The Hartford P&C Co. built a single consumer view for both its new business and its renewable policies, including a customer application that gives it instantaneous information about its customers. Its personal lines business also has been able to bring together some 30 different third-party data sources in the company and put them into one source.The Hartford's personal lines now has a single manner in which it processes motor vehicle reporting (MVR) across the entire company. The insurer built a single service that enables The Hartford to get immediate access to data across the company and work real-time with the states provided to gather MVR information. That service is now used in six different places across the firm, for everything from renewal purposes to billing purposes. Meanwhile, The Hartford's commercial lines business has made great strides in automated decisioning, improving its billing and creating new automated underwriting. The carrier's agents are now able to receive information in real time and provide quotes to commercial customers quickly.
The Hartford owes these efficiencies to its adoption of service-oriented architecture (SOA) and business intelligence (BI) tools, whose advantages are manifold, including providing real-time service.
"The opportunity from The Hartford's perspective, and what I am starting to see in the industry, is [that we insurers are] taking what we have and creating real-time capabilities out of it," says Gary Plotkin, CIO of the Hartford, Conn.-based insurer.
Some insurers are exploring SOA-enabled BI tools, and others are trumpeting them as revolutionary. To some, BI alone is critical, whereas SOA is merely a cool buzzword. "I think of SOA as this year's CRM," says Bob Goldberg, vice president of information technology of Colorado Farm Bureau Insurance Co., a Centennial, Colo.-based firm providing insurance to farmers, ranchers and others in Colorado. "There are always these acronyms that go throughout the industry. Vendors need to say they are using that acronym to sell their product." He argues that organizations, his included, have been using SOA for years without actually calling it that. "If you have a good object-oriented framework, isn't that really what SOA is all about-being able to use your objects that are in your framework to be able to do a variety of different tasks?" he asks, then adds that his firm has been doing this.
Some insurers and technology providers dispute that claim. "Certainly, I would say that all of the major companies are looking at SOA," says Pat Saporito, insurance solutions director and part of the enterprise performance management (EPM) center of excellence for Business Objects Inc., a San Jose, Calif., BI software company. Yet, she too, recognizes that vendors sense the seduction in saying their BI solutions are SOA-enabled, saying: "Most every one of them would tell you that they offer SOA-enabled solutions." Still, for her, there is a legitimate movement afoot among insurers to adopt such solutions, one akin to when companies went from client-server to Web-enabled applications.
MAJOR DRIVERS
Part of the reason why insurers are considering SOA is that their technology environments are increasingly sophisticated, and SOA provides a common "language" that enables applications to communicate with one another, be it on a mainframe, client-server or Web tier. SOA provides "drilldown capabilities," taking business services and decomposing them down to smaller services or activities.
Another impetus is that BI queries are getting more sophisticated and pertain not only to structured, but also to unstructured data, says Saporito. Geographic information systems are also a driver, as insurers to seek the ability to display data from queries in map format rather than solely in tabular format.
Further, standardization and regulations are compelling insurers to consider SOA-enabled BI tools, since they can enhance clarity and help insurers to report more easily, among other things. And, with insurers implementing Web-based services en masse and increasingly adopting a business process platform, progressive insurers no longer ask whether to roll out Internet services, but rather what information to deliver in this manner, argue SOA adherents.
The widespread acceptance of BI tools has also spurred insurers to explore SOA. When such tools are SOA-enabled, "you are able to collect information, you are able to analyze that information and, more importantly, you are able to act on that information," says Pramod Mathur, director of product marketing for St. Paul, Minn.-based Lawson Software, whose clients include Manulife Financial, National Life and Pacific Life.
Executives are discovering that in the absence of such tools, not only do they lack access to the information that they need to make decisions, but so do other people in the organization.
Consequently, it is not merely the IT department that is triggering interest. "While it was initially embraced by the IT departments and technologists, the benefits really are in the area of the CFOs of the company and the business community," says Mathur.
TANGIBLE BENEFITS
Insurers such as Allstate have already seen palpable benefits. The firm, which has more than 12,000 end-user BI tools, adopted SOA components to increase its effectiveness, both from a delivery and reuse perspective. Allstate put its entire document and content repository behind SOA. This effort, which is highly significant given the billions of documents that Allstate produces, has enabled the insurer to greatly reduce its document management costs (on a unit-cost basis), says Anthony Abbattista, vice president of technology solutions for the Northbrook, Ill.-based insurer.
"We have seen faster delivery times and smaller-than-average project sizes," says Abbattista about the company's move to SOA-enabled BI tools. "So the joke was: Can you get anything done around here for under seven figures? Now we have hundreds, if not thousands, of efforts that are five or six figures. And, we are delivering those chunks and pieces faster because we spent the time to get aligned and disciplined around that."
Allstate has also been able to simplify its operations and enable easier integration, so different vendors can plug-and-play into its architecture.
Concrete benefits from SOA-enabled BI tools are diverse, say proponents. If a carrier SOA-enables its data layer, it knows details such as where the data sources are from and when it was last updated. The strategy also enables the organization to set up business rules so that data specific to particular individuals, such as actuaries seeking data harking back a policy year, can be quickly and easily extracted.
The fruits from adopting SOA-enabled BI tools also can trickle down to policyholders. "Everybody benefits from having more accurate systems," says Bob Peterson, Lawson's industry marketing director for the financial services sector. "If there is an inaccuracy, it is usually the policyholder who ends up having to deal with all that pain."
Since SOA-enabled BI tools are designed to boost efficiency and reduce costs, lower premiums for the client could result as well. Further, they enable customers to check the status of a claim and see how investment products are maturing by going online or using their PDA, rather than calling the call center or waiting for paper to float in via the mail.
CHOOSING YOUR PATH
As for which BI processes to SOA-enable first, cost should be a crucial factor. Tackle those processes costing your insurance firm the most money, urges Saporito.
Abbattista recommends that the insurer select for SOA-enabling those areas where it has potential for high reuse across multiple user experiences. Allstate started with dashboarding and analytic reporting.
Given the enormity of the task, say experts, the move to SOA-enabled BI tools can be tedious, unless you start with a clean slate of SOA-enabled applications.
Partly for that reason, some believe smaller carriers, with less bureaucracy than their larger rivals, can be better positioned to take the SOA and BI journey. "The key is spending the effort and time to get alignment around your SOA strategy. And I think that small companies sometimes have an easier job of being one-minded," says Abbattista. "They have fewer hurdles to overcome internally with different development groups."
Yet, one could argue that it may be more critical for large firms, faced with greater complexity and a slew of inflexible legacy systems, to adopt SOA-enabled BI tools. SOA offers insurers the ability to modify applications more easily, which is vital for life insurance companies that, on occasion, have one policy administration system for every product, says Saporito.
Choosing a vendor is also a tough task. Suppliers "are all hungry" and have competitive prices, but the nature of the vendor can be more critical than the tool it provides. "Are they people you can work with, and can you integrate them with your aspirations?" asks Abbattista. "I think it is more important to spend time on your aspirations than on tool selection."
Not all is smooth sailing on the SOA and BI front. For instance, vendors do not enable insurers to solve issues such as data cleanliness, some argue. "Everyone wants to mask the problem for me-to provide me with obfuscation-type tools," says Plotkin. Particularly in large insurance firms, IT staff are trained on legacy platforms and may struggle to make the radical shift to an SOA environment.
Finally, some insurers are concerned that their mainframe performance related to batch processing will be replicated in an SOA environment.
"The ability to achieve the same kind of results in the new environment is really a bit of a question mark," says Srikanth Srinivasan, head of insurance for Infosys Technologies Ltd., a Bangalore, India, technology firm with U.S. headquarters in Fremont, Calif.
Consequently, many insurers are merely engaging in pilots and proof-of-concept evaluations. Additionally, too few strides have been made on standardization issues. "The insurance industry continues, from my perspective, to lag behind other financial services industries with regards to a common data model," says Plotkin. Efforts by the ACORD Standards Framework, which was enhanced to provide standards for business processes and data alone, are insufficient. "ACORD has made some great strides there, but it still is not an obligatory-type board," notes Plotkin.
