Driving eTransformation

Australia and New Zealand Banking Group Limited

David BoylesChief Operations Officer

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Today’s Agenda

• ANZ’s eTransformation Strategy

• Laying the foundations for successful eTransformation

– Focus on People, Customers, Process & Infrastructure

– Examples: Infrastructure Rationalisation

– Examples: Leadership in web-based technologies

• ANZ’s approach to internal eTransformation

• The PeopleSoft Partnership

• Key Learnings

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Continuous Productivity Improvement - ANZ’s way of life

• Rationalise & standardise our infrastructure

• Implement web-based technologies across a vast range of platforms & processes

• eTransform our internal processes

40

45

50

55

60

65

1997 1998 1999 2000 2001 Mar-02

NAB

CBA

WBC

ANZ

Cost leadershipCTI%

Provides the opportunity to:

Target

Mid 40’s

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ANZ’s Strategy

Specialise

eTransform

Perform

Grow

Breakout

• Building a portfolio of stand-out businesses with distinctive business leadership and a sustainable top 3 position that work as one ANZ

• Embracing technology to drive radical change, boost productivity, accelerate innovation and dramatically improve service and value

• Ensuring “best in class” performance for shareholders, customers, staff and the community

• Demonstrating strong growth momentum in core businesses and positioning ourselves in attractive new high growth categories

• Being bold and different, a high performance culture with a human face, technological leadership and a strong domestic and regional strategic position

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Laying the Foundations for Successful eTransformation

Starting in 1998 we made some key commitments involving People, Customers, Process and Infrastructure

• People: Alignment, collaboration & team work. Environment where individuals can excel. Retain critical individuals.

• Customers: Customer feedback processes & accountability, meaningful service levels, align with BU, implement TQM.

• Process: Consistent project management standards, strict criteria for new investment in applications, rationalise & standardise operational processes.

• Infrastructure: reduce costs, rationalise, consolidate & automate networks & platforms. Position for the future. Reposition backend product functions behind integrated service ‘frontend’.

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We rationalised and standardised our infrastructure

1998:

6 major systems

CBSHogan

MVS

UNIXW2K

2001

1998:

8+ major platforms

Core Systems

Platforms2002 1998 2002

- Provide all staff with best tools possible

- Low cost of ownership through standard solution

OS/2

Win 3.1Win NT

DOS

Servers & Desktops

1998

Multiple data networks

2000Internet Protocol (IP) network

- Single IP Network provides universal connectivity

- Greater ability to leverage new technologies

- Lower hardware, software licence fees & support costs

- Simpler systems & platforms reduce cycle times

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Leadership in Web-based Technologies

PAYplus – Global Payments Platform

• Standardised processes for enhanced product development

• Reduced operating and technology costs

• Improved operational risk management

VIPS - Visual Image Processing System

• Improved customer service through faster retrieval

• Enables eTransformation to customer ‘self service’ via Internet

• Eliminates geographic dependency on paper allowing stream lining of processes

• Lowest unit costs from ‘one pass’ data & image capture

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Web-based Technologies for a Range of Platforms

Tandem Replacement Project

• New lower cost base platform for EFTPOS & ATM switching

• Achieving high availability & high transaction performance

Microsoft Windows 2000 Platform for Branches

• Server & work stations deployed to 1000 branches across Australia & New Zealand to support new sales & service application

• Deployment also provided all branch staff with enterprise standard email & intranet

Proof of Concept of MS SQL 2000 for new data warehouse

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Positioning for Internal eTransformation

• Online self service is not new to our people

• eTransformation from the ‘top down’ - Board and CEO eTransformed using ‘Directors online’

• Introduced a common intranet (Max)

• Key people functions moved online - business process maps, Manage My Leave, Manage My Pay

• PCs@home offer taken up by 13,000 of our people

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Our Approach to the eTransformation of Internal Processes

Set Clear Objective

‘To move to online, standardised, real time processing, with Internet capability and wherever possible, self service environments.’

Prioritise Strategic Opportunities

Identify and reengineer key business processes

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PeopleSoft

• One area identified early on was the need for a common, standardised administration system or ERP – we chose PeopleSoft

• PeopleSoft met all our mandatory selection criteria

• HR functionality was tailored to Australian regulatory environment

• General ledger structure is a good fit to our operations

• Technology fits well with our architectural standards

• Relationships were effective and at the appropriate level

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Building on Microsoft Windows to Deploy PeopleSoft 8

• In the midst of deploying PeopleSoft 8 on MS Windows 2000 and MS SQL 2000

• MS Windows 2000 is our standard desktop operating environment

• MS Windows 2000 is also our standard for application servers running

• MS Windows 2000 has the lowest projected Total Cost of Ownership in comparison to other options we examined

• ANZ’s PeopleSoft implementation is one of the largest on this platform in the world

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Scope of our PeopleSoft Implementation

• ‘Vanilla’ implementation

• Processes changed to fit the software

• Focus on people impact – change management & training

• Major modules:

- Procurement

- Human Resources / Payroll

- Fixed Assets

- Accounts Payable

- Finance (General Ledger)

• Will cover 22,000 staff in Australia & New Zealand in 5 releases over 12 months – 5th release in September 2002

• Pushing the time / cost boundaries

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Organisational Impact

Changing the way we work, rather than the core system =

low customisation

Degree of package customisation

Low Customisation+

Major change to processes and jobs

=significant business change

Degree of package customisation

High stakeholder impact zone

Low stakeholderimpact zone

Low High

Ch

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o A

NZ

’s e

xist

ing

pro

cess

es

and

jo

b s

tru

ctu

re

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Internal eTransformation BenefitsPeople

• Empowerment and satisfaction

• Transformation of culture – real time high velocity execution, delivery of web-based information anytime, anywhere, any place, straight-through automation

Productivity

• Faster, easier and more cost effective ways of working

• Easier capture and use of business information

• Consistent business platform across ANZ

• Reduction in operational risk

Costs

• Reduction in HR, finance administration and procurement spend & greater control of fixed assets

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Internal eTransformationKey Learnings

• Need strong sponsorship/leadership from the CEO down

• Strategic & architectural framework established early

• Project leaders must make key decisions – with broad impacts not always time to consult

• Full resource commitment – right quantity, right skills

• ‘Vanilla’ discipline: vigorous scope control at all levels

• Hard decisions taken up front –in the PeopleSoft implementation:

- restructure of chart of accounts for the general ledger- Significant reduction of vendor base from more than

18,000 to approximately 5,000

• Be ruthless on inefficiencies – take the opportunity to re-engineer your processes