Two major UK insurance companies have taken different
approaches to cutting costs by using service oriented
architectures.
Standard Life and Prudential are both achieving savings by
developing SOA-ready applications. However, Standard Life is
focused on developing reusable business services to streamline
application development, and Prudential is using an SOA to better
manage its legacy pension platforms to meet new regulatory
demands.
In December 2004, Standard Life began a programme to look into
the potential reuse of its software developments. It now has 440
business services available for reuse in the 50 to 80 applications
in development, and is making full use of the reusable modules. The
insurer believes reusing these modules is generating savings of
about £1m a quarter.
By avoiding duplication of development work, Standard Life has
cut the time it takes to deploy new applications and bring new
products to market. This has proved vital as the insurer races to
prepare systems and processes for its planned demutualisation and
floatation on the London Stock Exchange in July.
The insurer’s 18-month effort to ensure readiness for
demutualisation involved more than a quarter of its 450 IT staff
working in this area at the peak of activity last year. Keith
Young, Standard Life’s IT director, said that reusing services
meant the remaining IT staff were able to make up for the shortfall
through improved productivity.
“One of the messages we got from other insurers that
demutualised years ago was that we would have to shut down IT
development for the business while preparing systems for the
changeover,” said Young. With the SOA strategy, that has proved not
to be the case.
Standard Life has also set up a new IT platform for its Irish
business which wholly uses SOA technology based on IBM’s
Websphere.
The insurer has migrated 14 products from its legacy systems
onto the platform in less than nine months, and expects to launch
all future products on the platform.
Standard Life is also looking to move a mortgage application
used by Standard Life Bank’s telebanking operation onto the SOA
platform.
Rival insurance group Prudential has taken a different approach
to cutting costs with SOA. The company is using an SOA based on the
BEA Weblogic framework to manage its complex estate of legacy
pension platforms more efficiently.
Prudential’s pension platforms have proliferated over the past
few decades due to its acquisition of businesses such as M&G
and Scottish Amicable. To deal with this expanding infrastructure,
Prudential developed a middleware application using SOA to enable
its staff to make contract enquiries about any of the firm’s
products without directly accessing its 50-plus legacy
platforms.
One driver for the overhaul was the requirement that all
insurers be able to provide real-time contract enquiries or product
valuations from 6 April, when the UK’s new tax regime came into
effect.
In the two-and-a-half years since Prudential’s 4Front middleware
application went live, the insurer has rolled out the system to all
its contact centres, including the three main hubs in Holmfirth,
Mumbai and Reading.
Two further applications have been developed using BEA Weblogic
to enable staff working on Prudential’s e-commerce website and
contact centres to extract more data from the legacy platforms.
Jeremy Gray, Prudential’s head of IT architecture, said, “We are
not building a contract engine within the SOA layer; we are
exposing our contract engines on the legacy platforms within our
SOA layer.”
The next application due to go live in the SOA environment is a
workflow tool that Prudential will use to administer products
across all of its businesses globally.
The application is being developed by the IT department of
Prudential’s US subsidiary Jackson Life. It uses the JBoss
framework – an open source rival to BEA Weblogic – but Prudential
will be able to adapt it to run on its own SOA.
Gray said, “If we did not build this application in SOA, we
would have built two workflow applications and the total
development cost would be twice what it has been.” The tool will be
rolled out globally in the first quarter of 2007.
The three large SOA-built applications that are already in use
are letting Prudential provide its customers with valuations of
their products more quickly, the company said. By automating many
of its processes for accessing product information, the firm has
also saved money.
“SOA certainly helps you provide a better service and reduce
cost, but it does not help you reduce your IT estate complexity,”
said Gray.