by Byron Connolly

Public cloud a pillar of growth for superannuation administrator

Mar 29, 2016
Cloud ComputingFinancial Services Industry

In late 2013, Maitland, NSW self-managed superannuation fund administrator, Heffron SMSF Solutions, suffered a server outage that saw its critical systems out of action for four days.

Heffron’s business continuity plans were also shaky and new infrastructure was required. The organisation earmarked $2 million to replace its ageing IT infrastructure with new servers and a document management system for storage and retrieval of well over 250,000 indexed digital client files.

But Heffron’s IT team quickly realised that deploying technology infrastructure onsite was costly and wouldn’t support the organisation’s future growth plans, which included acquiring MLC’s self-managed super fund (SMSF) business.

This acquisition would take its total number of funds under management to more than 3000, making it the second largest administrator in Australia behind AMP.

Capital costs to rollout new servers and Microsoft Active Directory and Exchange licenses onsite would be up to $1.5 million. Hardware to support a new document management system would cost $500,000 alone.

At between $5000 and $10,000 per month, it became clear that moving its IT infrastructure to a public cloud service was the best option and, in early 2014, the organisation began running IT from Amazon Web Services’ data centre in Sydney.

This supported the rollout of a customised Alfresco open source document management system and Ephesoft OCR engine throughout 2014.

“We’ve got a range of different services talking to each other – workflows and billing – and we knew we would need to have a software capability in-house to build an API that integrates them all and shares data between those systems,” Andrew Smith, Heffron CTO told CIO Australia.

“The real differentiator was less about cost at that point in time and it became more about the supporting services in Amazon. We do a hell of a lot more than just spin up a few virtual servers; we are using their queuing and notification systems and more.”

Smith claimed that competing platforms, Microsoft Azure and Google, were premature when Heffron initially went searching for a public cloud provider in late 2013.

Benjamin Herron, IT operations manager, said AWS offers direct connection services, meaning that a business in a regional city like Maitland can be fully public cloud.

“That’s a real big one, a huge win for us – especially with the rollout of the NBN and the reliance on fibre [connectivity], that changed our ability to use the cloud massively,” he said.

Heffron purchased MLC’s SMSF administration business in 2015, acquiring 1400 funds, effectively doubling the size of its client book in one hit. Without public cloud infrastructure, this simply would not have been possible, said Heffron CEO, Martin Heffron.

“From my perspective as a layman who writes the cheques, the move to the cloud itself appeared seamless to me and the business did not notice. In fact the business still doesn’t really understand what we have done because from where they sit, it’s fine. That’s as good a test as you can have,” he said.

As a super fund administrator, Heffron deals with highly personal information provided by trustees, or by financial intermediaries such as financial planners.

The level of security provided by AWS is better than what Heffron could provide itself. AWS has PCI, ISO and other certifications to its name.

“It’s a lot easier for us to remain secure now; we are often asked about the physical security and location of our data and Amazon checks most of the boxes for us,” Herron said.

“Their privacy and compliance means that we are better protected. An organisation of this size – with 80 staff – could absolutely not be as compliant without [using this public cloud infrastructure].”

Smith added: “We got flogged by NAB [which owns MLC] with every security architect and everything else you could possibly imagine – we were pretty much giving urine samples at one point – but we had to be using a compliant cloud platform.

“If they [NAB] had come up here and looked at our previous servers, we wouldn’t have passed. We had to spin up servers and storage, build software very quickly and get data transitioned. We had deadlines on when the handover had to happen due to privacy laws. We could never have done it with our two little servers, failing SAN and Microsoft Access applications,” he said.

Smith and Herron have engineered the organisation’s IT infrastructure to handle 10,000 funds, almost 7000 more than the company manages at the moment.

“Because of that enterprise-grade engineering we are starting to dabble with [the prospect] of reselling some of these things that we’ve built, or do we start to cobble together a technology story that stands on its own two feet alongside the business?

“A document management system could be very relevant to a law firm or [other businesses] not in our industry, and we are starting to investigate that based on what Benjamin has built and the software that has been built by our development guys.”

This infrastructure enables a regional independent financial services player like Heffron to compete with some of Australia’s largest companies in a globally significant space, Heffron added.

“That’s in the long term interest of the community that we can do that. If you have the IP to leverage the infrastructure, then you break corporate monopolistic practice, because you can access what’s necessary to support that scale so much easier than you could before,” he said.

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