1. Please read the case study that starts on the next page. 2. Answer all 5 questions below.
1. What were the problems faced by Income in this case? How were the problems resolved by the new digital system?
2. What types of information systems, communication and business processes were used by Income before migrating to the fully digital system?
3. Describe the Information systems and IT infrastructure at Income after migrating to the fully digital system?
4. What communication and information systems benefits did Income reap from the new system?
5. How well is Income prepared for the future? Are the problems described in the case likely to be repeated?
Chapter 2 Global E-Business and Collaboration
M o d e r n i z a t i o n of NTUC Income
CASE STUDY TUC Income (Income), one of Singapore's largest insurers, has over 1.8 million policy holders with total assets of S$21.3 billion. The insurer employs about 3,400 insurance advisors and 1,200 office staff, with the majority located across an eight-branch network. On June 1, 2003, Income succeeded in the migration of its legacy insurance systems to a digital webbased system. The Herculean task required not only the upgrading of hardware and applications, it also required Income to streamline its decade-old business processes and IT practices. Up until a few years ago, Income's insurance processes were very tedious and paper-based. The entire insurance process started with customers meeting an agent, filling in forms and submitting documents. The agent would then submit the forms at branches, from where they were sent by couriers to the Office Services department. The collection schedule could introduce delays of two to three days. Office Services would log documents, sort them, and then send them to departments for underwriting. Proposals were allocated to underwriting staff, mostly randomly. Accepted proposals were sent for printing at the Computer Services department and then redistributed. For storage, all original documents were packed and sent to warehouses where, over two to three days, a total of seven staff would log and store the documents. In all, paper policies comprising 45 million documents were stored in over 16,000 cartons at three warehouses. Whenever a document needed to be retrieved, it would take about two days to locate and ship it by courier. Refiling would again take about two days. In 2002, despite periodic investments to upgrade the HP 3000 mainframe that hosted the core insurance applications as well as the accounting and management information* systems, it still frequently broke down. According to James Kang, CIO at Income, "The system breakdowns were a real nightmare. Work would stop and the staff had to choose either data reconciliation, or backup. However, the HP 3000 backup system allowed restoration only up to the previous day's backup data. If the daily backup was not completed at the end of the day, the affected day's data would be lost, and costly and
tedious reconciliation would be needed to bring the data up-to-date." In one of the hardware crashes, reconciliation took several months to restore the data loss. In all, the HP 3000 system experienced a total of three major hardware failures, resulting in a total of six days of complete downtime. That was not enough. The COBOL programs that were developed in the early 1980s and maintained by Income's in-house IT team also broke multiple times, halted the systems, and caused temporary interruptions. In addition, the IT team found developing new products in COBOL to be quite cumbersome and the time taken to launch new products ranged from a few weeks to months. At the same time, transaction processing for policy underwriting was still a batch process and information was not available to agents and advisors in real-time. As a result, when staff processed a new customer application for motor insurance, they did not know if...