With all the promised benefits of integration and consolidation of information technology-from support of acquisitions, to developing innovative products and delivering customer service excellence-you'd think insurers would jump at the chance to make data integration and systems consolidation a priority.
But myriad challenges continue to plague such initiatives, such as cost, time, difficulty getting business buy-in and fear of the overwhelming task at hand, all of which make that promise hard to prove. INN believes that is changing.
A look at insurers' efforts at integration, consolidation of data centers, and standardization of data and business processes reveals that rewards are playing forward across the enterprise.
"Consolidation of data and application architectures is not only possible, but may be necessary," notes Bill Ulrich, founder of Soquel, Calif., consulting firm TSG Inc.
And it can't happen fast enough. In February, 65% of property/casualty insurers in a survey conducted by Dublin-based Accenture reported their systems need improvement. Of the 27 North American insurers surveyed, 19% rated the effectiveness of their systems as poor, with significant improvement needed.
Ursuline Foley, SVP and CIO of New York-based XL Re, XL Capital, finds affinity with these carriers. After a series of mergers and acquisitions completed by its $6B parent company, XL Group, the insurer opted to standardize the organization's hardware infrastructure across all segments, which included e-mail, networking, desktop, servers and reduce its data centers (an ongoing process). At XLRe, applications from 11 reinsurance systems worldwide were collapsed to one global reinsurance system.
"Every company we bought came with its own version of its data center," Foley says. "With that brings different operating systems, hardware, service agreements and networks. There is no competitive advantage to having disparate systems, so we knew we needed to consolidate and streamline."
Five years on, XL found that a coordinated, enterprise-wide approach to data and systems integration now enables cross-functional analysis and enterprise-wide performance management, improving critical applications such as customer and risk management as well as management reporting, which Foley now describes as being transparent.
Indeed, an understanding of what to do with all the data is a prerequisite for successful integration and consolidation efforts. Because for insurers of all sizes, data integration can create an "albatross effect," causing consolidation projects to halt before they are started. Yet insurers are confronting this challenge with incremental steps (see "Consolidation Roadmap" at left).
For Selective Insurance Group Inc., Branchville, N.J., that stepped approach involved employment of IBM's industry models for the Insurance Information Warehouse. The models helped Selective standardize its environment and implement its information-sharing initiatives.
The company, which offers primary and alternative market insurance for commercial and personal risks, aggregated critical information from across diverse transaction systems, such as underwriting, claims, billing, agency production and safety management.
"One of the keys to Selective's success was its clear vision of data cleansing and modeling requirements," notes Craig Bedell, worldwide business executive, IBM insurance business analytics.
Where you begin and how you communicate results also plays into success.Foley recommends starting with infrastructure so that underlying data is standardized, captured and delivered in one version of the truth. "But the need is almost more important in the applications area, because it enables your business people to be involved with same processes, working on the same platform. This means you can leverage business and IT resources," adds Foley.
And while the cultural challenge of getting insurance execs and business owners to understand IT's requirements may continue to dog efforts at simplifying information technology, it's not insurmountable, notes Foley.
"It was a challenge," she admits. "On the reinsurance side, it took a lot of education, reselling the concept to the executive layer, which felt their systems were adequate to run their business locally, so at first it was hard for them to understand the enterprise value. We did get buy in, because they wanted to access data on the same basis, and give the client a consistent experience when they deal with XL Re from the outside in."
Ancillary ROI may come from orchestrating the services, eliminating redundancies and optimizing operations.
"Where they start depends on sponsorship," notes Bedell. "If they can recognize the need, start there. Or see where business & IT align and start there. Big or small doesn't matter...iterative building will spread like a matrix."
SIDEBAR
Roadmap for the Future
With the goal of streamlining data access, workflow, and usability, Melissa Romagnoli thinks of integration and consolidation as a continuous process. Yet as vice president of operations, American Collectors Insurance, Cherry Hill, N.J., Romagnoli’s ambition is obviously not entirely technology-centered.
“We don’t work for tech, we make tech work for us,” she says. Under her direction, however, the provider of
“Keeping inventory of equipment being deployed onto desktops around the company was becoming an administrative nightmare,” she explains. “Tagging was cumbersome and time-consuming, so we found a product that can do this for us. So we purchased the Dell product to assist with asset management.”
A Dell automated system shuts down PCs at end of shift, and turns them back on at start of new shift. One person maintains this effort, along with inventory and asset management.
Feedback from employees and stakeholders is fed to the firm’s executive team, which offers input – and support.
The company’s goal -- to move 18 to 20 servers to two or three virtual ones and continue to support telecom efforts with combined fallover systems – will ensure the insurer’s agility and viability, says Romagnoli.
“What will our network look like five years from now? We are creating a roadmap for the future.”
