Sandy Crombie joined Standard Life in the 1960s in the
IT department. Some of the code he helped to developed back then is
still in use today. He became CEO in 2004.
Crombie has now joined RBS, but the legacy he has
left behind demonstrates how a strong HR strategy in IT can help
support and build a business.
Standard Life considers IT staff along-term investment,expecting
them toproduce their best work after a number of years oncethey
have built up business experience. The company, which has a total
workforce of 10,000,10% of which are in IT, has a low turnover of
IT staff.
Members of the top IT team at Standard Life have an average of
20 years' experience at the company each. This is a boast few
businesses can make.
Keeping IT staff on
board
Because technology changes quickly, the company ensures it has
young IT workers as well as more senior members of staff."We have a
low turnover of staff. When people do leave, we replace them with
trainees," says Keith Young, IT head at Standard Life. This
provides some younger thinking,he says.
Retaining IT workers for the long haul is not easy. These
workers are a very mobile group and regularly move between jobs to
better their career. They are also often the first to go when
redundancies are made. But Standard Life wants IT people to mature
in the business so it can get the best out of them. Young believes
IT staff start producing their best work after five years withan
organisation, oncethey have gained anunderstanding of what the
business needs from IT.
To this end, Standard Life attempts to retain workers and their
technical input. It helps its technical staff move into senior
roles without giving up their contribution toIT. Young, who has
worked at the company for 22 years, says, "If a good technician
moves into a senior management role, we can lose a good developer
and gain a poor manager. We help them retain skills and move up the
company. When you have good people, you have to make sure you hold
on to them."
The company mixes experience with enthusiasm, and its IT is not
stuck in the past. Unlike many companies in the finance sector it
has few legacy systems. It is also harnessing technologies such
as
service orientated architectures (SOA) and modern methodologies
such
as
agile software development.
Matthew Smith, director of UK regions at recruitment company
Harvey Nash, says large businesses can attract and retain good IT
staff if they have the right HR policy. "It is a good idea to
replace senior people with trainees if you have people whocan move
up intoroles that becomevacant." This strategy allows several
people in the company to be promoted at the same time.
Smith says Standard Life's strategy to allow technical people to
move into management without abandoning their IT skills is a good
move. "Some organisations create an environment where the top
technology executives are held in as high esteem as the people in
the business." He says some firms do not know what to do with IT
staff to help them progress. If there is no clear career
progression, they are likely to seek a new job.
IT plays a key role
The mix of new and old has helped Standard Life's
IT take centre stage as it has reinvented itself over the past
few years.
The IT department took centre stage in 2005 when the company
realised its business model was not working and had tochange it
quickly (seebox: Standard Life
wake-up call).
Bob McDowall, analyst at TowerGroup, says Standard Life had to
completely change its IT priorities as a result. "Fundamental
structural changes ride a coach and horses through the normal
planned developments and budgeting for IT development."
When Standard Life realised it needed to reduce costs as part of
its transformation, it harnessed techniques such as agile software
development and SOA to cut costs. It also slashed costs associated
with IT support through a programme that charged each department
for itsIT consumption.
The company has also cut costs at its Edinburgh datacentre. It
moved its servers to a single floor and freed up 1,400 square
metres of space. It is no longer charged by the business for using
the space, which is now availablefor other parts of the business.
As a result, the IT department saves £1m peryear. It also saves
£300,000 per year in energy costs, having reduced energy
consumption by 70% through
energy-efficient hardware and
virtualisation.
The cost of the company's IT, which is a major overhead, is now
75% of what it was in 2004, even taking into account increased
levels of business and inflation. "There is nothing like a specific
problem to act as a wake-up call," says Young.
A balance of skills and
experience
Bola Rotibi, analyst at Macehiter Ward Dutton, says a mix of
business experience andtechnical know-how, as well as new recruits,
will help businesses drive major IT projects."Younger people may
have a lesscynical approach and they will bring enthusiasm. The
younger people can drive the project, but you need thosewith
experience of the business to manage it."
She says getting this balance is easier said than done, but
Standard Life's recruitment and career development strategy for IT
workers puts it in a good position to achieve it.
Rotibi says the fact that IT staff can move up within the
company will help drive employee buy-in to transformational
projects. "The key to making sure the changes are accepted is
ensuring the management structure has bought into it."
Global
responsibilities
Standard Life's IT department will now be called upon as the
company embarks on its latest strategy to standardise IT across its
global operation. Standard Life operates in about 10countries, with
customers in 31. Its biggest presence outside the UK is Canada.
The company wants to move away from its current global IT
infrastructure, which involves"one company working in silos", and
move all operations to the same systems. This will see it develop
one HR system, one finance system, one payments system and a single
set of collaboration tools.
Standard Life is an example of a company that, although in its
200th year, is not afraid to change. The company dramatically
reinvented itself a few years ago, which was made possible by IT.
Standard Life's ability to harness the new to get the best of the
old will help it reach its bicentenary.
Standard Life
wake-up call
In early 2004, Standard Life demutualised and became a publicly
listed company,with shareholder capital replacing the capital
raised by policy holders' profits.
Its profitability, particularly in the UK life and pensions
business, needed to be addressed to compete long-term within the
financial services market.
A cost reduction programme was implemented which involved major
IT overhauls. IT is a major overhead and the company set about
cutting IT costs.
SOA savings
The company has reduced costs by £24m through its
service orientated architecture (SOA) strategy. The SOA has
built-in architecture which means developers do not have to decide
how to develop an application, thereby reducing development
time.
"The 'how' is increasingly abstract in the architecture," says
Russell Irwin, senior manager for IT strategy and governance at
Standard Life.
He says the IT department builds most applications in the SOA,
but can run legacy systems alongside the SOA if they behave in the
right way and do not cost too much. The SOA runs on IBM middleware
and developers use Java to develop applications.
Changes to software
development
The company has introduced
agile software development. Before the program was introduced,
more than half of the code developed was never used.
The agile approach focuses on iterative design and feedback,
which differs from the waterfall method usedpreviously. With the
waterfall method, software requirements are captured once early on,
making it difficult to later adapt to changes in requirements.
With the waterfall method, young saysbusiness users felt they
had only one opportunity to tell developers what their requirements
were, so they tended to givedevelopers more requirements than they
needed, which increased development time.
Another technique used by Standard Life is lean software
development, which allows developers to decompose projects into
small pieces of work to help them identify where they could cut
waste.
Photo: Standard Life IT team, from left to right:
Russell Irwin, senior manager IT strategy and governance; Ralph
Fairweather, senior manager, information systems; Bill O'Day, IT
delivery and support director; Keith Young, group IT director; Bill
Birnie, senior manager development solutions; Philip Medley, senior
manager, information systems