Standard Life saves £60m

Standard life has exploited the expertise of its in-house staff

Standard Life has cut £60m from its technology cost projections since the introduction 10 years ago of a service-oriented architecture (SOA).

The financial services firm’s early adoption of SOA is behind the strategy to keep the IT department in-house, and has enabled a more flexible approach to the core business.

The architecture changes have produced savings in a number of areas, said CIO Keith Young.

“SOA helps us get products to market faster,” he said. “We do not have to test and design new business services because we can reuse them ­ sometimes dozens of times.”

More flexibility also means Standard Life can move faster into new markets. In the past, the firm operated separate IT systems in the UK, Germany and Canada. But future expansion can be streamlined by transferring the business services already developed on the SOA model.

“We can exploit the assets we already have,” said Young. “Some changes may need to be made around language, currency and tax regulations, but it still saves money.”

And because the SOA has been in place for a decade, efficient processes are well-established and the cost of running the IT department is kept low.

The firm estimates its in-house team is only one per cent more expensive than the cheapest outsourcer. And an independent benchmarking test by analyst Gartner rated it twice as efficient as the top supplier.

“We contract out some routine things, but generally we try to exploit the expertise of our in-house staff,” said Young.

Designing business services for reuse is a balancing act, said David Norton, research director at Gartner.

“If services are designed for a certain line of business then they could be too specific to be reused ­ but if they are too generic then you end up spending to adapt them,” he said.

But firms can work around this by finding components that will be core to most business services, said Norton.