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October 02, 2020

Manulife migrates and modernizes essential valuation application using Azure services

The financial services industry does not often embrace major change, but to Manulife, a progressive approach to IT is essential to modern business success. Manulife’s digital transformation includes moving IT resources and applications to the Microsoft Azure cloud platform, including its valuation system. For the innovative valuation system transformation project, the company’s developers used Azure services to modernize the valuation application and streamline development processes with workflows and automation that speed up time to market and reduce costs.

Manulife

“Going forward, it doesn’t make sense to be anywhere but in Azure because it makes us a more effective, efficient, and flexible development organization.”

Rohit Mistry, Infrastructure Analyst, Manulife

Global financial services provider Manulife believes that cloud-based digital transformation is an imperative for modern companies. Moving to the cloud helps them take advantage of leading-edge developments in computing. Manulife’s transformation with the Microsoft Azure cloud platform began in 2014, and its early success accelerated the company’s drive to be a cloud-first enterprise.

Beyond the business-focused benefits of scalability, elasticity, and effective cost management, Manulife’s cloud-first approach is a boost for its developers. “Being in Azure removes traditional concerns about hardware provisioning and maintenance that can slow development,” says Shamus Weiland, Global Chief Information Officer at Manulife. “With Azure, our developers can focus on delivering great solutions and maximizing customer value without the historical constraints of on-premises infrastructure.”

For more information about Manulife‘s overall digital transformation, read this story.

As part of its cloud journey, Manulife has been migrating its applications from on-premises datacenters to Azure and modernizing them for the cloud. A key part of its application upgrade efforts is its valuation system transformation (VST) project. By moving the company’s essential valuation system to Azure, Manulife has helped developers unlock new capabilities and enhance the application to make it easier for Manulife to address complex ongoing regulatory changes.

Advantages of Azure for the financial services industry

Financial services companies rely on valuation systems to assess asset and liability value for accounting, budgeting, reporting, and investment analysis. Valuation reporting plays a vital role in regulatory compliance. But regulatory frameworks vary from country to country and change over time, so valuation models must adjust to keep pace. Because Manulife operates in multiple countries in North America and Asia, it needs to comply with multiple sets of regulatory requirements. Regulatory agencies have also been demanding more detailed information and more accurate methodologies for forecasting companies’ future liabilities.

“If you need more granular forecasts, you need to come up with new methodologies, and they produce more data, so our costs for storage and computing were increasing substantially, with no end in sight,” says Jon Bradbury, who at that time was Project Leader, Valuation System Transformation at Manulife.

Manulife’s growth through acquisitions further complicated its valuation scenario, with different divisions using different valuation tools. “We were maintaining 300 individual valuation models for 21 different legal entities using 10 different types of valuation software,” says Bradbury. “It took more than 600 actuaries to maintain the quality of the output and the audits. And it was a real challenge for us any time we had to make a change or launch a new product.”

To increase efficiency, reduce costs, make it easier to accommodate future regulatory changes, and provide business insights faster, Manulife began the VST project to envision and implement a better system. The rapid growth of cloud computing provided a perfect technological solution.

“Our systems have to accommodate extreme demand spikes for computing power at the end of months and quarters,” says Bradbury. “The rest of the time, we might need 90 percent less capacity. With Azure, we get that elasticity in a very cost-effective way that’s just not possible with traditional datacenter structures.”

Being in Azure also provides data transfer and storage benefits, with the ability to transfer data in real time highly securely via the cloud. “Today, we can move a terabyte of data from Tokyo to Toronto in less than two minutes,” says Bradbury. “Before we started this project, the fastest way to move that terabyte was to put it on a hard disk and jump on a plane. And we’ve dropped the cost of storing that terabyte from dollars a month to just pennies. Now we deal with petabytes of data and trillions of data points without blinking.”

Streamlined development with Azure

As part of the VST modernization effort, developers had to shift from an on-premises or infrastructure as a service (IaaS) mindset to a platform as a service (PaaS) approach. The team also streamlined operations and generated cost efficiencies by using Azure Monitor Logs workspaces for analytics and using Azure Logic Apps and Azure DevOps for automation.

“We have everything automated and integrated now,” says Rohit Mistry, Infrastructure Analyst at Manulife. “With just a few clicks of a button, you can copy a database, and you can set up a new full-performance premium database within minutes. Those are critical functionalities. We’ve used them to go from a delivery cycle of a few months down to a few weeks, which really helps us do reporting for the business. It’s fantastic.”

The VST team uses Azure DevOps to deploy to Logic Apps using HashiCorp Terraform, forming the basis for automating processes for PaaS database workflows. With the company’s legacy ticketing system, tasks like migrating from one type of database to another could take significant time. “Now we use Azure Logic Apps to automate the workflow, approvals, monitoring, audit trails, and everything else,” says Mistry. “I would say it reduces our lead times by 80 to 90 percent. It’s completely revolutionized our mindset and our processes.”

The team particularly likes that developers with different backgrounds can comfortably work with Azure tools, due to support for industry-standard programming languages. Some tools, like Azure Pipelines, don’t necessarily require any coding. As a result, developers can create extensive automations with minimal effort. They can also easily use Azure with other open-source software in addition to Terraform, like GitLab, Chef, and Microsoft Visual Studio Code.

“Azure makes it very straightforward to incorporate open-source tools into our workflows,” says Mistry. “We use Visual Studio Code with Terraform, Azure Logic Apps, and Azure Pipelines and with databases and storage accounts. I couldn’t live without it anymore. We really appreciate the Microsoft investment in open-source compatibility with Azure.”

The VST developers spend a lot of time working with databases, and they added Azure SQL Database to make it easy to do heavy-duty, high-performance computing. “The automation and the performance scaling we get with SQL Database have been great advantages for us,” says Mistry. “We can dynamically scale our environment on a pay-per-use basis, and we don’t have to worry about one database affecting the performance of another.”

The developers also credit native interoperation between different Azure components as another big advantage. “All the parts of Azure talk to each other so nicely—everything just communicates without errors,” says Mistry. “We can set it up so easily that it really speeds our time to market. It took me just a few hours to get the first proof of concept up, and then after that, I was able to automate a large portion of our business processes within a week.”

With the Azure-based valuation solution, Manulife now seamlessly integrates information from 65 different administrative systems around the world and combines 80 different datasets that feed into the company’s critical calculations. Throughout the VST project, Manulife developers pushed the limits when it comes to the use of cloud technology for financial services applications. The migration and modernization of the valuation system was a highly complex process, and the development team’s success earned the company tax credits from the Canadian government.

For a more detailed look at Manulife’s VST project, read this technical case study.

Benefits from Azure for the business, developers, and customers

As Manulife runs its valuation system in Azure, the company has the computing power to enhance the sophisticated calculations that go into risk modeling and forecasting by running more models and testing more hypotheses. This helps improve reporting and helps the company understand its own risk levels so that it can make appropriate business decisions. The necessary data is also ready faster.

“It used to take six days to complete the valuation process, and now we do it in two days,” says Bradbury. “That gives us four more days to really dig in and understand our numbers so that we can go to market knowing that we have the best possible liability estimate. In my opinion, that’s priceless.”

By boosting risk modeling with cloud speed and scale, Manulife can now better manage actuarial, catastrophic, and financial risk across the entire organization. Because the company can provision compute capacity as needed to address changes in market events, the business is more responsive. And by strengthening data governance and privacy with built-in Azure capabilities, Manulife helps ensure compliance with global regulatory requirements.

Manulife developers value the current state of Azure and anticipate even more benefits. “Our team has accomplished so much so quickly with Azure already that we’ve set a high bar for expectations, and we continue to deliver,” says Mistry. “Going forward, it doesn’t make sense to be anywhere but in Azure because it makes us a more effective, efficient, and flexible development organization.”

The outcomes from the VST migration to Azure also position Manulife for future business success. “By modernizing with Azure, we’re now a faster, more efficient, and more flexible company that can adapt more easily to regulatory changes,” says Bradbury. “We’ve also significantly reduced our total cost of ownership for the valuation process. So, we’ve created financial benefits at the same time that we’ve future-proofed the company. With Azure, we’ve fundamentally improved the operating sustainability of our business.”

Find out more about Manulife on Twitter, Facebook, and LinkedIn.

“With Azure, our developers can focus on delivering great solutions and maximizing customer value without the historical constraints of on-premises infrastructure.”

Shamus Weiland, Global Chief Information Officer, Manulife

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