Real Insurance looks to SaaS for cost savings

Renting Exchange online seen as an acceptable risk.

Real Insurance has embraced the software-as-a-service model, renting Microsoft Exchange from the vendor's Singapore data centre and experimenting with consuming Microsoft Azure services and online office productivity tools.

The insurance brand, only five years old in Australia, has already realised the difficulties with maintaining legacy systems in-house during a recent upgrade of its core policy administration and claims system.

It's a hassle the company wishes to avoid in the future.

"Our technology strategy, which was once based on hosting everything ourselves on-premise, is today at a high-level to embrace utility computing in all its forms," said Markus Strauss, head of information technology at the insurance firm.

"As the new kid on the block and growing fast, it makes sense. We don't want to have to make a large investment in infrastructure or deal with the large costs associated with cycles of technology refresh."

Software on tap

Real Insurance was the first organisation in Australia to engage directly with Microsoft to consume the vendor's BPOS business productivity tools as a service, negotiating to include the SaaS-deployment during negotiations for a new enterprise agreement for desktop software.

It was an uncharacteristic move - the company is a consertive buyer of IT. It continues, for example, to run Windows XP on its desktops, choosing XP's reliability and stability over the newer features available in Windows Vista and Windows 7.

Microsoft has helped the company's 500 Australian staff transition from an in-house deployment of Exchange 2003 to a hosted version.

Strauss said Real chose Microsoft due to its scale, in order to minimise risk.

"If you look at the stack, the risks are lower the more commoditised the service is," he said.

Microsoft was also intimately involved in the rollout.

"Being their first Australian BPOS customer, we knew we would have some teething problems," Strauss said. "Microsoft worked closely with us on that basis."

Managing risk

Microsoft's Asia Pacific BPOS offering is based in a Singapore data centre and backed up in a data centre in Hong Kong.

Strauss said this presented risk on several fronts, but none that couldn't be mitigated.

First, he said, email and calendaring were a natural first step for SaaS as they were less mission critical than other applications.

"The type of data being hosted in these data centres is not mission critical," he said.

"We can perform all of the customer-facing business transactions without any reliance on email."

Second, Strauss said that from a technical standpoint, the company had to "weigh up the risk of the data sitting in Singapore versus sitting in-house."

"It takes a lot of resources to ensure data is secure, backed-up and available when you deploy in-house," he said. "The level of assurance Microsoft could provide [in the cloud] was at a standard that exceeded ours. We simply don't have the resources to do something at that level."

Future cloud aspirations

Strauss said Real Insurance ensured its Enterprise License agreement with Microsoft was flexible enough to consider more cloud computing options in the future.

He said the company would "absolutely" consider moving its office productivity apps to the cloud.

"If you look at our overall technology strategy, it would make sense to move away from software on the desktop - we would prefer to have an Office suite on the web," he said.

The company has been moving to reduce its reliance on Microsoft Office licensing, omitting the software from the workstations of its 150 call centre staff in its latest enterprise agreement deal.

Instead, these staff will simply use the BPOS suite for Outlook and a series of light Microsoft reader clients for Word, PowerPoint and Excel files.

Microsoft has also named Real Insurance as an early adopter of the Asia Pacific iteration of its Azure platform-as-a-service cloud compute - which is also served out of Singapore.

But Strauss said the company was yet to use the service.

"At the moment we are investigating what systems would be feasible," he said. "We haven't pushed any systems [onto Azure] yet."

Measuring savings

Strauss said any understanding of the business of insurance leads an IT executive to a utility-style conversation.

He expects to realise cost-savings from the project in terms of the amount of capital no longer required for system upgrades, the savings from future operating expenses (not having to maintain the system), and the soft-costs of providing a better service, even if this last category isn't easily quantifiable.

"At the end of the day, we are an insurance company that uses capital to underwrite risks," he said. "Anything I can do that ties my [IT] expenses to the business we are doing, rather than investing capital in infrastructure, is of benefit.

"Investing capital in infrastructure is dead capital to us for risk underwriting."