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Like most traditional financial services companies, Australia’s MLC Life Insurance was saddled with high technology costs, including the overheads of managing a third-party supplier that was running its datacentre.
At the same time, MLC was not getting the flexibility it needed from its supplier. Whenever it needed services that were not in the service catalogue, it took three to four weeks for the supplier to gather requirements, only to produce a contract that MLC’s business teams could not afford.
There were also issues with the insurer’s internal teams, as well as those on the supplier’s side, who were unwilling to embrace change, hampering the company’s ability to innovate.
“We weren’t doing anything that was mind-blowing that we could go out and say, ‘We’re now the best insurance company in Australia’,” said Scott Brown, head of insurance technology at MLC Life Insurance, at Gartner’s IT Infrastructure, Operations & Cloud Strategies conference in Sydney.
Amid those challenges, MLC decided to move all its infrastructure, applications and services to the public cloud, but its journey was more about people than technology.
“We knew we wanted to become a talent factory and we wanted to have our own capability in-house, but we were also realistic. We couldn’t afford the skillsets in the marketplace, so we had to look at hiring people for not just their capability, but also their soft skills,” said Brown.
In building up its cloud capabilities, MLC sought to create dynamic teams, so that it has the ability to not only scale up and grow, but also to scale down during periods of economic uncertainty, and optimise its IT investments.
“When we optimise investments, we are talking about the capex [capital expenditure] side of things,” Brown said. “Our business is not really interested in the ‘lumpy spend’; we just want to know what our costs are going be for the next 10 years.”
Scott Brown, MLC Life Insurance
Like many organisations, MLC has had a cloud-first strategy for some time, but it did not always work out due to organisational silos and the strive for perfection.
“We needed to break down silos and we needed people to start thinking more fluidly. We also needed to be more open to the idea that not everything will be perfectly engineered in the cloud,” Brown said.
“It won’t have its own development chain, release chain and testing chain – sometimes you just can’t get that, and we were stifling ourselves. It was taking a long time for us to get to the cloud because while we already had an AWS [Amazon Web Services] platform, we only had two small things there because it always had to be perfect.”
There was also a lot of infighting between teams, particularly between infrastructure and cloud teams that were not talking to each other. “We broke that down, made it all one team, and also flattened out their titles and created more platform-based roles so that people had shared roles.”
That meant the team managing storage in the datacentre would also need to scale out storage to the cloud, for example. “Storage engineers are no longer storage engineers in the datacentre – they’re just storage engineers,” Brown said.
Amid the increasingly volatile business environment, MLC is approaching cloud not necessarily from a long-term perspective, as funding might not be available for cloud projects that are only due to start within a year or two.
“Instead of having an arbitrary timeline, if something is not due to change in the next six months, then it’s going on our cloud journey,” Brown said. “That was a risk worth taking, even though people were saying we might end up doing it twice. But we really didn’t know much further than six months ahead anyway, and the market changes rapidly every year.”
Despite the challenges MLC faced with its outsourced supplier, it did not ditch it right away. In fact, the company engaged the supplier to work out a business case in July 2021 to move to the cloud.
“They involved themselves in our proof-of-concept. But they said it couldn’t be done and they made it very difficult and there were a lot of barriers,” Brown said. “My answer to that was we were going to insource all our technology in four months.”
The supplier thought it was impossible for MLC to bring everything in-house within such a short period of time, but Brown’s team managed to do that with the right people and skillsets. By January 2022, the company had taken ownership of all its systems from the supplier.
The savings from not having to rely on supplier services went into the next phase of MLC’s cloud journey, in May 2022, when it productionised its technology platform for the cloud.
It was not an easy process, as the move drew the attention of audit and compliance teams – who turned out to be supportive. “They actually complimented us on the level of detail and care that we put into the design and our early engagement, which was key,” Brown said.
Then came the migration of data and some 1,000 servers to the cloud, including those that run on VMware through VMware Cloud (VMC) on AWS. Brown said VMC was particularly beneficial for application teams that did not have a full view of their systems due to staff attrition and other challenges, giving them the capacity to think about what the future looks like.
With the move to cloud nearly complete – it is currently pulling out all its datacentre equipment and expects to be datacentre-free by the end of this year – MLC is already reaping benefits, from improving security to reducing spending on infrastructure.
“We targeted a 40% in reduction in our infrastructure spending, and we achieved 30%, but I think we will continue to save as the journey continues,” Brown said.
Read more about cloud in Australia
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