Home Industry Strategy CommBank CIO attempts to break vendor choke
Commonwealth Bank of Australia technology chief Michael Harte appears to be driving a strategy of inter-bank cooperation in an attempt to force the most powerful vendors into changing their attitude towards cloud computing and regulators into understanding the potential of the new enterprise IT paradigm.

Commonwealth Bank of Australia technology chief Michael Harte appears to be driving a strategy of inter-bank cooperation in an attempt to force the most powerful vendors into changing their attitude towards cloud computing and regulators into understanding the potential of the new enterprise IT paradigm.

The executive, who holds the titles of group executive of Enterprise Services and chief information officer at the bank, outlined his ideas in a landmark speech last week to the Committee for Economic Development of Australia.

Harte (pictured) said there was a “major transformation and shift” going on in the technology services market, with one drive being at the front end — where customers wanted more convenient real-time services, and one at the back end — with cloud computing increasingly commoditising enterprise IT infrastructure and avoiding the need for packaged software.

“You’d think that IBM and HP and Oracle and Microsoft, the big household names, would be driving this change but they’re still very dependent on accounting standards and still very dependent on annuity income, and they haven’t made the transition fast enough,” he said.

Harte told the audience more nimble players were coming into the market, but he also flagged the possibility that CBA might play hardball its own way.

Firstly, where it found solutions to reduce the cost of its infrastructure, it would “share” and “open source” those solutions and make them available “across a network on demand”.

But secondly, he said another way of addressing the issue would be to get three banks together internationally and agree on how data could be stored and processed and take it as a standard to regulators.

This morning the Australian Financial Review reported CBA had teamed up with Bank of America and Deutsche Bank to create a technology buyer’s consortium to get better deals from the industry’s largest players. A CBA spokesperson has not yet responded to a request for comment on the issue and how it might relate to Harte’s speech last week.

The Australian Prudential Regulatory Authority is understood to have fairly strict rules on how Australia’s banking sector is allowed to store key financial data — onshore or offshore. The regulator’s spokesperson has not returned calls since last week on the issue.

Some of the banks have established extensive offshore facilities — for example, ANZ’s sizable division in Bangalore, India. But by and large most of the banks keep most of their data within Australian shores.

Harte’s speech alluded to the costs of keeping CBA’s IT systems running.

“When you look at [cloud computing] from an enterprise point of view you’d say, hell we’re really stuck in an old IT model. We’ve got 50 to 80 per cent of all of what we spend a year tied up in infrastructure and that infrastructure isn’t conferring any strategic advantage; it’s just a cost of doing business,” he said.

Image credit: Commonwealth Bank of Australia

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