Legal & General’s mainframe modernisation uses Microsoft Azure to bring speed, agility and innovation

“Like any other insurance company, we’ve optimised the use of our existing infrastructure assets for a long time,” states Tariq Surty, IT & Transformation Director – Pensions at Legal & General. “With Microsoft and Azure, we’ve now moved to an op-ex model, reducing technical debt and are modernising. Our focus can now shift to innovation.”
 

A desire for greater agility and innovation

Legal & General’s commitment to the digital transformation of its operations for the benefit of all its customers and stakeholders is reflected in its desire to become a technology business that is an expert in Insurance. 
 

This statement represents a huge transformation. Not least because some of the solutions underpinning its business operations were 40 years old or more. The cyber-security risk associated with out-of-date technologies was building up. The existing model of a managed data centre and a central group technology service was operating with four change cycles per year. The need to balance competing business and technical priorities was a brake on innovation.  
 

“In the past, the business units were competing for priority within the four release cycles per year,” says Lee Taylor, Technology Director – LGRI at Legal & General. “The needs of the business weren’t being focused on at the scale or intensity we needed.” 
 

“We had enormous plans to upgrade the applications across the business and there was no way we could do that without tackling some of the more fundamental issues,” agrees Morgan Spillane, Chief Technology & Data Officer – L&G Retail at Legal & General. “We were facing a significant amount of technical debt and a cost of change challenge. The lack of agility hampered our business. It made sense to look at developing a cloud strategy with an agile development culture and APIs and microservices at its heart.”
 

Choosing Microsoft

Senior members of the Legal & General team attended an executive briefing meeting in Redmond hosted by Microsoft, in addition to a similar event hosted by another major cloud provider.  
 

“We wanted to build out a proper DevSecOps practice – but we started with absolutely nothing,” explains Morgan Spillane. “We needed a partner who would be prepared to invest in us and help us build that competency and infrastructure. We felt Microsoft was in a better position to help us do that.” 
 

Although Legal & General’s goals were clear, the approach it decided to take to mainframe modernisation was more nuanced. It opted for a multi-faceted approach that gave individual projects the freedom to employ different approaches to retire, migrate or retain mainframe applications, tailored to the specific needs of the project, application, and line of business.
 

Reinventing a legacy application

Like many venerable financial and insurance institutions, Legal & General was carrying a significant amount of technical debt. Legal & General’s oldest application, Conventional Life, was switched on in September 1963. Since then, with a change cycle of four releases per year, it had ballooned to five million lines of code.  
 

In 2018, the Phoenix SCRUM team began work on modernising the application via a complete rebuild using microservices on Microsoft Azure. The first build went into production in 2019, with customers moved across to the new Phoenix build on Microsoft Azure gradually as additional functionality has been delivered. 
 

“In 2022, we completed 40 releases on the new Phoenix application,” reports Morgan Spillane. “For those people who depend on that application, it is transformative.”  
 

“Now with a release schedule of one per week, the Phoenix team is demonstrating the alternative to waiting for upgrades to these monolithic applications,” Morgan Spillane continues. “We can deliver change on an ongoing basis, as and when required, with little noise or error.” 
 

Of the 3.9 million policies originally on Conventional Life, the last 700 were migrated to Phoenix in mid-May. With the final functionalities being scheduled for release this year, the original application is set to be retired on its sixtieth birthday. Having demonstrated its value to the business, the Phoenix team has been rebranded: Phoenix Forever will continue to deliver business value in this new, agile way.

Enabling innovation and freedom using Microservices

Legal & General operates the second-largest admin and payroll service in the UK, just behind the NHS, serving 1.7 million customers on a monthly basis. The administration is based on an aging, internally developed application for Bulk Purchase Annuity Administration. 
 

Over 30 years, this evolved into a complex Asset & Liability Payment Service (ALPS) platform with over two million lines of code. ALPS served the full administration and payroll for deferred and in-payment annuitants across Legal & General’s institutional and retail pension business. However, some of the legacy technologies on which this application depended were out of support, creating risk and complexity. 
 

“It was becoming cumbersome and difficult to manage,” explains Lee Taylor. “We didn’t have the flexibility to support new schemes, new customer requirements, or scale in the way we needed to support business growth. Instead of this kind of monolithic application, we wanted to evolve and transform from an application to an ecosystem.” 
 

In Phase 1, the ALPS application stack was fully updated from Java 6 to Java 11 and migrated from WebSphere Application Server on z/OS to Open Liberty in Azure Kubernetes Service (AKS) orchestrated containers in Azure. Data services were migrated from Db2 z/OS to Azure SQL. The team adopted DevOps best practice, with fully automated release cycles via a new continuous integration / continuous development (CI/CD) pipeline.   
 

In close partnership with Microsoft, the team selected vFunction AI-based tooling to re-architect the applications and decompose them into loosely coupled microservices, fully exploiting the AKS orchestration to benefit from the full advantages and cost efficiencies of the Microsoft Azure cloud. 
 

Lee Taylor says, “By breaking it into microservices, we have the freedom to swap in emerging and industry-leading technologies at any time. We could, for example, breakout benefit calculations and buy in a benefit calcs service.” 
 

After a year in development in the Azure cloud, the new service will go live in June 2023. “We have greater operational resilience and vastly greater flexibility,” Lee Taylor adds. “As we grow, we can now scale the solution to support our UK and US business and globally.” 
 

Maintaining mainframe applications where appropriate 

In its mainframe modernisation project, the retail retirement business unit took a different approach again. Instead of migrating all production environments to Azure, it chose to use Azure to augment and extend its existing mainframe. 
 

“Our retail retirement business is growing really fast. Since auto-enrolment kicked in as a regulatory requirement, our member book has grown from 400,000 to over five million,” explains Tariq Surty. “We need to be more efficient whilst developing the customer experience so we can onboard and retain those customers. We have a requirement to scale and to modernise.” 
 

A different monolithic, legacy application was in play here: Future Product Framework (FPF), a policy administration suite hosted on an IBM mainframe since 1997.  
 

Tariq Surty explains, “We wanted to stay on the mainframe, but we wanted to improve the three Qs when it came to change on the mainframe: quality, quantity, and quickness. To do that, we needed to modernise the whole software development lifecycle around that application.”
 

Moving to a DevSecOps model 

“When you start to move to a DevSecOps model, one of the key requirements is immutable environments so we can make changes more concurrently and test them earlier,” states Tariq Surty. “We had a race with a number of hyper scalers to see how we could achieve this and the best solution was running a mainframe operating system on Linux in Microsoft Azure. We can now run a production-like environment on Microsoft Azure at a fraction of the cost.” 
 

The key to accelerating this success was a first-of-its-kind partnership with mainframe ISV, Popup Mainframe. Their set of pre-built “mainframe in cloud” artefacts enable organisations to stand up z/OS environments at speed. Together with its Microsoft partners, the Legal & General team built a genuine, fully supported, z/OS mainframe Dev/Test environment in Azure. 
 

Not only does this enable the development team to spin up and spin down its test and development environments at will, but the team can also move to a CI/CD model and leverage new tools like Integrated Development Environments (IDEs). 
 

“Prior to this capability, it was taking us months to get a test or development environment set up. Now it’s hours and minutes. The team now has much more autonomy,” enthuses Tariq Surty. “We don’t need mainframe developers to make code changes anymore. We are doing much more automated testing now too. The key benefit is not only the speed of change: we’re not affected by peak usage on the mainframe, so we have the opportunity to make changes more predictably as well.”

A multi-faceted approach tailored to each use case

Legal & General’s multi-faceted approach to its mainframe modernisation across the business demonstrates why there is no “one size fits all”. By deploying technologies selectively, it has enabled more nuanced outcomes. 
 

“It’s horses for courses,” says Morgan Spillane. “We have some applications where we’ve modernised the mainframe to enable a CI/CD approach. We have some where we’ve redeveloped applications entirely as microservices or macro-services. We have some applications where it’s been a straight lift and shift to Microsoft Azure and the redevelopment will come later. We have native builds for the first time. We have containerised solutions. We have all sorts of approaches going on – but none of it is random.” 
 

“Moving to the cloud isn’t necessarily cheaper when you’re treating Azure as a data centre and adopting a lift and shift approach,” adds Tariq Surty. “But if you adopt serverless architecture for events-based workloads, or are adopting more modern technologies the greater savings are there.” 
 

“A lot of our workloads in the pensions side of the business are event-based. Statements, payouts, and scheme updates happen on a periodical basis; there’s a cadence of peaks and troughs,” he continues. “Serverless architecture is very much aligned to that way of working–so we only consume resources when big processing is happening. The maths is stacking up nicely on those workloads and we’re seeing cost savings.” 
 

A new way of thinking about change 

Change and innovation is now very different to how Legal & General approached it in 2015.  
 

“In the future, we won’t need to have big migration and modernisation programmes,” states Lee Taylor. “The combination of an agile CI/CD approach with Azure microservices enables a continuous evolution of the platform, using more native technologies in the cloud.” 
 

“It’s partly about the technology but it’s also about the way we work with that technology,” agrees Morgan Spillane. “Technical debt will no longer be allowed to build up again. And we will be far better set up to respond to business opportunities.” 
 

He emphasises, “When we want to swap out a technology for something new, we will no longer be thinking that’s a £20 million project and a large team of people for three years. It will be built into the backlogs we’re managing on a daily and weekly basis.” 
 

“In building these applications for the future, with an API and microservices strategy, we will have enduring SCRUM teams that manage backlogs year in, year out, with a highly predictable level of spend and a far more predictable level of business outcome value.” 
 

The velocity of transformation  

To achieve this massive transformation programme across so many business areas, Legal & General has leaned into the support from Microsoft and exploited the depth of the Microsoft partner ecosystem. This was vital to address some of the talent challenges.  
 

Morgan Spillane explains, “Microsoft is very proactive about telling us about new technologies. The real challenge is working out the skills and capabilities, what we need Microsoft to provide for us, and where we lean into the Microsoft partner network.” 
 

“We have a good strategic relationship with Microsoft,” confirms Lee Taylor. “It’s a genuine partnership. It’s been useful and has driven confidence as we’ve migrated. Microsoft has been on the journey with us and they have always helped us fill the gaps when we’ve reached out.” 
 

Legal & General is also building skills internally and locating application development and cloud infrastructure experts directly in business units. Staff are encouraged to upskill with Microsoft training and accreditations. With tech teams closer to the business units, they can deliver change faster and more innovatively, both in response to business demand and pre-emptively. 
 

“The Azure cloud gives us the flexibility to scale out and accelerate change based on our own demands within every individual business unit,” explains Lee Taylor. “For governance, we work together with our Cloud Foundation for common services and standards around security, networking, and infrastructure. As individual business units, we can accelerate business change at the pace we need. My teams can deliver the technology that can support the growth of our pensions business internationally.”

Future ambitions: data exploitation

One of the unintended consequences of migrating customers to the newly modernised applications is that it has required some degree of data cleaning, thereby enhancing the quality of data held. 
 

“When we first started talking about cloud technologies, our conversations were about applications and legacy debt,” admits Morgan Spillane. “Now the conversations are more about data and how we can enrich and exploit the vast quantities of data we are sitting on.” 
 

Next on the agenda will be plans to exploit data with foundational infrastructure such as Azure Data Factory and new technologies such as OpenAI, artificial intelligence, and machine learning. 
 

Lee Taylor explains, “In our pensions business, we are assessing risk all the time, so everything we do is about the data. Leveraging the cloud more natively to assess risk, improve price, quality, and service to our customers is definitely an increasing priority.”
 

Microsoft is a partner for innovation throughout the business

The partnership with Microsoft and the use of Microsoft Azure stretches beyond the modernisation of legacy applications for Legal & General. Morgan Spillane explains, “The big platforms are being modernised; now we need to modernise our end-user computing and we’re working with Microsoft on that.” 
 

“A big part of our retail architecture is our CRM capability and we’re also working closely with Microsoft to see how we can use the Microsoft Dynamics platform,” agrees Tariq Surty. “Across our estate, we are making much more use of Power Apps as well because there is a big driver to develop our citizen development capability. We are working closely with Microsoft on that too.”  
 

Legal & General views the citizen-led development that the Microsoft Power Platform enables as a key way to improve ownership while adding power to the hands of users. Centralised governance via a Centre of Excellence ensures the right guardrails and oversight are in place, making internal auditors happier. 
 

“We have many mission-critical end-user computing solutions, often developed around Excel or Access databases. They really depend on the skill of the individual to manage those and, of course, those people move on. That creates real governance issues. Power Apps offers us a way to manage and future-proof that type of end-user computing solution.”  
 

The partnership with Microsoft remains strong 

“When we started this in 2018, we were very focused on legacy modernisation and building a stable platform for the future,” concludes Lee Taylor. “With the technology stack on Microsoft Azure, we can deliver faster with more modern technologies. Now, we are in a position to leverage cloud-native technologies to gain additional benefits.” 
 

“The focus now is shifting to innovation,” agrees Tariq Surty. “The next thing on the horizon will be the technology that is evolving around us: how do we leverage it to disrupt our business model? That’s going to be the next conversation and to have it we will continue to keep talking and working with our Microsoft Azure team.”