Global Operator Embraces Both Centralized & Decentralized IT

Manulife Financial uses its century-old global scope to maximize its technology budget. The insurer reduces operation costs through shared data centers in different global regions and by outsourcing its infrastructure.

Regional Challenges

Although territories are dealing with challenges that are regionally unique, there are many consistencies in the basic problems that these groups face. According to Mather, a common challenge is the unpredictability of systems projects because timeframes are usually short and the needs of local regulations must be balanced. Also, ensuring that the right investments are being made in different locations with budget limitations is a common problem. Manulife uses these consistencies to its advantage by encouraging the sharing of information by vice presidents across regional territories.

Manulife also takes advantage of its global scope by maximizing its technology budget through the strategic establishment of development centers in certain parts of the world. This strategy not only reduces development costs, but day-to-day operational spends, as well. For instance, the cost of operations in Pacific/Asia, says Mather, is less than operational costs of Canada because resources are less expensive. Doing business in Canada, in turn, involves less expense than do the operational costs in the US. Manulife currently has development centers in Sydney and in India. ""We have been very successful doing things this way in Manulife's systems area,"" Mather says.

Also, in an effort to reduce the costs of operations, Manulife—a veteran outsourcer for the past 10 years—recently implemented a process that it believes helps to better maximize what it spends on infrastructure and operations costs. As of April 1, 2002, all the company's infrastructure and operations are outsourced to a number of providers. ""Manulife believes that it's one of the best ways to create economies of scale, both between our business units as well as with other non-Manulife entities,"" says Mather. ""Manulife has been very happy with the results so far, from a cost and services perspective. I think it's a major direction that everyone in the financial services sector will be taking.""

The carrier's North American operational services support is outsourced to IBM (Armonk, NY). The arrangement includes Manulife's data centers, help desks and desktop computers. In addition to reducing costs, the deal helps the operation to build technical strength required for mergers and acquisitions (related to system consolidations). Manulife's Japanese and Pacific/Asian operations outsource processes to Sema (London). Another outsourcing partner of Manulife's is DST Systems (Kansas City). The company handles 70 percent of the North American territories' clearing. CSC (El Segundo, CA) handles Manulife's variable annuity processing.

Professional Development

Manulife Financial employs 13,000 direct employees worldwide, excluding agents, and the company understands the importance of hiring locally. ""Manulife thinks it's critical to have local staff as key parts of our operations,"" according to Mather, who stresses that wherever possible the organization likes to have employees from the local region leading the staff integration effort.

Because the appropriate skills set is not always available within a particular region, Manulife has an extensive training program. One of the major functions of the office of the CIO, explains Mather, is running Manulife's Expatriate Program. The program identifies key staff members and offers tours of duty in territories around the world. ""It's an opportunity to share not only our successful tools and methods, but it's also a great growth opportunity for our staff,"" he says. ""Many of them have a lot of fun doing it.""

Training, especially where the required skills are not always available, is also important. The insurer has developed what it calls the 20/120 Program. IS managers are given the responsibility to ensure that the employees in their charge complete a minimum of 20 hours of technical training per year and at least 120 hours over a three-year period. ""If an employee takes a 40-hour week of training every year they will make the three-year requirement,"" explains Mather. The minimum amount of training that must be taken per year is only 20 hours because the carrier understands that projects can limit time available for training. Every IS member, however, must complete 120 hours every three years. About $3,000 to $4,000 is set aside per year, per employee, for this training.

""We keep that money separate from the global IS budget so that there is no risk of having it reduced or transferred,"" says Mather. Also, money budgeted for training ""is tracked to ensure that it's effectively used.""

Through internal growth and acquisition, Manulife has expanded globally during the past eight years and continues to do so. Information systems personnel participate in the development of new global opportunities by conducting due diligence. ""IS personnel determines possible synergies, overlaps and new ideas we can use in our existing operation,"" says Mather. Manulife continues to review new business opportunities throughout the world and has a dedicated Business Development Group with that as its primary goals.

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COMPANY:
Manulife Financial, Toronto, $147 billion CD in assets.

COMPANY BACKGROUND::
The Manufacturers Life Insurance Co. was incorporated by an Act of Parliament in 1887. In 1893 the first policy was sold outside of Canada, in Bermuda. In 1897 the company expanded the operations into Asia; entered the US in 1903.

INTERNATIONAL PRESENCE::
Manulife has operations in the US, Canada, Hong Kong, Japan, China, Indonesia, Philippines, Vietnam, Singapore & Taiwan.

COMPETITION::
""In Canada our big competitors are Sun Life and Canada Life,"" says John Mather, EVP & CIO, Manulife Financial. ""In the US, it's John Hancock. We enjoy one of the largest market shares in Hong Kong.""

TECHNOLOGY PHILOSOPHY::
Manulife aims to support business units with reliable, secure and responsive systems that reduce business unit operating costs, and provide ""first-quartile"" service to customers and distributors.

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Manulife Global Subsidiaries

The Manufacturers Investment Corp. (Bloomfield Hills, MI): Holding company for life insurance and reinsurance operations in the United States.

Manulife (International) Reinsurance Ltd. (Hamiliton, Bermuda): Holding company for financial reinsurance operations.

Manulife International Holdings Ltd. (Hamilton, Bermuda): Holding company for life insurance subsidiaries in Hong Kong and China. Manulife International also has investment management operations in Hong Kong.

Manulife Bank of Canada (Waterloo, ON): Provides integrated banking products and service options not available from an insurance company.

Manulife International Capital Corp. Ltd. (Toronto): A specialized financing corporation and holding company.

P.T. Asuransi Jiwa Manulife Indonesia (Jakarta, Indonesia): Indonesian life insurance company.

Manulife Europe Ruckversicherungs-Aktiengesellschaft (Cologne, Germany): European property/casualty reinsurance company.

Manulife International Investment Management Limited (London): Investment management company for Manulife Financial's international funds.

Chinfon-Manulife Insurance Company Ltd. (Ho Chi Minh City, Vietnam): Vietnamese life insurance company.

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