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Ageas moves into Philippines cloud platform for insurers

Insurance firm adopts cloud-only business application suite to support south-east Asian expansion

Insurer Ageas adopted an end-to-end insurance business suite in the cloud when it wanted to expand into the Philippines.

The Belgium-based firm is moving into new markets in south-east Asia, specifically the Philippines, where it has partnered EastWest Bank to build a Bancassurance business. Ageas currently has a presence in 14 countries in the region, including Malaysia, China, India, Hong Kong, Thailand and Vietnam.

Ageas’s Philippines operation is on a greenfield site, so it required a completely new business system. This would mean building from scratch because there is no existing IT staff, infrastructure or supporting systems.

“A greenfield site means answering basic questions, such as how can we limit our time to market and reduce the complexity of building a business system – the main part of which is IT,” said Hans Van Wuijckhuijse, regional director, business development Asia at Ageas.

The traditional approach is to stitch together disparate systems from multiple technology suppliers into an on-premise business system, which is typically the backbone for running insurance operations, said Van Wuijckhuijse. Insurers would select core insurance modules, such as a policy administration system and claims system, and then add supporting applications such as HR, finance and data analytics.

Insurance software suppliers offer a wide range of applications for the enterprise, but each module may not be the best product of its type, he said.

“Building a complete IT landscape is a complex exercise involving a lot of time and money,” said Van Wuijckhuijse. “It may take five years to complete the whole landscape, with components that round off the system such as customer relationship management [CRM], financial asset management and data analytics.”

Integated IT platform

Ageas decided on an insurance software solution that consolidates its operations onto a single, integrated IT platform, and caters to the entire range of business functions, from core policy management to customer-facing front-end applications and business analytics.

This means the insurer can focus on core business matters, instead of issues such as systems integration, performance and the need to deploy and maintain systems. The set-up also enables Ageas to respond rapidly to changing consumer needs and latest technology trends, to improve service quality and deliver new products to the market more quickly.

“The big advantage with integrated systems is that the landscape is fully available within five to six months, with configurations for the specific greenfield site,” said Van Wuijckhuijse. “There is a huge difference in time to market and availability.”

After evaluating several options, Ageas decided on a hosted, end-to-end enterprise insurance suite built on SAP S/4Hana, which it found to have the most complete application landscape. The suite has more than 30 SAP systems, including omnichannel capabilities, core insurance solutions including policy administration, quotation, underwriting, claims, commissions, collections and disbursements, as well as finance, procurement, HR and enterprise analytics.

These are all deployed on SAP Hana Enterprise Cloud (HEC), a private cloud hosting service.

Clear clouds

The idea of hosting the business system in a private cloud arose when Ageas was exploring the solution set with SAP. The insurer realised that a software as a service (SaaS) approach would allow its staff to access insurance applications via the internet in a private cloud, removing the need for a large IT team, application installation, and complex software and hardware management.

This means Ageas pays for using its applications by subscription, including software, hosting and support costs.

Ageas’s data will reside in SAP HEC datacentres in Singapore, with the disaster recovery servers located in SAP’s Hong Kong datacentre.

When the system goes live in the first quarter of 2016, Ageas expects to achieve cost savings from a reduced IT organisation and a significantly shorter time to market. It expects to cut costs by 20-40% in the first five years, compared with traditional, disparate systems.

SAP’s integrated cloud suite is expected to streamline operations and add functionality that would otherwise be available only after several years, and generate a return on  investment in 18 to 20 months rather than three to five years.

Another typical concern about a cloud platform is security and confidentiality because all the data and processing is not hosted on-site. There are also performance risks as users depend on the speed and reliability of the network.

Read more about business systems in Asean

However, Ageas is confident that these potential risks are not an issue, as the SAP HEC datacentres are subject to stringent industry-standard security and confidentiality standards, and the Philippines’ data laws permit corporate data to be processed outside the country.

“With SAP HEC, we can fully leverage world-class datacentre capabilities without having to build anything like that ourselves,” said Van Wuijckhuijse. “Even with on-premise solutions, we need a connection of some kind and most datacentres are not housed in the same building as the users. The difference here is that it’s a longer connection.”

In February 2016, Ageas will launch the suite at its new joint venture in the Philippines and could also use it for other greenfield operations.

“With this next-generation enterprise insurance suite from SAP, we get to focus on customers and core business, instead of also running a mid-scale technology services firm internally,” said Van Wuijckhuijse. “This integrated set of SAP solutions, coupled with SAP taking end-to-end responsibility for the software-as-a-service, will give us the agility to help us establish and penetrate new markets.”

SaaS supports various functions

Today, 10-20% of SAP’s 2,700 financial services industry (FSI) customers in Asia are using SaaS to support various functions within their lines of business, said Arvind Sundaresan, SAP’s head of financial services, Asia Pacific and Japan.

“Most of SAP’s FSI customers are using on-premise software with components of cloud solutions,” he said. “The Ageas solution is the first showcase where we provide the processing for the whole company in the cloud.”

IDC analyst Mayur Sahni agrees that Ageas’s end-to-end insurance solution is unique.

“Cloud-delivered apps are the way to go,” said Sahni, senior research manager, services and cloud research at IDC Asia/Pacific. “Today it is all about speed to market. To migrate existing on-premise applications to the cloud is phenomenally expensive, taking a lot of time and money. Organisations normally try to replace an old app with a cloud app.”

Insurers that modernise their operations and processes will be able to deliver business benefits to meet ever-changing industry and customer requirements, said Sahni. Technologies such as SaaS can allow insurers to develop and launch new products much more quickly, he added.

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