Manulife Financial joins server virtualization crowd

Manulife Financial has added virtualization of its IT infrastructure to the duties for which IBM is responsible under an expanded outsourcing agreement.

The Toronto-based firm originally signed a deal with Big Blue in 2002 that included running its mainframe, midrange and desktop PCs as well as its help desk support, business continuity and disaster recovery functions. The value of the new agreement was not disclosed but IBM said it would stretch until 2012.

Manulife is asking IBM to virtualize its Intel and Unix-based server environment, as well as implement IT service management standards across its global operations. Joseph Cooper, Manulife’s CIO, said the deal reflects a maturation in the company’s relationship with the vendor.

“It was a very traditional infrastructure outsourcing agreement. We transferred our assets and our service delivery capabilities along with some of our people to IBM. After the first couple of years, which is usually the tough period of time for outsourcing agreement of more than 300 people and large-volume work, we were able to flesh it out into an environment where we were happy with the service we were receiving.”

One of those elements was moving over Cooper himself, who originally worked at IBM and managed the Manulife account. He joined Manulife last April.

“The biggest change that I bring here is a mapping of the contract and its deliverables to what would be Manulife’s contemporary infrastructure,” Cooper said. “What I wanted to achieve in the contract is a very straightforward integration for something that was more strategically outcome-based. We have service level agreements and so on, but I’m more interested in something that would address Manulife’s strategy.”

Manulife is looking for reduced costs in equipment, software, facilities and energy consumption, Cooper said, which is where running multiple instances of an operating system on a server, or virtualization, makes sense.

“We’ve been a little bit behind the curve in implementing that technology,” he said. “There are specific terms in the contract that benefit Manulife and IBM in regards to the achievement of virtualization across our infrastructure.”

In a recent IDC Canada presentation on future trends in the IT industry, Vito Mabrucco noted that virtualization has been a boon to utilization rates within server environments. The next phase may be trying the technology within corporate PC environments, he said.

“We will see customers (for virtualization) grow across the industry as CIOs recognize there are other ways they can virtualize their operation,” he said.

Some companies are working with IBM on so-called cloud computing, whereby applications are hosted on Big Blue data farms outside of the traditional enterprise headquarters. Cooper wasn’t sure Manulife is willing to take its outsourcing agreement with IBM to that level yet, though.

“Owning the infrastructure ourselves does not provide strategic value to us,” he said, however, “I don’t know if I would say in the next two years that (cloud computing) would be something substantive enough to be part of the portfolio.”

When IBM first signed Manulife Financial, the vendor launched an International Insurance Solutions Centre (ISC) centred in the University of Waterloo with operations in Toronto. Manulife was among the first participants.

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