Canadian Automobile Association South Central Ontario (CAA SCO) is probably best known for providing traditional roadside service to motorists. However, a considerable portion of its revenue is derived from its travel agency company and from its insurance company, which provides full home and auto insurance products. With 1.83 million members, CAA SCO is the largest of the CAA's nine organizations in Canada and covers most of Ontario.
Historically, CAA SCO looked upon information technology as just a 'utility' service that supported its roadside, travel and insurance operations. Accordingly, CAA SCO relied entirely on its application vendors to provide this service.
As new systems were acquired over the years, each was installed in a separate data centre, either at the system vendor's location or at a third-party data centre location. Such was the case with the ERP system used for member services and for dispatching and managing their fleet of roadside repair vehicles; their insurance management system; their public website; and the point-of-sale travel system used to manage travel product sales and agent commissions and to house all the travel package and flight information.
"New computing systems acquired by CAA SCO over the past several decades were spread out across four physically disparate data centres," says Jay Woo, CAA SCO's Chief Operating Officer. "This was very inefficient and left us with four facilities to manage, four sets of rules and four sets of costs." Woo goes on to describe other problems that resulted from this legacy approach. For example, with the utility model, a significant portion of the 60 CAA SCO IT staff were continually tied up keeping the infrastructure and end-user environment running smoothly. This prevented IT staff from working on strategic initiatives for the organization.
"Many of the IT team members were de-motivated because of the mundane day-to-day maintenance work that they were doing; and to the business units, IT was just a cost and not a source of real opportunity," says Woo, who was brought onboard to spearhead an initiative to transform the company's IT environment and leverage IT to drive new business opportunities. This would entail changing IT from a maintenance environment into a development shop and building new business applications.
The company felt that the insurance business had more potential. So, one of the first among many initiatives was to build a data warehouse - a central repository for the company's wealth of member data, such as demographics and claims history. Business intelligence technology could then be used to turn this into actionable information that the insurance business could use to set premiums and predict the source of losses, for example.
"We knew we wouldn't be able to build a data warehouse with four data centres, however, so we decided to consolidate all four business systems into a single, integrated data centre operation," says Woo, explaining that with multiple data centres, a single, centralized data warehouse would have required that data be continually retrieved from four different locations through four firewalls. This would have security and performance implications and would have required costly network circuits.
Rather than setting up a new, consolidated data centre in-house, CAA SCO chose to outsource its requirements to a third-party data centre services provider for a number of reasons, including: the complexity, cost and special skills required to build a secure and resilient enterprise-class data centre facility; not having the relationships or buying power with the telcos to arrange the necessary networking and Internet connectivity cost effectively; realization that a second complete infrastructure would need to be set up in another location for backup and disaster recovery purposes; not wanting IT staff tied up with ongoing system management work; and a preference for operational expenses over capital expenses. Accordingly, CAA SCO set out to find a suitable data centre services partner.
After conducting an RFP amongst major players in the data centre services market, including several incumbent providers, a selection committee at CAA SCO consisting of IT management and business unit heads chose to sign a co-location agreement with Q9 to host CAA SCO's mission-critical infrastructure and business applications.
"To be frank, Q9 wasn't the least expensive, but they surpassed the other bidders in many ways," says Woo. "For example, they already have a fully operational, mirrored secondary data centre, which means that if the primary data centre ever goes down, our business will automatically switch to the recovery site almost instantaneously, and it will be transparent to users." Security was also a key consideration for CAA SCO, and by visiting all the bidders' facilities, they quickly discovered that Q9 data centres were the only ones with adequate security guard coverage and full biometric protection.
Under the terms of the co-location agreement, CAA SCO consolidated its IT infrastructure from four data centres into a single Q9 data centre, with failover infrastructure at a second Q9 facility. In addition to secure physical space, HVAC and fire protection, Q9 is providing CAA SCO with highly reliable electrical power, network and Internet connectivity bandwidth, and 7x24 monitoring to ensure the highest levels of performance and reliability for its business systems.
On the roadside assistance side of the business, CAA is a 7x24 operation, so there can be no downtime for the mission-critical system supporting its roadside services business. As a result, the actual moving of CAA SCO's equipment from its four data centres to the Q9 data centre took place at 2:00 a.m. in the morning on a weekend, supported by special manual processes to ensure service continuity. But this was the simple part. The success of the initiative was really rooted in several months of upfront effort by multiple teams from both organizations to design an entirely new underlying network infrastructure from the ground up to support CAA SCO's consolidated data centre at Q9.
"Q9's network engineering team was top notch," says Woo. "They knew things inside out and how to work effectively with the different telcos; and when Q9 said something would be done by a particular date, it was often done a day or two ahead of schedule. The Q9 team worked very well with our own internal team, who were very knowledgeable and led the overall design and final implementation."
Along with optimizing its entire data centre environment, co-locating key business systems at Q9 is allowing CAA SCO to achieve numerous additional goals established as part of its IT transformation:
1. Increase system reliability. Prior to the data centre consolidation at Q9, CAA SCO's insurance management system was going down three to four times per month due to data centre-related issues. This not only prevented the company from properly servicing claims and providing good customer service, but also required a significant amount of effort by IT staff to fix corrupted data resulting from each system crash.
"It's been a real 'wow' for our company that we haven't had a single system failure in the six months since we went live at Q9 - our insurance business unit is happy beyond words," says Woo.
2. Improve disaster recovery posture. Instead of having to build different disaster recovery plans for four data centres, which is highly inefficient and expensive, CAA SCO now has a single data centre mirrored to a geographically separate secondary site for automated failover and business continuity.
3. Reduce costs. The arrangement with Q9 is allowing CAA SCO to respond positively to the constant pressure to do more with the same or less IT budget. "By consolidating our four data centres into a single infrastructure at Q9, we are experiencing a significant reduction in bottom-line expenses, which is freeing up cash to do other things," says Woo.
4. Seize new business opportunities. By bringing all its IT assets together into a single, integrated environment, CAA SCO was able to proceed with its data warehousing and business intelligence project, allowing the firm to tap into the wealth of data residing across all its business units. The integration also enabled numerous other business development initiatives associated with their business strategy, such as being able to transact and move data easily between businesses, for example. CAA SCO also plans to launch a new online channel so that insurance and travel customers can conduct real-time business transactions such as obtaining a quote, buying a policy or buying travel products through their website.
"To date, our web presence has just been a strictly static presentation of 'brochureware', with only a few online transaction capabilities, but by having a full online channel, we can now address a huge segment of the market we've been missing out on - the 30 to 40 year olds who rarely go into stores anymore, but rather choose to do things online," explains Woo. "We couldn't achieve any of this if we were still operating with multiple data centres or without the system reliability that comes from dealing with Q9."
5. Retool IT staff. The 40 per cent of headcount previously tied up doing system maintenance work were reallocated to support application development projects that are adding strategic value to the company. Some maintenance roles have been replaced by system architect and developer roles, which can lead and contribute to the data warehousing project.
6. Enable future business growth. Instead of adding another data centre each time a new system is acquired or built, the CAA SCO IT environment is now vertically scalable - new systems can be integrated into the existing data centre at Q9, often without having to add additional infrastructure. Any required additional space, power, HVAC or bandwidth is easily provisioned at a cost that is much lower than what CAA SCO was paying previously.
"With Q9's help, we have truly realized the notion of 'IT driving strategic business value', along with reducing costs, bringing IT and business together, building a reliable, future-proof infrastructure platform and eliminating islands of computing," concludes Woo.
