Insight into MLC Life Insurance’s cloud journey

Like most traditional financial services firms, Australia’s MLC Life Insurance was burdened with high technology costs, including the overhead of managing a third party to run its data center.

At the same time, MLC was not getting the flexibility it needed from its supplier. Whenever deliverables were needed that weren’t in the deliverables catalogue, it took the supplier three to four weeks to capture the requirements and then create a contract that MLC’s business teams could not afford.

There were also issues with the insurer’s internal teams, as well as those on the supplier side, reluctant to embrace change, hampering the company’s ability to innovate.

“We haven’t done anything overwhelming to say, ‘We are now the best insurer in Australia,'” said Scott Brown, head of underwriting technology at MLC Life Insurance, at Gartner’s IT conference on infrastructure, operations and cloud strategies in Sydney.

Faced with these challenges, MLC decided to move its entire infrastructure, applications, and services to the public cloud, but its journey has been more about people than technology.

“We knew we wanted to be a talent factory and have our own skills within the company, but we were also realistic. We couldn’t afford the skills available on the market, so when hiring people we had to look not only at their skills but also at their soft skills,” said Brown.

In building its cloud capabilities, MLC wanted to create dynamic teams so the company could not only scale and grow, but also scale down and optimize its IT investments during times of economic uncertainty.

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“When we optimize investments, we talk about the capex [capital expenditure] side of things,” Brown said. “Our company isn’t really interested in ‘lump spend’; We just want to know what our costs will be over the next 10 years.”

“We had to break down silos and we needed people who could think more fluently. We also had to be more open to the idea that not everything can be developed perfectly in the cloud.” Scott Brown, MLC Life Insurance

Like many companies, MLC has been pursuing a cloud-first strategy for some time, but it hasn’t always worked out due to organizational silos and the pursuit of perfection.

“We had to break down silos and we needed people who could think more fluently. We also had to be more open to the idea that not everything can be developed perfectly in the cloud,” Brown said.

“There won’t be a separate development chain, release chain, and test chain – sometimes you just can’t pull it off, and we’ve suppressed ourselves. It took a long time to get to the cloud as we already had AWS [Amazon Web Services] We only had two little things on the platform because it always had to be perfect.”

There was also a lot of power struggles between teams, particularly between infrastructure and cloud teams, who didn’t speak to each other. “We broke that down, made everything one team, also flattened their titles and created more platform-based roles so people shared their roles.”

This meant that the team managing storage in the data center also had to scale storage to the cloud, for example. “Storage engineers are no longer storage engineers in the data center — they’re just storage engineers,” Brown said.

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Amid the increasingly volatile business environment, MLC isn’t necessarily approaching cloud from a long-term perspective, as funding may not be available for cloud projects scheduled to start in a year or two.

“Rather than a random schedule, if nothing changes over the next six months, we’ll continue with our cloud journey,” Brown said. “It was worth the risk, even if people said we might end up doing it twice. But we didn’t know much more than six months in advance anyway, and the market changes rapidly every year.”

Despite the challenges MLC faced with its outsourced supplier, it didn’t give up on him immediately. In fact, in July 2021, the company commissioned the supplier to develop a business case for the move to the cloud.

“They participated in our proof of concept. But they said it wasn’t feasible and they were making it very difficult and there were a lot of obstacles,” Brown said. “My response to that was that we would be storing all of our technology in four months.”

The supplier thought it was impossible for MLC to bring everything in-house in such a short amount of time, but Brown’s team made it happen with the right people and the right skills. By January 2022, the company had acquired all of its systems from the supplier.

The savings from not relying on vendor services fed into the next phase of MLC’s cloud journey, in May 2022, when the company produced its technology platform for the cloud.

It wasn’t an easy process as the move caught the attention of the audit and compliance teams – who proved supportive. “They really complimented us on the level of detail and care we put into the design, as well as our early involvement, which was crucial,” Brown said.

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Then came the migration of data and around 1,000 servers to the cloud, including some running on VMware via VMware Cloud (VMC) on AWS. Brown said VMC is particularly beneficial for applications teams that don’t have a full view of their systems due to staff attrition and other challenges, and gives them the opportunity to think about the future.

With the move to the cloud nearing completion — the company is currently phasing out all of its data center equipment and anticipating being out of data centers by the end of this year — MLC is already benefiting from improvements in security to reduced infrastructure spend.

“We targeted a 40% reduction in our infrastructure spend and got to 30%, but I think we’ll continue to save as we go along,” Brown said.