CASE STUDY:

Modernization of NTUC Income?

1.) What were the problems faced by Income in this case? How were the problems solved by the

new digital system?

Income’s insurance processes were very tedious and paper-based. This resulted to humongous

Income also experienced frequent breakdown of the HP 3000 mainframe which hosted the core

insurance applications and the accounting and management information systems. In addition to this,

HP 3000 back-up system only allowed restoration to the previous day’s back-up data. Hardware

failures caused six days of complete downtime. COBOL programs also encountered frequent

breakdowns that halted the systems and caused temporary interruptions. At the same time,

development of new products using the COBOL is quite cumbersome and took weeks, even

months, to accomplish. They also lost opportunities to cross-sell because transaction processing for

policy underwriting was still a batch process and information is not available to agents and advisors

in real-time. Through the new digital systems, these problems were addressed. The paper-based

insurance processes were replaced by a paperless platform. Under the new system, all documents

are scanned and stored on “trusted” storage devices. Frequent breakdowns were addressed by the

high-availability platform. Multiple servers are hosted and connected to more communication lines

that are “load balanced”. The new system also addressed downtimes due to breakdowns by its hot

back-up disaster-recovery centers. The new digital system also addressed the slow development of

new products by COBOL through the straight through processing workflow capabilities of the new

system.

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2.) What types of information systems and business processes were used by Income before

migrating to the fully digital system?

The insurance process of Income was very manual and paper/file intensive. Filled-up application

forms of clients were sent by agents through courier. Their collection schedule causes delays of two

to three days. The Office Services log, sort, and send documents to underwriting. Proposals were

allocated to staff randomly. No system was in place for proper assignment of tasks per staff.

Voluminous documents are manually sorted and stored by a number of staff at their warehouse.

Since there was no clear document management system, retrieval of documents take days to

accomplish. Income also made use of HP 3000 mainframes which were very unreliable due to

frequent breakdowns that resulted to downtime, decreased productivity and wasted manpower

hours. COBOL programs were also used which also encountered technical failures. At the same

time, COBOL programs were very slow in developing new products for the company resulting to

lost sale opportunities.

3.) Describe the Information systems and IT infrastructure at Income after migrating to the fully

digital system.

According to James Kang, CIO of Income, the Java based eBao LifeSystem from eBao Technology

is very customer-centric. It provided seamless integration with imaging and bar code technology. It

also contains a product definition module that supports new products, new channels and changes in

business process. Data migration of Income’s individual and group businesses was successfully

implemented and customized. The new system was operational on high-quality platform with

multiple servers and communication lines. The new system also revamped business continuity and

the company’s disaster recovery plan. A real-time hot back-up disaster recovery center was

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implemented. Business processes went from paper intensive to paperless through digital storage

and records. Many users can access the system at one time, any time, and anywhere.

4.) What benefits did Income reap from the new system?

The robust architecture of the servers minimized downtime occurrence. This is made possible with

the use of two or more servers connected by two or more communication lines. Income also

reduced and eventually eliminated the use of paper. Under the new system, all documents were

scanned and stored on “trusted” storage devices – secured, reliable digital vaults that enabled strict

compliance with stringent statutory requirements. Staff members also enjoyed faster access to

information. With the use of the straight through processing workflow capabilities of the new

system, Income saved as much as 50 percent on time and costs in processing policies. Time in

designing and launching new products were also reduced from weeks to days using the table-

driven-rule-based product-definition module.

5.) How well is Income prepared for the future? Are the problems described in the case likely to

be repeated?

In the insurance industry, information systems are very important in ensuring product and services’

competitiveness. Customer queries should be addressed accurately and promptly. Products should

be constantly improved and new designs should always be made available. With the new

information system, Income is now equipped to face the challenges of the industry. To ensure the

success of the new system, proper implementation and control should be done. Continuous training

should be given to the staff to ensure proper use of the system and to maximize the potential of the

system. The system should also be continuously improved through the proper management of

feedback from users. Upgrades should also be done periodically to cope with the changes in the

demand of the industry and the market.

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