Skandia’s CIO drops ‘lift and shift’ to spur consolidation

Skandia consists of several different companies, of which insurance and banking are the two largest. The insurance business has old roots: the pension company was started as early as 1855, while the bank only started in 1994, yet it was first as a purely telephone bank.

In light of this, the technical basis on which each company rests is very different.

“On the insurance side, we have mainframe technology, while the bank relies on newer, Windows-based technology and basically has no legacy,” says Skandia CIO Johan Clausén. “So they are different situations.”

Right now, there is also a major change initiative taking place to consolidate and gradually transfer to standard systems—a process that’s taking a very long time. But the challenge with the older systems is not the technology or the systems themselves, he notes.

“The mainframe is very reliable and with new integration solutions such as z/OS Connect, we have good conditions to solve the integration needs we have,” he says. “The challenge, rather, is the amount of systems and the complexity with the number of systems and business logic.”

As part of the ongoing change, the business system Lumera, formerly Itello, which is used by many in the financial industry, is also being implemented.

“We will run the installation on prem in our own data centers,” says Clausén. “It’s a system that’s largely customized to the customer. At the moment, we don’t see any big gains from having it in the cloud the way the system is built. And another reason for that is the Schrems II judgment and GDPR where, among other things, it’s about the risk of putting it in the cloud and then maybe being forced to bring it home. It can be challenging to put system solutions in the cloud, but it’s probably more challenging to bring it home from the cloud.”

Because of this, Skandia has no plans to make an entire move toward the cloud despite having a multicloud strategy using the public cloud, private cloud, and on prem depending on what they think is appropriate.

“What’s important to us is to make informed decisions based on use and which information is to be processed,” he says. “We’re in an industry of trust. That’s important to remember.”

Not just changing technology

Above all, the benefit of reducing complexity is it simplifies business processes, digitization, and it takes less time to get new functionality.

“The important thing for me is the business transfer we make in a shift like this and not just that we migrate from one system solution to another,” says Clausén. “I constantly say no to suppliers who want us to do a so-called lift and shift, where we just go from one technology to another. It doesn’t produce the effects we want. When we build new, we should think about how we want the business to look in the future, not just build the same.”

Even before the pandemic, Skandia had switched to working agile according to the Safe framework, which has created completely different conditions for IT and operations to go hand in hand, according to Clausén.

“It’s about involvement and inclusion,” he says. “When everyone works together, it’s easier to influence and explain to each other where the biggest advantage of agile working methods lies; that we have common priorities everyone knows about and is involved in, and that there are no priorities on the side.”

The IT side is growing

With the agile way of working, resources that previously belonged to projects have been moved into IT, which has meant that during his seven years as CIO, the unit has grown to nearly 600 employees, nearly a quarter of the company’s total 2,300 employees.

And the unit still has a great need for new employees. Last year, over 80 people were recruited, and more growth is the aim for the near future as well. For Skandia’s part, the uncertain economic times can even be an advantage when it comes to attracting talent.

“Everyone is affected by the recession, but we are in an industry that has fared relatively well compared to others,” he says. “The insurance side has a long-term perspective like few other industries, and the bank has achieved good results. So my feeling is we’re in a good position.”

Sustainability in focus

Consolidation can often be seen as a way to more sustainable outcomes with greater energy efficiency—something not lost on Clausén.

For a couple of years, Skandia, and Clausén in particular, has started to include sustainability as a priority when making IT decisions. Among other things, he’s been involved in starting the CIOCO2 initiative because he sees there’s a lot to do on the IT side.

“Too little thought has been given to sustainability in IT and it’s going too slowly,” he says. “After my years on the supplier side, I strongly believe in driving development by setting requirements in procurements.”

He points out that if a customer goes to the supplier with requests for how a service should be designed, nothing happens unless the supplier believes it’s possible to make a profit in the near future. But when the same thing comes from 20 customers, it becomes difficult for the supplier not to act.

But if there’s sustainability criteria in a procurement and a supplier doesn’t meet them as well as others, it doesn’t necessarily signal an end to that partnership.

“Instead, you can set demands that within a certain time they must have reached a required level,” he says. “In this way, you push on and raise the general level.”

How suppliers respond when demands on sustainability are made, however, can vary widely.  

“There’s no one who doesn’t think it’s important, but some have difficulty delivering what we want because their company has not progressed far enough,” says Clausén.

CIO, Cloud Management, Digital Transformation, IT Leadership