No single strategic objective in the insurance industry offers the profit potential of policyholder retention and cross-selling. It has been documented that multi-relationship policyholders are more likely to renew.Further, the cost to sell renewals and additional policies to current customers is dramatically less than initial customer acquisition costs.

Properly addressed, these facts promise to create something extremely scalable and equally as rare: the virtuous circle of customer behavior.

Essentially, a cross-selling activity reduces sales costs and improves loyalty, which further reduces sales costs and provides fertile ground for cross-selling.

This self-reinforcing process can pay dividends in both cost reduction and organic revenue generation by creating a ''growth vortex.''

As businesses increasingly rely on IT to become more agile, CIOs now play a critical role in shaping, orchestrating and delivering on these types of strategic objectives by aligning them with existing systems.

This traditional approach to alignment has involved liberal amounts of custom application development, often on top of existing enterprise application integration (EAI), business process management (BPM), or Service-Oriented Architecture (SOA) layers including Web services.

This development was driven by the peculiar requirements of the business processes involved. This development is unpredictable, dynamic and focused on outcomes.

Now a new field-proven approach holds promise for a practical solution. Called Complex Event Processing (CEP), it is an approach that identifies data and application traffic as "events'' of importance, such as a customer submitting a quotation request, correlates these events to reveal patterns, and reacts to them by generating "actions'' to systems, people and devices.

Event pattern trends are monitored and thresholds are set that will trigger adjustments and notifications when they are crossed.

The CEP layer sits on top of an existing message or event delivery layer. Working through an intelligent, flexible authoring and execution platform that can define and control the right time coordination of IT assets, the CEP layer correlates activity among applications, services, databases and middleware (if available).

CEP schemes

This coordination is managed through the previously mentioned message layer either as workflow or through rules so that disparate applications can collaborate, making dynamic, non-linear processes possible (known as CEP schemes).

For example, the CIO of a major insurance company needed to align existing IT infrastructure and strategic business goals to generate additional revenue. To bring in new insurance business, the company had set up a self-service Web site targeted at existing and potential customers.

The new Web site was generating a lot of traffic, but browsers were not buying. The company needed a practical way of aligning the Web application, call center infrastructure and the company's central database to effectively address strategic cross-selling objectives.

Aligning the existing IT infrastructure could not be accomplished with custom application development due to three characteristics of the process:

1. It was extremely complex in its implementation, requiring information from a variety of systems to be evaluated in real time with customer activity.

2. The process is highly dynamic, involving constant "tweaking'' of the business rules.

3. Because the process is closed-loop in nature, it requires the tracking of outcomes that affect process execution.

The company implemented a CEP technology, which enabled complex patterns of customer behavior to be identified, correlated, evaluated and responded to without custom application development.

For instance, when a customer requested a quote on the Web site, if they fit a certain, pre-defined criteria, additional high-margin add-on products could be offered if they had not already purchased them within a fixed period of time.

Within a week of going live, the company saw double-and in some cases triple-digit returns on their investment. The system even delivered business from 2,000 new customers.

Getting started requires three steps from CIOs:

1. Set an objective: Identify a strategic initiative such as fraud, compliance, or cross-selling that is worth IT investment.

2. Identify the first process: Find a process, like the one the CIO of our property/casualty company discovered, with the potential for great returns but which is too unpredictable, dynamic, and closed-loop to be practically built with custom application development.

3. Pilot a CEP technology platform: See if the technology is right for you by prototyping a solution and seeing the results first hand.

CIOs today are in a better strategic position than ever before and have the ability to finally deliver on the promise of technology as a strategic differentiator.

David Cameron is vice president, product integration and marketing at AptSoft Corp., Burlington, Mass.

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