WA Insurance Commission slashes IT costs with modernisation project

The government organisation cut IT operating costs by 10 per cent but the project was not without its issues.

Glenn Myers, CIO, Insurance Commission of Western Australia

Glenn Myers, CIO, Insurance Commission of Western Australia

The inevitability of having to modernise legacy systems is front of mind for many government organisations and the Insurance Commission of Western Australia (ICWA) is no exception.

For almost three decades, the ICWA relied on mainframes running around 1200 well-written COBOL applications used in its motor vehicle insurance and risk cover businesses.

Agents use these applications to manage thousands of third-party motor vehicle insurance, workers compensation, commercial property, and motor and liability insurance claims across Western Australia each year.

However, faced with the increasing cost of maintaining an IBM Z9 mainframe and dwindling numbers of COBOL specialists, the ICWA recently began looking at options to modernise its IT infrastructure, used by 360 staff across its two core insurance divisions.

“The licensing and maintenance costs for our mainframe – irrespective of the number of users and/or applications – were pretty much the same,” said Glenn Myers, CIO, Insurance Commission of WA.

“While the mainframe is a wonderful piece of equipment from a number of perspectives, it’s very expensive for an organisation of our size. We never really needed to understand our mainframe environment as we outsourced the mainframe management to vendors such as Fujitsu – it has effectively been a 'big black box' to us.”

The ICWA also grappled with high disaster recovery costs associated with leasing a logical partition (LPAR) platform – or subset of a mainframe – from IBM to provide a disaster recovery capability.

In mid-2011, the ICWA kicked off a 12-month modernisation project. The organisation switched off its mainframe in July 2012 and re-hosted its 1200 core applications on IBM BladeServers using the Micro Focus Enterprise Server Platform.

This will enable the ICWA to leverage its COBOL applications for some time to come by allowing its application development staff to use object-oriented coding without needing to work in character-based COBOL.

“These tools act as wrapper around our existing COBOL code so people with more modern development skills can maintain our back-end systems and also create new applications for the organisation,” said Myers.

“We can now get around the lack of COBOL skills in the WA market with this development environment. For example, Java developers can develop on the workbench instead of needing COBOL developers to work the code”.

“This is particularly important as the number of COBOL developers is declining; people don’t come out of university these days with a COBOL development capability.”

Primary and DR infrastructure costs cut

Delivering IT infrastructure costs reductions was vital for the organisation, which experienced an 8.5 per cent increase in the cost of managing claims between 2010 and 2011. This rose a further 3 per cent during 2012.

The modernisation project – completed in July 2012 – has helped the ICWA reduce IT operating costs by 10 per cent resulting from savings in hardware maintenance, software licensing and maintenance and facilities management services.

“We have also reduced our disaster recovery costs and can stand up our disaster recovery environment 75 per cent faster than previously because we are no longer relying on a vendor’s hardware to assist us,” said Myers.

The ICWA is also creating a service-oriented architecture, using process management software to publish services out of its core applications for re-use as required.

“We have two core insurance divisions and they both conduct insurance activities so we can look at leveraging services for both divisions where we have not been able to do this in the past,” said Myers.

Modernisation issues

According to Myers, the project was not without its problems, which contributed to a three-month delay in deployment time.

The organisation ran aged versions of the IBM DB2 database on its mainframe, which enabled “aged database management practices”.

“The more current DB2 databases enforce best practice, which caused some issues for us,” he said. “We had to work out how to work with DB2 in the open systems environment.”

The ICWA was also running an application – written in Visual FoxPro – an unsupported database application toolset, and needed to work out how to interface this application with its core insurance systems on the re-hosted platform.

“We had to learn very quickly how the application worked, which required a lot of attention during the migration process, because it caused a lot of issues,” said Myers.

“These problems are always solved by a small group of individuals who are subject matter experts and this case was no different. Business resourcing for end-to-end and user acceptance testing wasn’t a major issue but getting the timing right at certain stages was problematic”.

“When we thought we were ready for the business, we actually weren’t, which slowed down the project.”

Despite these issues, the project was a success for ICWA, Myers said.

"It has delivered on all of the key success criteria included in the business case," he said. "This success can be attributed to the ongoing buy-in and support of the ICWA executive and the commitment of the ICWA staff involved."

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Tags Insurance Commission of Western AustraliaIBM Z9COBOLGlenn Myers

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