Cutting through the smoke and mirrors

To ensure that the solutions being showcased are legitimate-not smoke and mirrors-many insurers have embarked upon proof of concept (POC) strategies that are more encompassing and systematic than in the past.Although it's the responsibility of software vendors to establish the proving ground, it's incumbent on insurers to be equipped to absorb and measure what a vendor is delivering.

Some insurers are still fuzzy about how to approach proof of concept strategies. "Overall, I would say that insurers that have never acquired a piece of software are the ones that lack the performance-based metrics to internally measure and assess a POC," says Wendy Corman, business development officer for Bolivar, Mo.-based Duck Creek Technologies Inc.

Western United Life once relied heavily on request for information (RFI) and request for proposals (RFP) to make vendor selection decisions. Although it is still a tried and true methodology, it's now augmented by a deeper dive.

"I have three of my IT staff involved and five people from the business units, including marketing, operations, finance and new products," declares George Hanrahan, vice president and director of information systems for the Spokane, Wash.-based carrier. "We use a matrix/scorecard to weigh vendor POCs. It's human nature to select the last POC you see, so you need a numerical methodology to factor in a third realm."

When comparing vendors' products, Western United Life typically evaluates no more than four vendors and occasionally will perform a Web presentation with a vendor first before bringing them to its headquarters. "We also always leave a day or two between each POC," Hanrahan says. "We then establish a time frame to sign a contract. We try to go no longer than four to six weeks from the POC to when a contract is ultimately signed."

Industry experts agree that insurers have to be active participants in the process and must come with an open mind and demonstrate flexibility. Otherwise, a POC is performed in vain."We get nervous when a customer doesn't know what they want," says David Holmes, executive vice president, sales and marketing, for Atlanta-based Jacada Inc. "We need access to applications and networks. We need to set up a so-called laboratory, but it's up to the carrier to assemble the right resources."

Holmes says that his company will "walk away from a partnership if we believe that the customer might fail. We might say, 'You're going to need to acquire three or four more servers if you want to accomplish this.' " The POC can't always take into account the scale of a particular project and the internal systems architecture necessary to do it."

Deb Smallwood, insurance vice president for Needham, Mass.-based research and consulting firm TowerGroup, agrees that the onus is on insurers to meet vendors half way to optimize proof of concept strategies. "There are very few bad technology solutions out there-when there's failure it's usually a lack of executive sponsorship at the carrier level," explains Smallwood.

"I've been blown away by the rationale of some vendor selections. Carriers will sit through fabulous product demonstrations but then select an inferior product," Smallwood continues. "When that occurs, it's often dictated by corporate politics. Or, it's because a vendor with an inferior product might have come across as being able to understand a carrier's business better, understand their pain points-yet the product is still inferior," she notes.