In a time of ever increasing technological complexity, some companies in the financial services industry are looking to outsource whole departments while others are more apt to ‘out-task’ only certain things.
National Life Assurance Co. of Canada is a provider of individual life insurance, group life and health insurance, and retirement and investment products. Founded in 1899, it has about 450 employees in its Toronto headquarters and regional offices across the country. In 1997, National Life decided to seek an outside IT vendor for outsourcing key components of their IT organization. It chose Getronics Canada to whom National Life outsources a critical portion of its IT department. Getronics, a provider of systems integration and networked technology services, developed and continues to manage the blueprint for the insurer’s LAN environment. Getronics has converted a previous network to an Ethernet platform and lends expert advice when required.
“One could argue that we should go hire the equivalent expertise ourselves and we could, but the big difference is behind the scenes,” says Gary Coles, vice-president, Systems and Services, National Life. “You have to look beyond the Getronics people who are onsite. We have access to their entire organization, to their R & D, and to their deep knowledge in many technical areas. So I’m looking to access a lot more than just their people who are here. They help us expand strategically so I don’t have to hire other staff. This way we have the expertise of a much larger resource pool.”
Aon Reed Stenhouse, on the other hand, went a totally different route. While National Life outsourced a specific department of its IT operations, Aon dished out specific tasks, also to Getronics.
Aon Reed Stenhouse is an insurance brokerage and risk management firm, and a member of the Chicago-based Aon Corporation. In Canada, Aon Reed Stenhouse claims to be the number one insurance brokerage firm. The company has had a relationship with Getronics for over 15 years, back to the time when Aon operated in a mini-computer environment. That relationship is now a partnership and the nature of it has changed considerably.
The insurance industry has a reputation of being slow to embrace technology and to employ standards that service all the players. Even today, Joe Pedota, Aon’s vice-president, Technology Infrastructure, admits the industry is largely paper-based. “It’s just the nature of the beast,” he says.
“As the technology changed, so too has our environment,” he adds. “The infrastructure has changed, as have the products and services provided by Getronics. But our preference has always been to out-task to partners who can bring benefit and value-add to us in specific areas rather than just outsource everything. This way we can maintain a good grasp of control over our environment. At the same time, we are aware that some of these areas are very demanding and challenging to maintain. That’s why we have opted to partner with Getronics.
“Out-tasking means taking a certain piece of your infrastructure and partnering up with companies that provide best of breed and value to your organization,” Pedota continues. “Some areas are just too costly for us to justify making an investment in terms of capital, intellect, and resource. The environment is constantly changing and difficult to manage on a regular basis. So sometimes it’s better to out-task to someone who can do this better than you can.”
Aon has become increasingly reliant on its network as it continues to roll out enterprise-wide applications across the country. A key consideration here is that about 80 per cent of the company’s transactions generate 20 per cent to 30 per cent of its revenue, so being able to process all these transactions efficiently makes the company more productive.
Pedota says applying IT helps Aon achieve productivity efficiencies, along with cost reductions. The company’s dependency on the network has increased dramatically. “We have become totally dependent on network availability and end-user connectivity to the system,” he says.
WAN management application and monitoring is still fairly new in the marketplace. Pedota says Getronics’ investment in the tool set required for the job, coupled with its knowledge of Aon’s management portfolio, made it a natural choice when Aon decided to switch over its network-managed service.
Today, Getronics provides Aon with hardware service maintenance, software support, and a total network management and monitoring package. It lends communications support, on a distributed processing basis, to Aon offices across Canada. And it supports a number of Aon operating companies on the same network, totalling 36 offices and half a dozen business units.
Getronics also provides Aon with network monitoring and management from its Canadian Network Management Centre (CNMC) in Toronto. One of four centres worldwide, it is staffed by network engineers around the clock. On a huge map of Canada they can view Aon’s entire network, monitor performance, and zero in on a single switch or port at any location.
According to Pedota, this works out well for Aon, especially when its business operations span 13 hours a day, considering time zones. In the event of an outage, Getronic’s CNMC has Aon’s blessing to call a building location to confirm that a link outage has taken place, and not a power outage, then get the telco involved and resolve the issues on a 24-hour basis.
Getronics’ application monitoring allows Aon to plan for future capacity. The provider can measure the performance of user applications and give performance feedback to better react to users’ needs and forecast problem situations. Adds Pedota: “our new business systems and increased functionality should result in increased speed and throughput, and will enable us to better service our clients.”
Aon itself has a small team of two dedicated people on its WAN team. Since the WAN network has 36 locations across Canada, Pedota says it would be impossible for Aon to manage this system around the clock. Out-tasking to Getronics’ field people on the ground brings technical resources to Aon coast to coast.
Pedota reasons that out-tasking like this offers Aon the best of both worlds. “We haven’t given up total control of our environment and we haven’t lost the ability to control change and to react to business conditions,” he says.
Like Aon, National Life is steeped in tradition, yet technology has played a big role in its success. Before it began outsourcing six years ago, it had a strong internal staff that possessed a mainframe-based technology background. They found themselves challenged with the new distributed networks. They needed new skills and the company had a decision to make – either upgrade the internal skills of its own people or look outside for a partner. They chose the latter. While Getronics has served as the technical adviser, National Life’s staff is upgrading their skills.
“When we wanted to look at wireless technology, which is new, we just didn’t have the expertise ourselves,” recalls National Life’s Gary Coles. “Getronics did, so we went to them for opinions and ideas. They brought their technical wireless expert in and he made a presentation to us about trends in wireless, the cost benefits, and what’s out there.
“By the same token, when we considered a move from Windows 95 to the next level, and when we upgraded from Novell, we utilized their R & D so they could help us plot the route map. That’s why I say you just can’t look at the onsite people they provide. You have to look at the more strategic, behind-the-scenes expertise that they bring.”
What about the loss of control that Aon’s Pedota mentioned? Coles doesn’t see it that way. He says the ultimate technology decisions are still in the hands of National Life. “The Getronics people report to our own technical head so it’s more of a partnership. They give us knowledge, research and information which I really think gives us more control, not less.”
National Life implemented its WAN in 1999 and it’s been a big boon to the organization. Before it was set up, all offices outside the Toronto head office had only dial-up connection, but the WAN gave them full-service online capability. The objective for Getronics wasn’t to educate National Life’s people about the technology, but to let them focus on their business functions – and the benefits they could realize through the use of technology.
Getronics is vendor-independent and both Aon and National Life like that. Coles says Getronics is able to select from a number of different vendors the best computer architecture – from both cost and performance standpoints. He says another benefit is that he can rely on his expert supplier to fill ad-hoc needs for advanced technical talent.
But as for the argument about what’s best – outsourcing or out-tasking – Coles says there are no firm rules.
“Some large insurance corporations have outsourced and there is some evidence that people are looking at that more seriously nowadays and maybe even expanding the practice. In the insurance industry there is a lot of amalgamation going on which means consolidation.
“Everybody is extremely cost-conscious and there is more focus on the bottom line so people are more open to looking at different ways to do things. And this is all because of the immense scrutiny on the bottom line.”
In the past year Getronics has helped National Life upgrade its LAN from Novell to NT. Coles says a number of new projects involving infrastructure improvements are still coming up, such as LAN back-up and recovery strategy.
“Getronics is a strategic partner,” he says. “But that’s not to say we outsource everything. Our own software development is still done in-house because our people know the life insurance business and understand our user community. However, for the technical end of things, we look to them.”
The decision is not simply to outsource or not to outsource. There are lots of options and even with one provider, you may be able to select the one that works best for you, as have these two insurance companies.
Jerry Amernic heads up the Toronto-based Wordcraft Communications which includes Getronics as a client.