IBM’s hot at Westpac, SAP not so much


Westpac technology czar Bob McKinnon today praised the bank’s long-term outsourcing partner IBM, but didn’t appear quite as enthusiastic about its German rival when asked why the bank had settled on CSC’s Hogan core banking platform rather than that of SAP.

Westpac has a long and storied history with Big Blue. The bank is currently deciding whether it will renew its decade-long comprehensive technology outsourcing contract with the company, which was worth some $2.3 billion when it was initially signed.

But at times the relationship has been fraught — for example, in August 2006 then-Westpac chief information and security officer David Backley, who has since left the bank, told of a “battle” with IBM over security governance. “We made a small blunder in that,” he said at the time. “We outsourced all our security to them.”

But today McKinnon appeared to cast a positive light on Australia’s largest IT services company. “IBM have really stepped up to the mark in the last 12 months,” he said in an analyst briefing broadcast online.

As part of Westpac’s IT strategy outlined in detail this morning, it will eventually migrate to the Hogan core banking platform, which is already used by its subsidiary St George. Westpac had originally planned the migration earlier but delayed it to better to focus on customer migration services.

McKinnon was asked why Hogan was chosen over SAP as a transaction platform. Commonwealth Bank of Australia, which is conducting a similar migration, opted for SAP in partnership with Accenture. But the Westpac chief said “SAP is a slightly bigger platform” and did not not do some of the things that the bank needed in its strategy.

The Hogan platform, he said, offered very similar capabilities to SAP, and additionally better supported the Westpac strategy. “We are confident it is the best thing for us,” he said.

McKinnon acknowledged that banks “have somewhat chequered history” in terms of technology. The bank has established a broad technology committee to oversee technology, with Bernadette Inglis accountable for the portfolio of strategic investment projects which Westpac is embarking on the in the technology area.

McKinnon also touched on the legacy systems that will be left in the advent of its ongoing technology migration strategy. “We don’t believe the program will get rid of the legacy systems,” he said — adding there would be ongoing development work in this area — like painting the Sydney Harbour Bridge — for many years to come.

Image credit: Patrick H, Creative Commons