Case study: Unusual development approach wins favour with HSAHealth insurance provider HSA is working on a £10m IT "heart transplant" which will replace the core administration systems with a new web-based system.
The company was reluctant to build the new system from scratch - as it would take too long - but didn't want to simply buy in a package that wouldn't fit its needs.
So instead HSA has taken the unusual approach of working with Indian software company Mastek to add capabilities to the vendor's existing packaged software. HSA then purchased the intellectual property rights to use and alter the bespoke system as if it had done the development itself.
Ian Maude, HSA's business service director, told silicon.com: "We can't sell it on but we can grow the business without any fees being due. I've been in IT for 30 years and this breaks the mould - and it works."
Big suppliers were not interested in HSA's novel approach, he said: "When we approached some of the big suppliers they were unwilling to give us IP rights."
The new system - dubbed Pulse - will process new business, pay claims and manage customer and corporate accounts and is integrated with the call centre, HSA's imaging and workflow system and a sales force automation application.
"IT is a key competence in financial services - we didn't want to outsource," said Maude.
The project will allow HSA to consolidate its existing systems and to offer new services, such as internet self-service, and new products to customers.
The system will also allow HSA, which has made a number of acquisitions, to operate multiple brands at the same time. "We are creating a system that has the ability to launch different products and combinations of products," Maude said.
"Over the last four to five years we've put in a lot of satellite systems, like imaging and work flow and call centres, but this is like doing a heart transplant: taking out the administrative system that three quarters of our people work on and replacing it."
The new system takes the place of an AS/400 which as been in place for 20 years. Maude said it was hugely reliable with downtime "measured in minutes per year" but HSA decided it was not a strategic platform for the future, especially with the internet becoming more important.
HSA gets around 14,000 claims per day from its customer base of around 1.2 million.
The project was approved by the board in December 2003, with the first pilot system going live a year later.
HSA's Leeds-based subsidiary is currently migrating to the new system, with HSA moving another 800,000 customers over at the end of June.
Maude explained that the business case for the £10m project is reviewed every six months. "The business case is based on the benefits that will accrue from selling new products. We believe the payback is within three years," he said.
As well as holding onto the intellectual property rights for the system, HSA is making sure it is self-sufficient by training up its IT staff - each of its developers is going through 54 days of technical training to get from AS 400 to Java and Oracle.
"We've invested hugely in our existing people and I don't want to lose any of them," Maude said.