Hay will handle existing Standard Life self-invest clients but new business will be managed in-house by Standard Life.
Jan Regnart, managing director at James Hay, said, "They are just at the beginning of their investment. Their view is that they are not bringing their existing books in-house."
The insurance company has spent two years developing the new applications which are extensions to its existing pension platforms. The latest Java-based applications run on Standard Life's IBM Websphere application servers.
As well as integrating with Standard Life's in-house transaction-processing platform, applications can receive valuations through third-party stockbrokers. Data feeds and transactions are based on XML messaging.
Standard Life used agile development techniques to reduce the time it took to build the two new applications.
Software development has traditionally involved a written specification, design programming and testing before users get fully involved. With agile programming an application is split into small blocks, which can be developed and tested quickly. A user is involved in the project from the outset to ensure the code meets requirements.
Ian Muir, Standard Life's senior manager for core technology, said, "It will become best practice for us. Upfront, you are using agile techniques to drive improvements and you are looking to continually build and test the software."