The beleaguered Bank of Queensland has ultimately bitten the update bullet and will abandon sweating its disparate legacy IT stack, telling traders it’s planning to shell out $440 million in contemporary capex more than five years on a electronic-led transformation to drag it into the cloud era.
Revealing its “refreshed” five yr strategy on Thursday, recently appointed chief government George Frazis fully commited the when proudly department-primarily based shop to an intensive electronic rehab including new, standardised cloud core methods throughout numerous arms and new apps.
Whichever way you look at it, it’s a significant-ticket IT rebuild lower into modest parts to enable investor digestion.
“We are not possessing any big systems that go on for numerous years… which is wherever I have noticed, in my earlier practical experience, wherever you get a minimal unstuck,” Frazis mentioned.
Except that it’s $440 millionj in indicative capex more than five years. Which is not modest or limited.
In formal financial investment parlance, the $440 million is anticipated capex relatively than firmly fully commited expend. The really hard amount will arrive in the next set of financials.
“We will provide effects whilst transforming the financial institution,” Frazis mentioned, carefully eschewing any idea of a significant fall which has arrive to haunt rivals like Suncorp.
“This is not about promising a little something that is likely to be delivered in 5 years time,” Frazis mentioned.
“There will be no customisation.”
Notably, like the CBA, it’s the CEO trying to chat-up the institution’s tech-savvy relatively than leaving it to the IT crowd – though Frazis sounded considerably less snug than Matt Comyn when dropping the nerd nomenclature.
The only model fall was core banking professional Temenos, which BoQ has recently found out also does a true-time and cloud-primarily based version of its core program, relatively than just batched on-prem.
That’s a confident indication that piles of ageing package and program will before long be headed for the scrap heap as aspect of a root-and-department overhaul of goods, processes and foundational engineering that has devolved into a disparate and disconnected mess that retains BoQ again.
And it’s really a pile as well.
“On the retail side we have two core methods and about seven methods that interact with our customers,” Frazis mentioned.
“On the enterprise banking side that image will become even more complicated. We have 10 core methods and eleven methods for how we interact with our customers,” the BoQ head complained.
“That’s been explained as a ball of spaghetti.
“What we are not executing is repairing that ball of spaghetti. We are about developing the new and then migrating to that new,” Frazis mentioned.
BoQ’s strategy to day has been shopping for in worth from more nimble plays, like Virgin Revenue, relatively than using the more capex-intensive route of developing its own.
Which means it has a faster, less costly way of upgrading but may perhaps not have essential road memory to dodge the potholes.
Frazis reckons there’s plenty of upside, even though he did not rule out a merger with core methods distress mate Suncorp, which are unable to get Oracle to function.
“Development in technology…gives us the option to effectively compete from main players, enabled in aspect by standardised cloud systems and the customer’s shift to mobile,” Frazis mentioned.
“Our electronic transformation will be methodically staged at first for the retail financial institution. We are setting up off with our Virgin Revenue model.”
Frazis mentioned BoQ will progressively “migrate the rest of the financial institution as just about every phase is effectively completed”, referring again to the five-yr prepare that aimed to “deliver us the power of and set up financial institution and the agility of a neobank.”
But the Conradian horror of unsuccessful IT empire developing is nevertheless there.
“We have bought a bought a quite, quite complicated environment,” Frazis mentioned, speaking to BoQ’s propensity to obtain corporations without the need of integrating them.
“The complexity and expenses are there as a end result of that,” Frazis mentioned.