Business Requirements

Discuss About The Australia Gained Benefits Using  Standards?

Commonwealth Bank of Australia established in 1911 and it was privatized in 1991. A multinational bank, it is headquartered in Sydney, Australia, and also operates in Asia, United States of America, United Kingdom, New Zealand etc. It has a workforce of approximately 50,000 out of which 6,000 are IT and operation departments. Its financial services include management of fund, banking related to business, retail and institutional, management of pension and retirement, insurance and services related to investment and brokerage (Schlagwein, et al., 2014).

Commonwealth Bank of Australia was facing a lot of issues in the areas like, increase in the cost of IT infrastructure, contracts of vendor which were inflexible, processes which were labor intensive. There is a need to help banks in growing and being profitable, to provide more value to the business of IT, and to attain advantage strategic to the bank, the IT team should acknowledge its staff, processes which can be automated, change in the methods and means of IT resources sourcing, provisioning, payment and bring into usable condition (Turner, 2014). There is a need for cloud based IT operating model so as to transform all the usable technology, people involved and processes used in the cloud based model. This will ensure that there is gain in efficiency, savings in cost and leverage to vendor. By implementing one good cloud computing, automation based on policy and multisourcing in vendor, Commonwealth Bank of Australia can  minimize its spending on IT (Bartoletti, et al., 2012).

There is a big requirement for Commonwealth Bank of Australia to implement cloud computing in its process and day to day working so as to gain overall objective and efficient to the bank. The process can prove as a very strategic asset to the bank.

IT regards banking sector as a complex environment. On the basis of the bank security, compliance, and IT systems, a customer established its trust and it is this trust which is very important for bank for whom it’s functions.  All these three functions are affected by cloud computing.

In between the Enterprise Data System and other internal units, Commonwealth Bank of Australia sensed IT –related stress and rigidity. In order to overcome, such kind of issues in the Commonwealth Bank of Australia will have to endorse a brand new vision for IT, there is a dire need for regaining the capabilities of  IT and rebuilding its IT function, for the purpose of selection and merger of external IT providers. This process will ensure completion of important and huge projects of IT, eg. Which new bank program.

System Requirement

Commonwealth Bank’s motto is “committed to being Australia’s finest services organization” through excellent services related to customer. Pan Australia, as mentioned earlier also, it provides services in business banking, retail, management of funds, investment products, insurance, brokerage services, etc.. As a 100 year old conglomerate financial organization, it provides services to the largest customer base, which is almost 3.5million plus electronic users and a workforce of nearly 50,000 (Bartoletti, et al., 2012).

After the massive core banking modernization program, it came into light that the Bank’s present IT infrastructure spending are not delivering the correct yield, wherein, more than half amount was spent on maintaining infrastructure which are very basic in nature and which does not add any strategic yield or return to the bank. The other situation was that, the arrangements in between the vendor which were outsourced and the bank itself was not flexible and were massive and huge.

Because of Enterprise Data System, which was the main provider of the Bank’s IT services, the Commonwealth Bank of Australia had to cut short its staff in IT department which led to loosing some good caliber employees from the organization.

There is a dire need for spending nearly  AUD300 million for building new data center space as the bank had to shrink its workforce and the existing data center space is running out and becoming obsolete.

Due to these issues which are related to each and every department of the Bank like – operational, commercial and technological issues, to change the fundamental, a  massive project for the Commonwealth Bank of Australia transformation is must.

To tackle these technologies, operations and commercial issues, there is a requirement for launching a project which will transform and change the Commonwealth Bank of Australia’s IT infrastructure fundamental nature which was cost oriented into value driven by doing innovation in business.

The core principles of cloud computing will be the new vision for infrastructure for IT which is as a standardized service for its customers in business, resources of IT which are moving forward will be also delivered to them. The Commonwealth Bank of Australia will consider itself as a provider of true services and not only as a bank which deals in product services, whereas, the Bank’s growth and success level will not solely be dependent on the reduction of cost and will also not be measured by reduction of cost, but by investment made in each IT service and the business values delivered by them. This can also be termed as IT-to-BT (Business Technology) transformation.

The Solution: Software and Vendor Selection

To deliver everything in service form by the IT, there is a need for building a private cloud architecture on a large scale by the Commonwealth Bank of Australia.  So that resource which is present in the Commonwealth Bank of Australia can be virtualized, depending on such resources a basic and approved set of IT services which are clear-cut and well defined can be developed, by making such services portable. Once by doing so, the services which are now mobilized, can operate from any location which are cost effective in nature and to the Bank, eg. In the public cloud, in house or at a managed-services provider.

The Commonwealth Bank of Australia will have to hire a vendor ServiceMesh who provides enterprise cloud management platform, to guide them in making cloud strategy more refine and accelerate the strategy.

The Commonwealth Bank of  Australia will be an Integrator of cloud service. In the process. The services are defined by IT department and the way of performing, handling and maintaining everything which is important it will be pointed out by them

To help refine and accelerate this agile and lean cloud strategy, the bank will have to work closely with ServiceMesh, provider of an enterprise cloud management platform

The Commonwealth Bank of Australia will be an Integrator of cloud service. End to end management of services and functions arrangement,  are IT team responsibilities and they help in defining the services and  the manner in which it should perform. Multisourcing is an approach of the Bank, wherein, an invitation is sent to all the vendors in general, for bidding for providing the services. After this, to comply with and meet the requirements of the Bank, vendors adjust their own terms.

The model of cloud operation and reference architecture  which will align with six core tenets, can be built by Commonwealth Bank of Australia, below mentioned are its fundamental principles which include the vision of its service:

• Pay as you go: As against contracts based on fixed terms, customers who are in business, make payment for only those services and products which are based on the meter or chargeback and falls in agreements which are flexible.
• Contestability: To avoid any kind of monopoly or favoritism and to promote pricing which is competitive in nature and to avoid any kind of situation, wherein, the company is stuck with one exclusive vendor, multiple vendors bid for IT services is encouraged.
• On Demand: Immediate delivery request for any services related to IT, should be done by doing processing in real time to minimize wastage of time which is needed for fulfillment process beginning.
• Automation: Business customers via interfaces of self service, can be able to put forward any request of the Bank catalog. With the help of policies of government, approvals which are fully automated, on-demand provisioning processes, fulfillment is executed.
• Standardization: In order to encourage cost and reuse predictability, usage of services which are standard need to be defined and enforce the usage of it in a clear manner in a catalog which is all inclusive (Amiri & Salari, 2013).
• Workload portability: Between  vendors and infrastructures, services of IT department need to be fully portable designed which ensures that the Commonwealth Bank of Australia can shift easily its workloads to a location which are most cost effective.

It is felt that a process which is holistic in nature which include people, processes and technology is required to make sure benefits which are ongoing and sustainable is achieved.  The strategic plan, IT-as-a-Service (ITaaS) of Commonwealth Bank of Australia need to be divided into three phases to be named as “horizons” to upgrade and take benefits from this transformation (Team, 2017).

• To consume and pay for the base, existing contracts will be restructured and installed into current offerings of the Bank
• Private cloud infrastructure to be established for selecting, managing, securing, governing and policy controlling of applications.
• For non-critical applications, a public cloud for ITaaS piloting.
• For a service Integrator operating model, establishing tools and processes which are core, so that they maximize the market value of Commonwealth Bank of Australia’s product and services (ACS Foundation, 2011).

• While minimizing expenses overall, increasing portability, cloud dissemination, its application portfolio should be standardized with high intensity.
• In its core process and use of production, private cloud infrastructure need to be expanded, which will help in managing, governing and internal control.
• To offer ITaaS and Platform as a Service(PaaS), extension of public cloud
• Overall resources and core processes need to be optimized.
• The Private and Public cloud architectures need to be integrated, so that a set of defined suppliers can be provided with portability in workload (CAN, 2017).

The Commonwealth Bank of Australia, consider that in the process of transformation through the cloud based model, if it will move to an “X—as-a-Service” (XaaS) architecture, it will be benefitted:

• The cost will be reduced due to vendors competing among themselves by lowering their own pricing
• Operating expenditure will be reduced due to shifting of applications to a cloud model
• 40 percent storage cost will be minimized if XaaS model for storage is used
• Time involved in infrastructure delivery will take a few minutes
• Only when required, services which are specific can be purchased and risk can be offloaded
• By lowering expenses in the future, suppliers can aim for unit priced, pay-as-you-go models (Williamson, et al., 2015).
• Millions of Australian Dollars can be saved

Evaluation of Level of Efficiency

With the implementation of AIS/ERP many practices which are beneficial for the Bank can be achieved:

The transition to an organization which is service based can be eased with the help of strong leadership:

The Commonwealth Bank of Australia was earlier using a non standard based service provider and making any changes in it is a challenging task. But the efforts of the leader of the Bank and the Bank’s management and human resources, dedicated efforts  will result in an infrastructure technology and operations team which will be new and efficient.

• A change in organization from top to bottom
• Precise and clear objectives and metrics for development of cloud services
• Placing accordingly Cloud Service Catalog and Operation Processes:

Prior to new technologies selection and implementation, a time duration of six months is required for development of the new cloud operating model (Schlagwein, et al., 2014). All the credit goes to this approach, which helps in coping with the change and getting more accurate and precise inputs about any limitations in current processes. The Bank associates should be encouraged to:

• Initially building a holistic cloud operating model: A target state automation model need to be developed initially that will describe, on demand, how components of technology can be delivered as a utility. Catalog for service, orchestration, billing and recharge etc comes under the target state model.
• To take benefits from cloud economics, standardization enforcement.

The process of renegogiation of Commonwealth Bank of Australia’s present IT contracts of outsourcing can be driven by the Bank’s cloud operating model which in turn provide a means to contracts for new providers. Only those vendors, who clearly understand the arrangements of the Commonwealth Ban of Australia, wherein they will have to compete on a regular basis for providing continuous IT services (Bartoletti, et al., 2012). This in turn promotes standardization and the vendors can think like manufacturers.

While CBA’s IT transformation is still underway, significant benefits have already been realized. The bank has moved from a fixed to a variable cost basis for IT services, which lowers unit costs overall. In the process, CBA has successfully shifted its IT capital investments closer to the end user business customers — demonstrating greater business value and helping to further embed the IT organization into the strategic goals of the business.

By demonstrating business values which are big in size and  implanting strategic goals, the Commonwealth Bank of Australia can shift its investments in IT capital successfully closer to the business customers who are its end users (Sharma & Prasad, 2014).

• Early cloud returns fund new strategic IT initiatives: Approximately AUD 100 million per year can be saved in IT infrastructure costs by using multisourcing and cloud operating model.The savings done can be used in other initiatives for strategies.
• Basic Infrastructure operations cost involved can be driven down by Cloud saving: The ratio of the basic infrastructure of IT spending to IT spending driving strategic advantage can be improved in the Commonwealth Bank of Australia. By increasing the efficiency overall in its investments in IT, the Commonwealth Bank of Australia, for less infrastructure cost can provide and deliver safer and trustworthy services (Nichols, 2016).
• Deployment of workloads to the locations which are more efficient, internally or externally: To deploy any current or new applications, most stable and cost effective location can be chosen by the Bank.
• Additional money and time is saved: There will be no need for waiting for five weeks or four months for an infrastructure in IT which is new. For pre-production environment service delivery time can be minimized to 15 minutes and for environment in production it can be 24 to 48 hours (CCMC, 2016).

Provider Challenges:  To make the concept of client-side standardization acceptable, the Commonwealth Bank of Australia, must try to make cloud providers convince..

Cultural Challenges: There is a requirement of shifting of mindsets in which cloud computing which can be done by leadership in IT and its active change management. How people interact with each other externally and internally, such pattern is changed by cloud computing (Njihia & Mwirigi, 2014).

Ways to Utilize Cloud Model for Enhancing Efficiency

Technology Challenges: To implement the cloud management system and finding accurate technology is a challenge. ServiceMesh’s software can be customized by the Commonwealth Bank of Australia and can be used in its processes (Fub, et al., 2007).

There are five key factors which are identified based on the Commonwealth Bank of Australia, which will prove beneficial in helping different companies IT executives who wants to implement the Commonwealth Bank of Australia kind multiprovider cloud models.

Client-Defined Cloud Standards should be enforced: Applications and workloads of computing are allowed by client defined cloud standards in preventing any kind of technological lock in by moving between cloud providers. Internally, the standards are defined and modifies current applications by the Commonwealth Bank of Australia, and check whether applications which are new, can be adjusted to such standards. Cloud providers are convinced externally to be in agreement with the standards (Mnjala, 2014).

Flexible Short term arragements are negotiated: Short term arrangements which are flexible in nature, can prevent dependencies which are commercial, with the help of a set of cloud providers.There should be no prices which are fixed and no volume in guarantee, it needs to be flexible and they should not hamper any movement of customers from switching to one service provider to another in near future, it needs to be short term (Scrimshaw & McKinnon, 2001). The Commonwealth Bank of Australia with Amazon, Fujitsu and HP has such kind of arrangements. This factor will help a market to work efficiently and emerge more.

Internal IT capabilities retention: There is a need for retaining the capapbilities in IT which are very essential and crucial for the creation of system which is complex like a distributed cloud management system and too many noncloud and cloud vendors imtegration and management, by the organization adopting multi-provider cloud model. Because of relying on a solo provider for a good period of time, the Coommonwealth Bank of  Australia lost its capabilities in IT. Before aking any shift in strategy in IT sourcing model, these capabilities were rebuild (Awuah, 20114).

Regarding Legacy Applications be pragmatic: Non cloud able applications can be moved to the cloud only when events related to major life cycles open up opportunities for one by one clouding.IT departments can do cost justifications and cloud transformation workload can be balanced over a given period of time (KPMG, 2016).

Standards setting efforts engagement: With resources available at its disposal, the Commonwealth Bank of Australia, cloud standards of the Bank can be done.

References

ACS Foundation, 2011. Technology careers on show: Industry foundation, Available at: https://www.acsfoundation.com.au/assets/feedback/021_IAJulAug11_Foundationi-1.pdf.

Amiri, A. & Salari, H., 2013. Effect of Accounting Information System (AIS) on Software qualitative. International Journal of Business and Management Invention, 2(4), pp. 06-11.

Awuah, L., 20114. An Evaluation of Strategies for Achieving Competitive Advantage in the Banking Industry. The Case of Ghana Commercial Bank Limited.,  Available at: https://ir.knust.edu.gh/bitstream/123456789/4352/1/Lawrence%20Awuah.pdf

Bartoletti, D., Staten, J. & Belanger, H., 2012. Case Study: Commonwealth Bank Of Australia Gets Service-Oriented Via Cloud Computing, Available at: https://docs.media.bitpipe.com/io_10x/io_107873/item_650165/Bank%20of%20Australia%20WP%202.25.pdf

CAN, 2017. CommBank retail insights report, Available at: https://www.commbank.com.au/content/dam/commbank/business/pds/retail-insights-report-CIB0517.pdf

CCMC, 2016. Banking Practice in Australia 2015-16, Available at: https://www.ccmc.org.au/2016-annual-report/CCMC_2015%E2%80%936%20AnnualReport.pdf

Fub, C., Gmeiner, D. & Schiereck, D., 2007. ERP in Banking: Expectations and Goal Achievements by the World’s Biggest Banks, Available at: https://www.researchgate.net/publication/254403762_ERP_in_Banking_Expectations_and_Goal_Achievements_by_the_World%27s_Biggest_Banks

Grabski, S., Leech, S. & Lu, B., 2015. Risks and Controls in the Implementation of ERP Systems. The International Journal of Digital Accounting Research, 1(1), pp. 47-68.

KPMG, 2016. Ten key regulatory challanges facing the banking and capital markets industry in 2016, Available at: https://kpmg.com.au/portals/0/N13616ADV_Top10_Regularity_FS-WEB.pdf

Mnjala, D., 2014. The Challenges of Creating Sustainable Competitive Advantage in the Banking Industry in Kenya. IOSR Journal of Business and Management (IOSR-JBM), 16(4), pp. 82-87.

Nichols, C., 2016. How To Increase Your Bank’s Commercial “Pull Through” Rate, Available at: https://csbcorrespondent.com/blog/how-increase-your-bank%E2%80%99s-commercial-%E2%80%9Cpull-through%E2%80%9D-rate

Njihia, E. & Mwirigi, E., 2014. The Effects of Enterprise Resource Planning Systems on Firm’s Performance: A Survey of Commercial Banks in Kenya. International Journal of Business and Commerce, 3(8), pp. 120-129.

Schlagwein, D., Thorogood, A. & Willcocks, L., 2014. How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model, Available at: https://www.misqe.org/ojs2/execsummaries/MISQE_V13I4_Schlagwein_Web.pdf

Scrimshaw, R. & McKinnon, B., 2001. Commonwealth Bank Group Technology Strategy Enabling Growth and Productivity, Available at: https://www.commbank.com.au/about-us/shareholders/pdfs/2002-asx/0625-Commonwealth-Bank-Group-Technology-Strategy-Update-Conference-Call-with-Russell-Scrimshaw.pdf

Sharma, N. & Prasad, H., 2014. Banking Development And Challenges. International Journal of Advancements in Research & Technology, November, 3(11), pp. 111-120.

Team, C., 2017. Commonwealth Bank of Australia: Our company. [Online]
Available at: https://www.commbank.com.au/about-us/who-we-are/our-company.html

Turner, A., 2014. Case study: Commonwealth Bank leads cloud transformation to achieve high customer satisfaction, Available at: https://inform.tmforum.org/features-and-analysis/2014/08/case-study-commonwealth-bank-leads-cloud-transformation/

Williamson, R., Raghnaill, M., Douglas, K. & Sanchez, D., 2015. Technology and Australia’s Future: New technologies and their role in Australia’s security, cultural, democratic, social and economic systems: Australian Council of Learned Academies, Available at: https://acola.org.au/wp/PDF/SAF05/SAF05_Report_web_17Sept.pdf