Systems standardisation at PGGM

17 June 2008

PGGM’s administrative efficiency was impaired by its complex mainframe environment, so it standardised on a .NET service-oriented architecture.

PGGM is the second-largest pension fund manager in the Netherlands, administering pensions for two million former employees of the Dutch healthcare and social work sectors. Rigorous checking of personal details, status and salaries of all subscribers is essential in order to calculate the best pension for customers’ needs and ensure timely and correct payments.

PGGM’s administrative efficiency was impaired by its complex mainframe environment. Different skill sets were needed for the ageing Cobol, mainframe and Unix applications, and information sharing was difficult. Managing and maintaining multiple legacy platforms was holding back new initiatives and keeping operating costs high.

“We had to create all kinds of interconnections between the old and new systems, and to do a lot of integration work that was costly in terms of time and manpower,” says Hans van der Zwaag, IT operations manager at PGGM. “It was a lot of work to keep things running – a real test of endurance.”

With the pensions industry becoming more open, PGGM needed to ensure that it could compete in the future by implementing flexible and open systems that could more easily connect to employers and business partners outside the organisation. It decided to replace its legacy systems with a unified and integrated nextgeneration pension fund information system based on a .NET service-oriented architecture (SOA) and industry-standard infrastructure. It chose HP to handle the migration from its ICL/Fujitsu mainframe and Sun platforms to a new platform.

PGGM has replaced 90 per cent of its old systems, in a project that entailed the transformation of some 35,000 function points and the creation of 2.5 million lines of new .NET code. To achieve this, PGGM needed an accelerator that would allow it to build faster, with better quality and at a reduced cost. It chose a flexible sourcing solution from HP, and outsourced part of the application design and system testing to the HP Global Delivery India Centre.

“We have been very aggressive in moving toward an HP BladeSystem solution,” says van der Zwaag. “We are now replacing our mainframe and some 250 physical HP servers of different models.” PGGM uses HP BladeSystem c-Class for its applications, and is virtualising the environment with VMware ESX Server. It has standardised on HP Integrity server for its database platform. Its primary database applications run on Microsoft Windows Datacentre Edition for 64-bit operation, SQL Server 2000, and SQL Server 2005 database management software running on two HP Integrity servers.

“Integrity servers with Windows give us great performance for memory-intensive databases,” says van der Zwaag. “The platform scales beautifully, so we can consolidate other database instances later if necessary.”

The higher quality of information generated by the new system has resulted in better decision making by PGGM staff, and a more efficient service for customers. The company can connect more easily with the outside world and compete more effectively. Integrating the systems has increased efficiency, because there is no need to transfer data between different systems. The new environment has a lower cost level, and achieves over 99.5 per cent accuracy in paying the correct pensions at the correct times.

Sensitive information is protected with HP Data Protector software. This enables PGGM to make a full back-up of all servers used to administer investments and pay pensions. Every night, it makes incremental two-terabyte back-ups for user data, including applications such as PeopleSoft, Coda and Tridon. PGGM also uses online back-up and advanced backup to disk.

In 2007, PGGM’s total IT costs dropped by almost 40 per cent compared to 2002, and they are expected to drop further. “Our budget for 2007 was around €33 million less than the cost level in 2002,” says van der Zwaag. “After completing our next-generation pension fund information system with HP, this could drop even further, to half of what it was.”

This article first appeared in the Summer 2008 issue of Finance on Windows magazine.