Co-operative Financial Services (CFS) has upgraded the mainframe infrastructure behind its banking and insurance businesses to support a £500m IT transformation.

The upgrade to a newer generation of IBM kit was completed in late February under a replacement and “buy-back” process, using the residual value of the legacy equipment. The switch will ultimately save the company £3m.

CFS hopes the machines will provide a more flexible and environmentally-friendly software testing environment - with the old equipment, processing power could only be reduced or increased in 400 million instructions per second (MIPS) chunks, while the new mainframe allows changes in power use of 100 MIPS.

“We will be going through a significant amount of change over the next four to five years, so we needed greater flexibility to scale power up and down according to our requirements,” said Gary James, head of enterprise computing at CFS.

“The new mainframes will act as one of the enablers for the overall change programme. It will meet short-term requirements such as support of our testing activities and provide operational and financial savings for the organisation,” he said.

Further benefits of the migration, carried out over two months in partnership with datacentre specialist Thesaurus, include higher levels of security, control and automation.

In addition to the mainframe upgrade, CFS is also looking at making better use of virtualisation technology at its three datacentres, said James.

“We are partnering with IBM to look at options related to virtualisation for our Unix platform and I expect there will be a significant amount of activity in that area towards the second half of this year and beginning of 2010,” he said.

James said another key area for the IT team over the next three years could be related to the integration of Britannia Building Society – currently attempting a merger with CFS – which has a very different set-up, with Sun equipment and no mainframes.