IT staff report low morale after failed outsourcing deal and
swingeing job cuts at UK insurance giant
Several major IT projects at Zurich Financial Services in the UK
have run into delays or been scrapped, raising fresh concerns about
the IT strategy of the insurance giant.
A new insurance claims system, which Zurich expected to deliver
more than £60m a year in cost savings, was due to be rolled out by
the end of this year, according to internal documents seen by
Computer Weekly.
But an insider said the system is running behind schedule, despite
Zurich's claim this week that the project, for the general
buisness, was "constantly evolving" and had been set no date for
completion.
The system will play an important part in helping to reduce the
cost of processing insurance claims - one of the main overheads in
the
sector.
A spokeswoman for Zurich UK said that progress had been made on
early implementations of the new claims system but refused to
elaborate further.
"There are different workstreams within [the claims system
project]," she said. "It is constantly evolving and is not seen as
a simple job."
An internal Zurich document dated last October, however, outlined a
clear timetable for rolling out the system. Key deadlines included
installing a motor claims system at two Zurich offices by January
this year. However, this milestone was missed, according to sources
inside Zurich.
A separate project, to build a new IT system for Zurich Municipal's
building guarantees insurance arm, which provides cover for about
half of new-build houses, was deferred indefinitely earlier this
year after months of work.
After the collapse of outsourcing negotiations with IBM, estimated
to be worth about £400m according to Zurich sources, nearly 200 IT
staff were laid off in January this year - more than one-third of
full-time IT staff in the general business division's IT
department.
News of the missed deadlines comes in the wake of the abrupt
departure of Zurich's IT head for the general business.
Ian Marshall resigned recently after two years in the position. He
had introduced a controversial "broker" system for Zurich's general
business IT department.
Based on the principle of establishing an internal market for IT
services, the broker system relied on a handful of management
consultants to liaise between Zurich's business units and the IT
department.
A Zurich spokeswoman said that Marshall's departure had been agreed
by both parties and came after he had completed his review of the
company's IT strategy.
The broker system was similar to the way business units were run
throughout Zurich, she added.
Late-running and cancelled IT projects, as well as the 11th-hour
collapse of the proposed outsourcing deal with IBM after seven
months of negotiations, led to pressure from Zurich UK's chief
executive for Marshall to resign, said one senior company insider -
a claim Zurich has denied. Zurich has appointed a replacement for
Marshall.
The broker system also attracted accusations of cronyism from IT
staff, because Marshall appointed consultants with whom he had
worked previously, to key positions at Zurich.
Marshall was not available for comment.
Zurich's catalogue of difficulties
- New claims system, designed to save Zurich UK £60m a year,
behind schedule with no completion date set
- New system for Zurich Insurance Building Guarantee's business
deferred indefinitely after work had begun on project
- Abrupt departure of Zurich UK's chief information officer (CIO)
for general business
- Zurich IT staff attack "cronyism" of broker system set up by
former CIO.