SOA lets insurers make the most of software modules and legacy data

Two major UK insurance companies have taken different approaches to cutting costs by using service oriented architectures.

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.

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