Suncorp has announced it will save AU$53 million per annum through integrating insurance company Promina's business technology with its own, helped by an "agile" approach said to be used in companies such as Apple and Google.
Suncorp's acquisition of Promina was approved last year. "The Promina transaction brought together numerous strong business and brands, many of which had separate IT infrastructure," Jeff Smith, Suncorp group executive business technology told ZDNet.com.au .
"We estimate the merged business will generate US$325 million of annualised synergies, with business technology making an important contribution to that figure," he continued.
The costs of the business technology integration, which is estimated to be finished at the latest in June 2010, will run to AU$161 million.
Despite the company's results being adversely affected by the recent floods, Smith says the IT integration budget will not be on the chopping block: "The business technology component of Suncorp's integration of the Promina businesses is critical to the success of integration. Suncorp has always managed its costs efficiently, and this will continue to be the case throughout the integration program, but to reduce spend in business technology integration activities to offset losses in the insurance business would be counterproductive."
"There are really three major components to our business technology strategy and the first and foremost is driven from our overall business strategy, not IT independently," Smith said at the company's half yearly results briefing yesterday.
The first is to select a few focus areas which will generate the biggest business outcome and the quickest benefits realisation, the second is to use Suncorp's assets, and the third is to take the assets and implement them in a more efficient manner.
The focus areas are claims management, pricing and analytics as well as overall Suncorp's Internet channel. Suncorp is also undergoing consolidation in its IT infrastructure by moving from four datacentres to two; consolidating its overall networks as well as rolling out a consistent environment for employees.
The assets which Suncorp has been able to reuse across the organisation include a new claims system rolled out in the GIO home insurance business, a pricing and analytics product and an Internet platform originally deployed in Vero NZ.
"We really want to focus on avoiding reinvention and starting from scratch and moving to reuse and net change," Smith said.
Implementing these assets in a more efficient manner involves introducing a so-called "agile approach" which Smith says has been around for around 10 years and is used by big product development companies such as Cisco, Apple, Google and Yahoo to develop their software and hardware products.
Smith said the approach is "increasingly being adopted in major corporations".
There are two main tenets that support it, according to Smith. "The first is a focus on small teams and focusing on launching core capabilities quickly and following up with releases for incremental improvements as opposed to trying to do big gain type of solutions. You realise the benefits earlier and you are able to adjust more quickly," he said.
The second tenet is extensive use of automation, particularly in testing. "Most people don't realise it but in most IT projects, 60 percent of the costs and 60 percent of the time is in testing," he said. "If you can attack this area you can significantly reduce costs and cycle time and increase your quality."
Suncorp has been able to launch increased automation in a number of projects according to Smith, one of which has been the deployment of the claims platform in GIO. The IT team has put out four more releases of the platform, and deployed it into RACQ, where it was able reduce the overall testing cycle by 60 percent in the latest deployment.