying in his annual results briefing that the job was aimed at “simplifying and modernizing our technology park.”
The mechanics of how CBA navigates its area of technology on an application-by-application basis was revealed at the ’21 TBM Council conference this week.
tunnel boring machine – technology business management – is used to quantify the functioning of information systems and to measure the value created by these systems.
CBA revealed that it first tried to implement a “tailor-made” and “highly personalized” TBM model to improve IT cost transparency in 2018, but encountered ” data issues in IT and finance ”- and eventually had to“ start over, ”financial services program delivery general manager Richard Spalding said at the conference.
When the bank came under pressure on margins during the pandemic, it then lacked the information it needed to reduce wasted technology costs.
“We weren’t really in a strong position last year as the pressure on margins started to impact the industry to be able to respond and deliver the level of transparency at scale that we needed to support the bank’s technological simplification and digitization strategies. “said Spalding.
“We found ourselves having to really look at ourselves in the mirror and say, ‘We have to start over. We need to get the right data model and solution architecture in order to have a solution in place that can meet our current and future needs and deliver lasting value. ”
By remaking TBM, the bank this time kept things standard and out of the box. In doing so, he managed to get a system in place in nine months instead of the usual minimum of 18 months, with a commissioning in July of this year.
Spalding said the ABC decided to “focus on rhythm over perfection.”
“How can we deliver the right level of transparency at a rapid pace to enable our business and IT leaders themselves to execute application digitization and streamlining strategies?” [or] modernization at the pace? he said.
“In order for them to run to the beat, we had to run to the beat.
“If you have a strategy that tries to save hundreds of millions of dollars over a few years, every month you take to provide transparency to allow [teams] to run, we’re probably paying close to $ 5 million to $ 10 million in benefits per month.
“I would defy anyone to say that customizing and taking an extra three months is worth trading in the perks you get from the Rhythm.”
The main early use case of TBM is to support CBA’s technology simplification strategy.
“Our technology simplification program looks at both the size of the application park and how we designed the application stack,” said Spalding.
“The role TBM is playing … is that we now provide the Technology Simplification Program team with full transparency into the cost of each application, both in terms of execution and modification, throughout. the development organization as well as the infrastructure organization. .
“The team can see exactly how much each application costs, where it costs, and if they then decommission or modernize that application, they can see the value captured. “
Spalding said transparency is about both streamlining the number of apps and any overprovisioned underlying infrastructure.
“Our technology simplification strategy is a recognition that 60% of your IT cost base, sometimes more depending on your industry, is generated by application assets. Therefore, if you want to manage your expense base, you need to manage your app assets. ” noted.
“We must rationalize the number of applications because each application has a TCO [total cost of ownership] infrastructure support, licensing and hosting, etc.
“So for us, simplifying technology is looking at our portfolio of application assets, streamlining those that we believe are end-of-life, not fit for purpose, or unsuitable for. migrate to the technology we want to run them on so it’s one piece. .
“There is also another element around the optimization of the application. You can have an app suited for your purpose, but the use of the underlying asset or assets is not very good due to the way it was designed or configured.
“Often, developers, for example, will ask for infrastructure capacity without thinking about asset usage. They want to make sure that the capability is there for that app while they’re developing it and therefore that it works fine once it goes live.
“But this can often lead to excess capacity at the portfolio level.”
Spalding said TBM – and the Apptio software used to implement it – would allow the technology simplification team to act and execute “with a much higher level of precision.”
“Obviously, the costs don’t go through the door just because you deactivate an app. You often have to cancel contracts or realign your workforce, ”said Spalding.
“We now have this transparency to do this with a much higher level of precision than before.
“If you don’t have that transparency, how do you know which apps to use? How do we know how much we’ll save if we downgrade or modernize an app? How do you know which contracts to cancel or which workforce to realign? ”
Spalding said future use of TBM would see the bank allocate technology costs to every part of the execution of key transaction processes, such as the mortgage approval process.
“We need to tie the cost of servers and IT assets to business product channels and business processes,” he said.
“By mapping the transparency we get from TBM to the business profit model through what we call a cost of service lens, we can then understand … the technical and operational cost of taking out a loan. real estate, how that correlates with the non-tech costs … and the overall value and competitiveness of this product offering.
“Most of all, we can see where and why it costs – being able to segment that [technology] cost through the stages of the home loan process, but also have the depth of transparency to be able to understand not only which IT services and assets support each stage, we can see the cost of the underlying technology stack .
“So in some cases we may have to spend less on technology for a certain phase because we haven’t optimized it very well.
“In other cases, it may indicate that we are spending too little on technology, as you can see that it is relatively low for this stage of the mortgage lending process compared to the human layer spent by operations to process documents. mortgage.
“This is the next frontier for us.”