Forethought Financial Group was facing a challenge that is probably familiar to most any successful small or medium sized business: dealing with rather dramatic growth without incurring additional IT expenses. But the solution Forethought implemented this year is one that was not conceivable even a few short years ago: moving much of its IT infrastructure to a cloud service provider.

In a session at the Gartner Symposium 2012 conference, Forethought CIO Doug Jaworski explained how his company is employing cloud-based services from NTT Data to immediately cut capital expenses by 25%, with more on the way. The move has enabled him to shift his limited IT staff from operational functions to more strategic efforts aimed at delivering technology that will help the company succeed with customers.

Forethought is a financial services firm that spun out of a casket maker. It started life by financing funerals, essentially, mostly for recent widows. Eventually, the company started offering more traditional insurance and annuity products and spun off to become privately held in 2006, Jaworski said. Today, the company has 260 employees and some 36,000 independent agents selling its products. It has $6.7 billion in assets under management and more than a million policies on the books.

The company is experiencing rapid growth on its way to achieving is goal of $10 billion in assets. And, being in financial services, has to deal with many of the same complexities as larger firms, he said. Part of that complexity includes dealing with the legacy systems the company inherited when it divested from its former parent, including a mainframe.

The challenge was to keep up with the growth trajectory while keeping the organization relatively flat, including IT. “People are stretched,” Jaworski said. “And we don’t always have the skill set to do the things we want to do.”

The company’s IT department has four overarching goals to help the company deliver on its business strategy:
·   Reduce time to market for new and enhanced products
·   Scale operations and IT product rollouts, automate processes and increase agility
·   Make it easier and simpler for producers, banks and customers to do business with Forethought
·   Provide timely business intelligence, to monitor, manage and expand the business

Going to a cloud model “allowed us to focus on our future,” Jaworski said. With the exception of the mainframe, he moved all of Forethought’s server infrastructure to a private cloud hosted by NTT Data. In the process, he converted much of the company’s capital expenses for its leased servers to operating expenses – and greatly simplified his budgeting.

“My budget line items went from 26 down to one,” he said. “It’s much easier to deal with.” His capital budget immediately went down by 25% from jettisoning server leases and he’s also saving about 25% to 40% in operating costs with the managed service as compared to in-house IT management, in the process freeing up about half of his IT staff.

The conversion to the cloud was rapid. “We did it in three months’ time, which is a pretty incredible feat,” Jaworski said. The company moved several applications, including its Lawson ERP system, Microsoft Exchange, Oracle and SQL databases and several legacy applications.

Another hosting provider previously housed forethought’s servers. NTT Data moved all of its data without ever setting foot in the previous provider’s data center, said Douglas White, VP of Cloud Services for NTT Data. “They wouldn’t let us in,” he said, noting the final cutover happened over the course of a single weekend.

Another benefit from the cloud environment is improved business continuity and disaster recovery. NTT Data has dual data centers in Virginia and California and constantly replicates Forethought’s data between the two. Forethought hooks in via its existing MPLS network while its agents connect via the Internet.

Down the line, Jaworski expects additional benefits from the cloud environment, as it migrates its Lawson and Exchange environments to fully cloud-based “as a service” implementations. It will also benefit from the on-demand nature of the cloud service, with access to skills and capacity as required.

In fact, that benefit will play out soon, because Forethought is in the process of acquiring another organization. “We’ll just scale up the environments we already have,” Jaworski says. “We don’t have to go buy a bunch more infrastructure. We can request it and turn on that afternoon.” Additionally, once the company’s mainframe lease runs out, that, too, will be moved into the cloud, freeing up additional IT resources.

NTT Data’s White noted Forethought is getting the full benefit from cloud because it looks at the technology in a holistic manner. Companies where department heads go around IT and buy cloud services on a credit card won’t reap those benefits and actually create risks in terms of compliance.

“Don’t go down the cloud path without out a strategy,” White said. “You’ll never get where you’re trying to go.”

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