Bridging IT implementation with ANZ’s organisational culture

1. Bridging IT implementation with ANZ’s organisational culture Peter Dean Head of Technology, Personal Banking & Wealth Australia and New Zealand Banking Group Limited Presentation to AFR 3rd Annual Banktech Summit 7 November 2002

2. Agenda • The ANZ approach • Strategy • Technology focus • Aligning IT with ANZ’s culture • People • Customers • Processes • Infrastructure • IT Case Study: ANZ’s approach to project management - aligning IT with ANZ’s culture. • Key achievements

3. ANZ’s Strategy Our targets • Extend specialisation • Grow customer numbers • Increase share of wallet • Drive productivity Organic out-performance • Revenue growth materially higher than expense growth • Take business units to sustainable leadership positions • Build a range of strategic options • Invest in high growth areas • Build specialist capabilities • Exit weak positions • Risk reduction Portfolio reshaping Transformational moves • Step changes in positioning • Creating new growth options • Proactively shaping industry • Create the ‘Bank with a Human Face’ • Build strong commitment to our people • Promote team performance and cultural transformation Breakout culture

4. ANZ’s Technology Focus Putting technology to work to: • Provide our customers with a personalised, consistent experience • Empower our customers and our people with real time information access and online applications via web-based technology, anywhere and anytime • Ensure our technology is robust, flexible and cost effective • Aggressively reduce costs, improving productivity, benchmarking, increasing ‘straight-through’ processing, simplifying and automating administrative functions • Provide low-risk, high-efficiency & state-of-the-art payment capabilities

5. Agenda • The ANZ approach • Strategy • Technology focus • Aligning IT with ANZ’s culture • People • Customers • Processes • Infrastructure • IT Case Study: ANZ’s approach to project management - aligning IT with ANZ’s culture. • Key achievements

6. Initial Strategy (1998) – provided focus to align IT with ANZ’s culture People Process Infrastructure Customers (BU) 1998: Inward focused, low satisfaction, weak process, complex infrastructure • Little BU focus • Poor understanding of business drivers • Service levels poorly understood • Leadership weaknesses • High staff turnover: 18% • Many cultures • Inflexible, high cost technology • 15 data networks • 6 core systems • Many different platforms • Poor disaster recovery • Inconsistent architectures • Poor project management & methodology • Billing of services incomplete and inaccurate

7. Average - 1999 Average - 2000 Average - 2001 Detailed billing to Business Units for IT services Customers - Commitment to focus technology on business unit objectives Service level agreements in place for each Business Unit Average SLA for major systems Clear alignment between Technology & Business Units Customer survey/ feedback process on 6 monthly basis. Linked to individuals’ performance measures. Electronic timesheet capture for IT project tracking, reporting & billing

8. People - Skilled & committed Management tertiary qualifications policy Breakout cultural transformation workshop pcs@home: heavily subsidised packages for staff to acquire PC’s Online training courses Half yearly staff survey with action teams to address issues raised eVouchers provided free to staff to choose reading materials $$$

9. Process – designed to improve execution capability Project in a Box • ‘Best of breed’ project management tools • Central repository for all project reporting • Open access to all users Capability Maturity Model • Significant productivity & quality improvements • CMM • AustraliaPartial level 2 certification - 1st Australian Bank • Bangalore, Indialevel 4 certification Project management training • Generic training courses tailored with ANZ specific content & latest Project in a Box tools • Reengineering in a Box • Standard tools, templates & process for re-design of business processes • Continuous improvement programme • Driving real culture change • Series of workshops for all staff • Resulted in significant cost savings

10. Hogan 2001 2000 CBS OS/2 Win 3.1 Win NT DOS Infrastructure - Commitment to rationalisation & standardisation Core Systems IP network 1998: 6 major systems 1998 Multiple data networks • Single IP Network provides universal connectivity • Simpler systems & platforms reduce cycle times Servers & Desktops Platforms 2002 1998 1998 8+ major platforms 2002 Platform Focus Eg,W2K, UNIX, MVS • Greater ability to leverage new technologies • Lower hardware, software licence fees & support costs • Provide all staff with best tools possible • Low cost of ownership through standard solution

11. Initial IT strategy (1998) – where are we in 2002? Customers (BU) People Process Infrastructure 2002: Customer focused, positive culture, improving process, simpler infrastructure • Explicit business partnership • High Customer satisfaction 7.7 (Sep 02) • Service Level Agreements • Customer Survey/ feedback process • Tandem, Unix & AS400 rationalisation • 2 core systems • Single IP Network • Standard Win2000 desktop across Australia • Intranet to all but 800 Int’l staff • Established strategy for standardisation and re-use • Full DRP in all critical processes • 854 staff through Project Mgt program • New Processes - PiaB, One Team, CMM, Niku, RAD, Phased funding, Outcome Management • Technology costs defined and regularly reported • Technology governance, standards & policies • Detailed billing • Significant benefits from our continuous improvement program • Improved Staff satisfaction to 83% • IT staff turnover below 4% • Training on-line • Leadership Development program • Performance culture

12. Agenda • The ANZ approach • Strategy • Technology focus • Aligning IT with ANZ’s culture • People • Customers • Processes • Infrastructure • IT Case Study: ANZ’s approach to project management - aligning IT with ANZ’s culture. • Key achievements

13. Situation analysis - What our internal business customers expect from IT • IT support of each Business Unit’s strategy and agenda and elivery of annual Business Unit targets • Dedicated IT team to meet Business Unit needs • Maximisation of the return on investment in technology • Accelerated, high quality, ‘no surprises’ delivery of IT projects • Substantial increase in output, at reduced cost • Zero customer impact operating environment • Increasingly aggressive use of technology in short time frames

14. Our Project Management Challenge • Solution • Develop high quality project management system to better leverage our existing project management capability Situation • High demand for professional staff • Resources increasingly expensive and limited • Need to move from traditional ‘technical’ focus to ‘systems & business integration’ focus • Complexity of large specialist organisation • Projects increasingly need to cover multiple businesses • Need to improve project delivery and build & maintain a project management culture • Ensure a ‘no surprises’ culture

15. Our Approach To ensure high quality delivery of IT projects, we implemented a two-phased approach - the Capability Maturity Model (CMM) for software development, followed by the refinement and enhancement of our project management (PM) practices CMM PM Began with pilot of 100 staff Widespread deployment in Australia Development of ANZ’s Project Management practices Implementation in India • Results were meeting expectations within 6 months • Work has been almost entirely self funding

16. What Improved project delivery capability Improved project management capability Better managed the utilisation of project management skill sets to our project portfolio Key attributes Evidenced by increase in projects with green or amber status Peer reviews, training and mentoring of project managers, project review process More informed of skill levels of project managers and better understand current and future skill requirements Project Management Practices – what we have done

17. Project Management Practices – key outcomes • Improved delivery capability • Professional project management culture • Appropriate project management skills available for all project engagements • Highly developed project management skills and practices • Improved risk profile for portfolio of projects • Enhanced compliance to all standards and policies

18. For our business • Greater flexibility • Improved exposure and understanding of ‘project risk portfolio’ • More predictable project start-up and outcomes • Standard modus operandi • Development of the correct Project Management skill set for now and the future • ‘Better and wanted project managers’ most appropriate candidate for an engagement • Proper management of Project Management careers • For team members • Better development of Project Management career paths • Increased choice on future engagements • Focussed career management • Mentoring and coaching from within/ peer support • Information forums • Generic measurable Project Management KRAs • Participate in project peer reviews Project Management Practices - advantages

19. Key lessons • Key challenge is change management • Winning hearts and minds is difficult at outset • First 6 months is very difficult – needs strong leadership & experience helps • Success = excitement = more success • Do this for tangible, business outcomes • Use metrics to track progress and lock in results • Make sure everyone is accountable for the same outcomes – and use strong incentives • Strong support for teams with their customers – dates will be missed early in the program • Teams go through a ‘valley of despair’ in the early stages and need help through this

20. Key achievements • Aligning IT implementation with ANZ’s focus on people, customers, process and infrastructure has delivered: • Better outcomes for IT’s business unit customers • Higher customer satisfaction • High IT staff satisfaction rate • High quality, more productive IT staff • Simpler infrastructure - robust processes supported by a continuous improvement focus

21. Questions?

22. Copy of presentation available on www.anz.com

23. The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. For further information visit www.anz.com or contact Philip Gentry Head of Investor Relations ph: (613) 9273 4185 fax: (613) 9273 4091 e-mail: gentryp@anz.com