Information Technology has entered a new era — the “IT Post-Revolution,” BMO Financial Group Chairman and CEO Tony Comper said today in a presentation to the IBM Global Financial Services Forum in San Francisco.
The theme of the conference is “value creation for competitive advantage,” and Mr. Comper used his speech to discuss the key role information technology has played in the ongoing success of BMO Financial Group and how it is now changing.
“The BMO story today is both an account of the end of technology as we’ve known it over the past 30 years in our industry, and the beginning of technology as we will know it in the new era that has already begun to unfold — what I will call the IT Post-Revolution,” he said.
Mr. Comper recalled that during the early years of the IT Revolution, BMO successfully turned to information technology to improve productivity. Now it is the enormous business demand for IT that is helping to fuel new productivity challenges.
“It seems already certain that the overwhelming demand will be for off-the-rack, state-of-the-art solutions, buyable over the Internet from suppliers — solutions that work simply and flawlessly and cost next to nothing,” said Mr. Comper, who also spoke of what he refers to as the ‘latest great debate’ of the information technology age: Is IT headed for commoditization?
“My answer to that question is yes — in theory, at least. Certainly it is a desirable goal for many aspects of our business,” he said. “Realistically, however, it will be a long time coming for organizations as large and complex as mine. That’s because, in addition to requiring cost-effective solutions that both employees and customers can readily use, we also need to be able to integrate them seamlessly into our own platforms and systems as we tighten our focus on using technology to simplify all of our work. This is a tall order.”
At BMO, information technology is the second-largest expense category after employees. IT has gone from what was essentially a back-office function to an expenditure that now, according to the U.S. Department of Commerce, takes up 50 per cent of companies’ annual capital budgets in the United States.
“Undertaking what amounts to the second coming of IT is not exactly a walk in the park,” said Mr. Comper. “We’ve moved past the
In fact, one very prominent industry observer, Nicholas Carr, has stated directly that IT’s power is outstripping most of the business needs.
“Let’s think about that for a moment. I’d hazard an educated guess that the vast majority of the two main end-users in my organization — customers and employees — actually utilize about 20 per cent of their computing capabilities (and I’m being generous here). The rest of the investment is mostly wasted,” said Mr. Comper.
“This leads to a greater truth about IT in 2003, which is that like most A-list organizations, BMO Financial Group has just about all the basic technologies we need to successfully compete right now,” said Mr. Comper. “Whether you’re talking hardware, software or expertise, the transition has already been made from seller’s to buyer’s market. Prices have dropped to affordable levels, and the capacity of the Internet has caught up with demand and that means – to paraphrase Mr. Carr – vendors are now having to position themselves as commodity suppliers, or even as utilities.”
However, Mr. Comper does not believe that business should hold vendors responsible for the events leading up to the IT-Post Revolution.
“This is a position from which I would publicly like to distance myself, because we were all adults in the Revolution together and in the end we buyers did get what we needed,” he said. “That we also got a lot more than we needed is attributable to the exuberance of the times, as one of the greatest creative explosions in history ran parallel to what many were saying was a never-ending bull market. Are we taking advantage of the newly evolved buyer’s market to negotiate better deals with IT suppliers? Of course we are. Who wouldn’t be? But are we recriminating? Not a bit of it. That would be looking backward, and backward is not where we look in my organization — unless, of course, it is for instruction and inspiration.”
Established in 1817 as Bank of Montreal, BMO Financial Group (TSX, NYSE: BMO) is a highly diversified North American financial services organization. It includes BMO Bank of Montreal, its Canadian retail arm, Chicago-based Harris Bank, a major Midwest financial services provider, BMO Nesbitt Burns, one of Canada’s largest full-service investment firms, and Harris Nesbitt, BMO’s U.S. investment banking operation.
A full transcript of Mr. Comper’s speech may be found at www.bmo.com.