Case Study: Modernization of NTUC Income

1.    What were the problems faced by Income in this case? How were the problems resolved by the new digital system?

Lack of flexibility, poor connectivity to the Internet, costly hardware and software maintenance, lack of hardware support, and frequent breakdowns of the mainframe that would bring operations to a grinding halt were some of the problems faced by Income due to the legacy system. New product development was also quite cumbersome and coding in COBOL was time consuming. In addition, transaction processing for policy underwriting was a batch process and information to agents and advisors was not available in real-time. Since data was not captured in real time, various departments did not have up-to-date information. This required passing of physical documents among the departments and hence slowed down the work processes. Furthermore, due to interdependencies among departments in updating policy information, the business processes were complicated and tedious.

As the new system was operational on high-availability platform with application residing on two or more servers; this robust architecture minimized downtime occurrence due to hardware or operating system failures. The business processes were also streamlined and the straight through workflow processing capabilities of the eBao system brought significant savings in time and cost needed to process policies.

2.     What types of information systems and business processes were used by Income before migrating to the fully digital system?

Before migrating to the fully digital system, Income had been using a manual paper-based insurance system running on HP3000 S969 mainframe that housed the core insurance applications as well as the accounting and management information systems. Most of these applications were developed by Income’s in-house IT team in the early 1980s using COBOL. 

The business processes were tedious and complicated. The insurance process involved customers meeting an agent, filling forms and submitting documents. The agent would then submit the forms at branch offices from where they were sent by couriers to the Office Services department. The collection schedule could introduce delays of 2-3 days. Office Services would log documents, sort them, and then send them to departments for underwriting. Proposals were allocated to underwriting staff mostly randomly. Accepted proposals were sent for printing at Computer Services and then redistributed. For storage, all original documents were packed and sent to warehouses where, over 2-3 days, a total of 7 staff would log and store documents. In all, paper policies comprising 45 million documents were stored in over 16,000 cartons at three warehouses. Similarly, whenever a document needed to be retrieved, it would take about 2 days to locate and ship it by courier. Re-filing would again take about 2 days.  

3.      Describe the Information systems and IT infrastructure at Income after migrating to the fully digital system?

The new eBao LifeSystem was based on Java technology and comprised three subsystems – Policy Administration, Sales Management and Supplementary Resources.

The entire IT infrastructure was revamped and was replaced with a more robust, scalable architecture. For example – all servicing branches were equipped with scanners, monitors were changed to 20 inches, PC RAM size upgraded to 128 MB, new hardware and software for application servers, database servers, web servers, and disk storage systems was installed. Furthermore, the LAN cables were replaced with faster cables, a fiber-optic backbone, and wireless capability. In addition, Income also revamped its business continuity and disaster recovery plans. A real-time hot backup disaster recovery center was implemented where the machines were always running and fully operational. Data was transmitted immediately on the fly from the primary data centre to the backup machines’ data storage.

4.     What benefits did Income reap from the new system?

With the successful implementation of the eBao system, Income obtained significant benefits in terms of higher efficiency and performance with a reduction in both operational and hardware cost.

Improvement in System Availability: The new system was operational on high-availability platform. All applications resided on two or more servers, each connected by two or more communication lines, all of which were ‘load balanced’. This robust architecture minimized downtime occurrence due to hardware or operating system failures. Similarly, the operations could be switched quickly to the new disaster recovery site without the need to rely on restoration of previous day data.

Improvement in System Connectivity:  The Life System used by about 500 office staff and 3,400 insurance advisors could be accessed anytime, anywhere with a web browser.

Process Efficiency and Cost Savings: As the new system provided a singular view of customer across products and channels, opportunities to cross sell and increase in customer service was made possible. The straight through processing workflow brought 50 percent savings on both the time and cost needed to process policies. Also, the time needed to design and launch new products was reduced from weeks to just days using the table-driven rule-based product definition module.