IAG sinks New Zealand IT project

IAG New Zealand's Endeavour insurance system, which was to have handled the needs of customers of both the State Insurance and NZI brands, has finally been abandoned.

The project is based on Sirius, a UK package, but involved building new systems virtually from scratch. It has been repeatedly delayed and by the company's own admission overran budgets, but has previously won several reprieves.

The company has now had another hard look at "optimisation" strategies, says IAG NZ chief executive David Smith, and sees adoption of Insurance Australia Group's (IAG) Huon Bonus system as the more effective course for the State side of the business.

NZI customers will continue for now on the company's existing pre-merger IT system, Polisy, with a few enhancements in functionality promised.

Smith puts most of the blame for Endeavour's eventual capsize on the very different environment created by the merger, which increasingly integrated the companies through 2002. However, insurance industry sources had already been warning it was a complex and risky undertaking, likely to come to grief.

Industry sources say delays in the continuing development of Sirius in the UK is also likely to have been a factor in the Endeavour delays. IT chief Catherine Rusby acknowledged in May this year that parts of the Endeavour system were being developed in Sirius's old Visual Basic code, pending a move to .Net.

A source, who is now out of the insurance industry but offered inside comment on the project over the years and always predicted its demise, says the Huon solution may take a little time to implement "but the Australians have been running it for four years and there's plenty of local knowledge there".

If the two companies had been allowed to develop their systems separately and "piecemeal" towards an eventual convergence, the unified system "would have been running by now and would have cost about $7 million", he says. He estimates around $40-50 million has gone into the failed "big bang" Endeavour project. "It's not quite an Incis [the failed police computer system of the 90s] but it's almost in the same league."

Smith refuses to discuss how much has been spent on the abortive development, but it almost certainly runs well into tens of millions of dollars. Not all the development effort has been lost, he insists. "It wasn't just IT. There was substantial business re-engineering work done, and we should be able to recycle some of that," he says. But none of the specifically IT work will be reusable.

Project Endeavour also entailed scrapping a regional structure and replacing it with a centralised one (shrinking staff numbers by 20%), and culling the number of products the company sold from about 300 to fewer than 20.

Despite his hopes for using the results of the process re-engineering, Smith acknowledges that the Huon system is "very different" from the planned Endeavour IT architecture and will require further rethinking of those processes; a more cost-efficient alternative to trying to bend the Australian package to fit the Endeavour environment.

It will be 12-18 months before that work is completed and the State customers have a functioning new insurance system, he says, but the current system is still functioning and is continuing on its own enhancement track.

When IAG NZ was still trying to see Endeavour through, IT chief Catherine Rusby acknowledged that there was a parallel task in continuing to enhance the existing systems which, on the original schedule, should have been discarded during 2003 at the latest.

Computerworld approached Rusby last week to ask whether she thought Endeavour's termination was premature and the project could still have carried on, but she declined to comment.