National IT outage “minimal”, claims CommBank

16/08/2012

blog Yesterday at a financial results briefing session, the Commonwealth Bank opened up for the first time regarding the nationwide outage it suffered several weeks ago which took down around 9,000 of its desktop PCs, hundreds of servers and even its CommSee customer management system. iTNews reports (we recommend you click here for the full article) the bank’s chief executive Ian Narev as stating the problem wasn’t actually that big of a deal:

“At the moment, we’re still working through exactly what the implications of what happened were, but we’ve got no immediate need to change our IT strategy … In terms of cost [to the bank], it’s minimal,” Narev said.

To be honest, we beg to differ. Thousands of desktop PCs, servers and one of the bank’s most important staff IT systems knocked off line? Hundreds of staff mobilised to fix the problem? The global CEO of one of the world’s largest technology firms personally flying in to meet with bank executives, in the context of a major IT contract up for renewal? Yeah. Sorry, but as far as IT outages go, they don’t come much worse than this one ;) And we’re sure that quite a few internal IT policies will be reviewed and governance controls strengthened to make sure this doesn’t happen again.

In terms of the broader IT ‘strategy’, it’s perfectly plausible that in the broadest sense, CommBank do not need to reassess it. No doubt pundits can take varying viewpoints on how short term, long term or to what degree an organisation’s ‘strategy’ is, but my take on Narev’s statement is one more referring to the bank’s current balance of internal IT operations and externally supplied services rather than the lower level policy review.

Ref: ‘Commonwealth Bank Group Strategy Update 19 April 2012’. Opportunities and areas for review include that of no off shoring, technology driven change, ‘Lean IT Maintenance, Lean IT Development, Lean IT Operations, Lean Back Office’ and so on. My take is that Narev has merely emphasised the continued drive for productivity and leading systems will not be impacted by this particular IT issue.

Cost to the Bank? In terms of tangible dollar cost, I’m sure a significant portion will be underwritten by EDS but estimating intangible costs like employee inconvenience, customer inconvenience etcetera would have terrible accuracy and in my opinion a pointless exercise in the context of reviewing annual results. It’s the Executive’s role to maintain confidence and assurance that the internal IT outage didn’t affect its customers outrageously and that the business was able to recover without significant cost. Most shareholders, institutional investors and customers without enterprise IT interest probably wouldn’t care about ComSee going down or an employee’s laptop being useless for a day or two unless it impacted things on the customer side, had significant recovery costs or on group earnings.

I agree the issue will be reviewed, but in the sense that lean operations through outsourcing and increased efficiency is going away in the short term or much looser budgeting for Enterprise Services? I think not.

1 COMMENT

FF 16/08/2012 At 3:34 pm

In terms of the broader IT ‘strategy’, it’s perfectly plausible that in the broadest sense, CommBank do not need to reassess it. No doubt pundits can take varying viewpoints on how short term, long term or to what degree an organisation’s ‘strategy’ is, but my take on Narev’s statement is one more referring to the bank’s current balance of internal IT operations and externally supplied services rather than the lower level policy review.

Ref: ‘Commonwealth Bank Group Strategy Update 19 April 2012’. Opportunities and areas for review include that of no off shoring, technology driven change, ‘Lean IT Maintenance, Lean IT Development, Lean IT Operations, Lean Back Office’ and so on. My take is that Narev has merely emphasised the continued drive for productivity and leading systems will not be impacted by this particular IT issue.

Cost to the Bank? In terms of tangible dollar cost, I’m sure a significant portion will be underwritten by EDS but estimating intangible costs like employee inconvenience, customer inconvenience etcetera would have terrible accuracy and in my opinion a pointless exercise in the context of reviewing annual results. It’s the Executive’s role to maintain confidence and assurance that the internal IT outage didn’t affect its customers outrageously and that the business was able to recover without significant cost. Most shareholders, institutional investors and customers without enterprise IT interest probably wouldn’t care about ComSee going down or an employee’s laptop being useless for a day or two unless it impacted things on the customer side, had significant recovery costs or on group earnings.

I agree the issue will be reviewed, but in the sense that lean operations through outsourcing and increased efficiency is going away in the short term or much looser budgeting for Enterprise Services? I think not.

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