Zurich Financial Services Supports Market Leadership Strategy with CSC's Application Outsourcing Services

Founded in 1872, Zurich Financial Services is one of the world’s largest insurance-based financial services providers. It has a global network of subsidiaries and offices, mainly in North America, Europe, Asia Pacific and Latin America. Its 60,000 employees serve customers in more than 170 countries.

For most of its history, Zurich has delivered global success as a collection of independent business units. In fact, more than one in 10 of its worldwide staff was involved in managing and maintaining almost 4,000 different software applications. Zurich also employed more than 30 chief information officers worldwide, and the company’s independent business unit model was getting out of step with the competitive demands of the industry.

Creating a Global IT Infrastructure

“There was no groupwide IT strategy,” said Michael Paravicini, Zurich’s chief information technology officer. “We had about 7,000 IT employees, but there was no synergy because we weren’t able to leverage all the intellectual capital we had. If you looked at our IT spend, a large percentage of the funds went merely to maintain the systems – to keep the lights on. We didn’t have much to spend on developing new functionality.”

The company developed a new global business model and created a centrally coordinated global IT infrastructure. Central to the IT strategy was a reevaluation of the way the company managed and maintained its computer applications. “We asked ourselves why we needed 20 different claim systems and 20 different underwriting systems,” Paravicini said. “We had to have much higher reuse of our applications.”

That imperative drove Zurich’s decision to outsource applications development and support across the United States, United Kingdom, Switzerland and Germany. In July 2004, Zurich announced a $1.3 billion, seven-year applications outsourcing contract with CSC – one of the world’s biggest insurance IT deals.

Introducing Innovative Solutions

Although Zurich chose to retain key resources in-house — such as business analysts and system architects — one part of the agreement was the transfer of around 1,600 staff to CSC. This was achieved within four months of contract signing.

Productivity is on course to achieve the contracted improvement, mainly due to deployment of a Global Process Framework, and the principles and processes for software development adopted by CSC — Software Engineering Institute’s (SEI) Capability Maturity Model (CMMI) Level 3.

Although cost saving was not a primary focus, reductions of around one-fifth in IT budgets were planned, and this is being achieved. Operational costs will be down by 20 percent over the life of the contract, due to IT platform consolidation and rationalization of IT processes. Maintenance costs are now fixed price under the contract, delivering more than 20 percent savings to Zurich. The development flexibility sought by Paravicini is also emerging, allowing Zurich to respond to a surge in business demand by providing IT services on a scale that its decentralized operations would have been unable to achieve.

Efficient and High Quality Processes

The program is helping Zurich rise to its business growth challenge in all countries covered by the contract. When Farmers Insurance Group decided to expand its market from 39 Western states to the whole U.S., for example, it needed to enhance its back-office systems and processes, and introduce three new applications fast. CSC supported Farmers to stand up its state-of-the-art agent call center trademarked “ServicePoint” on time and budget with high quality. ServicePoint will enable Farmers to greatly improve the efficiency of service operations and raise the customer satisfaction of Farmers’ agents and customers.

Zurich’s UK operation has been able to respond to its local business drivers and successfully reorganize its Life Insurance business by separating its distribution arm from the product provider/manufacturing arm and launch a distribution business called Openwork in 2005.

Paravicini expects that the achievements will continue. “We have seen good advances in the way that efficient applications management can support our business and contribute to its profitability. It will contribute in future to real global transformation and provide the best platform for our business goals.”

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