Old Mutual`s centralised IT division could ultimately be a revenue generator too WHEN Old Mutual decided around two years ago to centralise all of its administration and technology functions into a single division, Old Mutual Service Technology and Administration (OMSTA), the aim was to achieve greater efficiency and cost savings.

But the IP excellence of the division could someday see it becoming a serious revenue generator too.

Iain Williamson, senior manager, Product Platforms and Strategy, OMSTA Technology, says the group is still consolidating all its development activities into a centralised area. It currently services the Old Mutual group of companies, including Skandia and Selestia in the UK.

"We are looking to expand our services to the Old Mutual offshore group of companies over the next few years. However, we may go third-party ultimately," he says.

"The centralisation of IT supply is an intent, which is still being executed. The decision was taken as part of the overall decision to centralise all administration and technology functions into OMSTA. OMSTA, in turn, was established to become a centre of excellence that is operated on a commercial basis, charging for its services and being held to service level agreements by internal customers," Williamson says.

He says the main benefits to the business have been in scale and efficiency.

With around 350 developers based at the Cape Town office, OMSTA also offered significant savings over software development costs abroad. With the strengthening of the rand, the saving is not quite as substantial as it once was, says Williamson.

"Historically, we were looking at 20% to 30% saving over development costs in the US or UK," he says. While the rand-dollar exchange has closed this gap, South Africa still offers world-class IP at a good price. " And now OMSTA has built a track record of reliability, so clients continue to use the local services, even though the savings are not as significant as they were," says Williamson.

POWERING A UK RETIREMENT SOLUTION

OMSTA`s latest release was the software for a new retirement solution launched to the British market this month via Selestia, the group`s fast-growing fund supermarket business in the United Kingdom.

Built from scratch by OMSTA`s Selestia team in Cape Town, the Selestia Collective Retirement Account (SCRA) provides access to a range of investment propositions from 63 fund managers as well as access to a leading `manager of managers` SEI. Investments can be made into the SCRA from a number of sources, including individual, employer and third party contributions. The transfer of existing pensions from other schemes is also available. Advisors are able to use the Selestia site to construct portfolios to suit client needs, produce client-specific illustrations, submit applications online and download literature including application forms and key feature terms and conditions documents.

The solution has none of the legacy issues of some of the older, off-the-shelf products currently available in the UK, says Selestia. Instead, it provides a clear and transparent retirement solution, with additional adviser choice for clients entering the long-term savings arena.

Bill Vasilieff, Selestia`s marketing director, says: "With the arrival of open architecture platforms in the pensions market, we believe the role of fund supermarkets will be increasingly important, with other more niche retirement vehicles such as self-invested pension plans taking a backseat."

"The launch of the SCRA has been an enormous development for us and is testament to hard work, team effort and innovation in both Cape Town and St Albans," he said.

Williamson adds that keeping the development division in Cape Town allows the whole group to leverage off a well-established product administration capability in the city. "The technology grew up in Cape Town, and we then simply cloned it to support the Selestia business in UK. We are capable of architecting the solution end-to-end at a significant saving," he says.