David Weymouth, who sits on Barclays’ Executive Committee and reports directly to the CEO, talked to Information Age about IT’s profile within the business and strategies ranging from consolidation to outsourcing.
About the company
David Weymouth’s first months as Barclays’ CIO were as pressured as any. After his appointment in February 2000 to the newly created role, he was given 90 days to specify and publicly launch “a new e-enabled infrastructure for Barclays [that would] put the bank at the forefront of the ecommerce revolution”.
The deadline pressure was perhaps eased by thoughts of his budget for transforming the creaking infrastructure from top to bottom: £325 million.
Four years on, there is not an e-prefix in sight and the bill for the overhaul has reached £700 million. However, the new structure is credited as one of the main factors in helping Barclays take £1 billion out of its cost base since 2000. It services 55,000 users spread over 60 countries and 2,800 branches, 3,850 ATMs and, an increasingly large proportion of online users among the bank’s 4.5 million customers.
Having spent his entire career at the company, Weymouth, 48, has seen many sides of the business and how each benefits – or not – from IT initiatives. He has run risk management, been chief operating officer of corporate banking and run service provision for retail and corporate banking.
After falling into ‘technology’ by accident (his first implementations were systems to curtail Mafia money-laundering in Italy) his enthusiasm for the application of IT to the business seems undented.
Information Age (IA): Given the IT industry’s tarnished reputation for delivering on business promises, I am interested in how senior managers like yourself create a more efficient, trusted IT infrastructure. Where do you feel Barclays’ IT sits on that issue?
David Weymouth (DW): Overall, I’d say if you badge it as pure IT, it’s dead in the water. I doubt if IT, in itself, has ever delivered any significant benefit to anyone. It is a question of what you do with it, how you implement it, how you change the process, what you do with the people. And I think that has become particularly true in the last decade.
In our case, it is all essentially about what IT can deliver to improve customer experience. So if you install a hugely expensive customer relationship management system, but you can’t get it out to different channels and train people how to use it, it becomes interesting for development but little more.
IA: Does that attitude stem from the fact that you are by no means a ‘traditional’, technology-steeped IT director?
DW: In 27 years at Barclays, I have run a lot of things, including various sales forces, the risk unit, corporate banking, so if there is such a thing as a traditional IT director, I am not it. [For a CIO] the role of technology also depends on what aspects of your organisation you group together. I have brought together expertise under a CTO, but alongside that I have a group called Operational Transformation. That is really where the value is driven from, look-ing at processes, looking at change, but always driven by the customer strategy.
How have we brought efficiency to the IT infrastructure? As in most things you change processes, you automate, you consolidate. And the change has been extensive. We have taken an approach not dissimilar to one you would take when managing an external merger, but we have done it internally.
It has been a three and a half year journey. Back in 2000 we needed to address a number of critical issues. There was cost, which was a bit above market levels in some places and very out of step in others. Then there was availability, as the customer was increasingly looking for us to be available all the time – and our systems weren’t. That was a factor of the infrastructure – the ATMs, the branch networks and the looming demand for online banking. We were beginning to build one of the world’s largest online banks and we were in severe danger that it would only be available at lunchtimes!
And then lastly, we were facing questions about project delivery and IT governance.
IA: How did you go about overhauling that structure?
DW: Over three phases. The first one was to ‘get hold of stuff’: to consolidate, rationalise, standardise. We had about 18 or 19 different IT systems across the UK and Europe and we wanted to pull the lot into the centre.
The second thing we said we’d do is to create a more commercial environment, so that users didn’t continually complain that they had no choice but to deal with the central facility. That sounds a bit nirvana-like, but you dream on.
And the third part is underway this year: creating a shared services organisation [for procurement] that allows the internal customers to buy easily, and through which we can manage the supply chain across internal and external supply.
IA: What has that journey delivered?
DW: It has delivered pretty large benefits. Barclays as a group has seen $1 billion cost savings over three and a half years. That is not just by our activity, but we have contributed hugely to that. Other benchmarks: spend as a percentage of revenue [is down], project delivery has gone up to a very high level and client satisfaction has moved up 25 percentage points.
IA: Have you had to do that against a background of budget constraints or even cuts?
DW: Absolutely. Broadly, on day-to-day business, you’d expect to get double-digit productivity every year. That you would get through a combination of continuous improvement, outsourcing or major projects. But in reality what we have found is that as we spent a bit less we’ve spent it better.
It is also about effectiveness, about project delivery, partnership with the business – a sort of increasingly intense focus on only doing those things that line up with the group strategy and have an impact on the customers. I think one of the dangers of the IT priesthood is that you do a lot of things that are very exciting but that don’t really mean anything to the business.
Essentially it is about melding what we do to what the various customer-facing businesses needs, with the proviso that you have a couple of additional stakeholders in terms of regulatory influences and shareholders which will drive you to spend money on things that you’d have to work very hard to get customer value out of.
I am sure IAS [the new accounting standard] is fascinating for accountants but I am not quite sure if I can work out what it means for the customers.
IA: Some of your peers at other banks have looked to outsourcing to ensure they stay focused on those wider goals. Others have brought IT completely in-house for the same reasons. What’s Barclay’s position?
DW: We run more than 50% of our day-to-day IT operations through outsourcing. But I see it as a means to an end, rather than as a goal in itself.
So why do it? Because you can get lower unit cost. You’d expect EDS to deliver a desk top service for a lower unit cost than we could do it internally. We look outside for cheque clearing, because we are unwilling to make the huge investment on our own. So you’ve got to have the rationale very clear.
At the moment, we are talking to Accenture about a very big contract for application development. That is what they do for a living; we run a bank. And therefore you’d expect to get the benefit and expertise out of that as well as the unit cost improvement. It would be hugely costly for me to set up CMM Level 5 development capability at four different locations across the globe – but that is what Accenture does.
IA: What part does offshore outsourcing play in that global structure?
DW: We are having a bit of a rethink at the moment about how we tackle offshore. We call it the ‘global operating model’. Importantly, one of the first things we did was work out an agreement with the people in our unions about how we’d deal with redundancies. And now we have got about 400 to 500 people working with various suppliers [IBM, Siemens, Xansa, Tata] in India.
We already do a fair amount of IT development which is relatively straightforward. But we are moving more towards business process outsourcing, where the challenges are much greater.
For example, we have been piloting BPO with the helpdesk for the online banking service for mid-market corporate customers, and what we have found is that where we have got the training right, it’s great, customers are delighted. What we have done is effectively invest in enhanced availability and customer service. It is not a cost play. You have broader coverage because of the time zones and you have very bright people answering difficult questions in a very effective way. What you are doing is reinvesting the labour saving into enhanced service.
We are learning that running global outsourcing imposes some strain on your architectures, because there are three ways of delivering core services: within your secure domain; outside your secure domain but within the same geography; and outside your domain and your geography. There is a series of consequences of doing all this that I think people are only beginning to get to grips with.