When ‘in-sourcing’ is the right move: Takaful Malaysia CIO interview

AvantiKumar

Following a recent news report that Islamic insurance firm Takaful Malaysia recorded benefits, which included efficiency gains of 40 percent and reduced costs by 27 percent, after deciding to in-source its IT infrastructure management, Computerworld Malaysia asked the Malaysia-headquartered insurance company's chief information officer Patrick Wong to talk through some of the steps to these achievements.

Headquartered in Kuala Lumpur, Malaysia, Takaful Malaysia, which provides general, life, and health insurance to more than one million customers, operates through 31 branch offices nationwide

Patrick Wong - Takaful Malaysia profile photo modified

Photo - Patrick Wong, CIO, Takaful Malaysia.

 

Could you talk through the initial steps behind Takaful Malaysia's decision to 'in-source' its IT infrastructure management?

Our IT Infra outsourcing arrangement started had been in place since 2008.  In late 2012, we were informed that there would be a revision to the outsourcing fees to include additional equipment.  We could not come to a mutual agreement on the fees as the revised fees were too exorbitant. Moreover, the outsourcer could not fully deliver some of the deliverables, which was promised earlier  

Hence in early 2013 we had to look for alternatives.  We did several internal studies from vendor replacement to selective out tasking, and insourcing.  

Based on the financial analysis that we have done, we find that we can save at least 10 percent from the existing outsourcer fee.  This financial analysis results has taken into consideration the monitoring system replacement and all additional staffing expenses.  As such, we decided to proceed with insourcing.  

The Microsoft solution [Microsoft System Center] came about while were performing due diligence on our infra monitoring system.  We evaluated three different solutions, and Microsoft gave us the most 'value-for- money' solution.  Furthermore, 95 percent of our entire server farms are already on MS platform and Microsoft System Center [MSSC] can also monitor all our current networking devices.  So, it was an easy decision.


What methods did you use to gauge the business benefits that could accrue from this solution and how was the implementation?

 The measurements were very straightforward:

From financial perspective, we take all the FTE costs, system implementation and other costs relating to Infra support, annualized it and compared it against the outsourcing annual costs.  We were happy to have 27 percent savings.  Note that we are comparing with the existing outsourcing fees charges without taking into consideration the new fees which the outsourcer wanted to charge.  If we take that new amount into account, it will actually be close to 40 percent savings.  

The immediate benefits of Microsoft's system are that we can now measure SLAs [service level agreements] accurately.  For example:  The helpdesk system has ageing capability, escalation capability, and dashboard capability.  And this is just on Helpdesk information alone.  

As mentioned before, we have increased our service level TAT by 40 percent.  This means that, when a user call, where previously it will take 5 working days for the outsourcer to attend to the request, now  we can attend to the business users within one day. Furthermore, previously the customer call will not reflect anywhere in the helpdesk system, but we can now track with the MSSC Helpdesk.  

The actual project details, including implementation, are:

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