Reuse before buy before build: CGU

Being conservative with its IT investments and strategy has worked well for the insurance company, which is in the third year of its IT transformation project, according to CGU CIO Ian Frew.

Innovation in the financial services sector is often achieved through technology. Banks and other financial institutions are striving to be the most innovative, releasing a swathe of banking apps and online solutions , but Australian insurance provider CGU Insurance isn't interested in joining the fray.

The company is in the third year of its IT transformation program, and it has learned a lot along the way. Something CGU has very conscious of is to not buy into the hype of being the best at technology, or buying into the latest and shiniest technology products, according to the company's CIO Ian Frew.

There is no point being innovative in technology when you don't have the resources to make it a reality, he said.

"You need to be able to move a smart idea into production," Frew said at the FST Media Future of Insurance Conference in Sydney. "Likewise, you can't always be in front of the curve.

"You will be caught sideways sometimes, and you need to be able to react quickly."

Cost of IT investment is something CGU has been very careful with. On the infrastructure side, it's not afraid to put some of its IT assets into the cloud, which lowers total cost of ownership (TCO), though it is conscious of the security implication of doing so. CGU's approach for infrastructure and applications is simple: Reuse before buy before build.

"If we already have it and it's fit for purpose, why not reuse it?" Frew said. "If we don't have it, then we can buy it off the shelf.

"If both options are closed to us, then and only then will we start considering building it ourselves."

To that end, CGU has ended up with a mix of various IT providers, connections to other banks, and its own IT assets. The ability to integrate all those disparate elements together is crucial, according to Frew, which is why two years ago, CGU set up its integration competency centre to connect internal and external systems together.

With integration in mind, CGU doesn't get caught up in the hype behind new and supposedly "innovative" enterprise IT products, he said.

"Don't get fooled into looking at the latest shiny new thing out there," Frew said. "Have a think about how it will work into your own environment.

"If you've already got a .Net team and that's your skill, why would you consider going with Java, or vice versa?"

Another thing CGU doesn't buy into is "enterprise-grade" applications and services, according to Frew. Enterprise-class is not essential for everything from the frontend to the backend, he said.

"If we have to integrate with other systems or if we believe that in the future we are going to need that capability, then we will put it through the enterprise delivery," he said. "A lot of financial transactions will be enterprise-type services, but if it's just bits and pieces going in the frontend and backend, there's no point going through the mapping."

CGU is still undergoing it's five-year IT transformation to simplify its systems and to drive down cost. It has been rolled into its One CGU transformation program announced in March 2012, which is slated to save the company AU$65 million per year by 2015.