Needham, Mass. – For service-oriented architecture (SOA) to fulfill its potential, carriers and vendors need to become more aggressive in establishing enterprise governance, in adopting process and data standards, and in testing and managing service-oriented solutions, according to a study by TowerGroup, a research company based here.

Insurers are generally dissatisfied with the information they receive from vendors in implementing SOA, researchers say. The insurers want vendors to provide pre-built functionality and services that carriers quickly can adapt to their needs. Carriers are also looking for clarity and accuracy in product descriptions, especially for SOA integration and implementation.

Conversely, the study found that technology vendors are coping with the market's lack of consistency and standards. Consistent business and technical standards would allow vendors to invest in resources to advance solution offerings, helping them predict whether insurers will use their products and thus provide a reasonable return on investment, says Mark Gorman, strategic research advisor in TowerGroup's Insurance practice and author of the study.

"SOA promises a path to system consolidation, process flexibility, enhanced reporting and expanded analytics--all resulting in a more efficient and effective business operation as well as improved customer service," says Gorman.

"While carriers and vendors both recognize the potential of SOA,” he continues, “they must now take a giant leap forward and collaborate to address the marketplace issues that inhibit realization of the full opportunity SOA provides for business transformation."

He says the study also indicates insurers need to establish a business architecture, enterprise steering committees, architecture councils and SOA stewards to realize the business gains SOA promises.

Vendors must adopt insurance industry standards, he says, and offer applications that insurers can use across the enterprise, collaborating with insurers on industry-wide commodity processes, and making performance information available for analysis and reporting.

TowerGroup believes vendors have an opportunity to take an active role in the governance process, encouraging insurers to adopt SOA, Gorman says.

"Insurance carriers want clear, consistent, accurate and timely information in order to effectively anticipate business benefits and manage project costs and project risk," adds Matthew Macauley, senior research associate in TowerGroup's Insurance practice and co-author of the study.

"We believe that SOA has the opportunity to fulfill these goals,” says Macauley. “However, carriers must come together with vendors in order for both to successfully address the industry's needs."

The report resulted from interviews held over the last several months with senior insurance executives and technology vendors that offer SOA software to the insurance market, TowerGroup says.

Source: TowerGroup

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