Last year was viewed as a coming out party for Enterprise Application Integration (EAI)-related investments in the insurance industry. A larger coalition of carriers made a commitment in 2001 to identify the role that EAI-and within it XML-plays within the context of their operations.Financial services firms spent more than $4 billion on EAI-related hardware, software or other services in 2001, and this year projections are they will spend almost $6 billion. By 2006, EAI expenditures will reach upwards of $12 billion, reports Newton, Mass.-based Meridien Research Inc.

"The advent of the Internet combined with the tendency of most financial services to engage in operational belt-tightening and budget scrutiny placed pressure on them to identify areas that offer more immediate and assured return on investment," Sarah Ablett, research analyst for Meridien, says.

XML is a key puzzle-piece to support widespread data management initiatives that are occurring in conjunction with EAI, such as customer relationship management, enterprise resource planning and business process management projects, Ablett reports in "XML: Are We Speaking the Same Language?"

Emphasized within the study, Ablett declares that the implementation of middleware such as XML in tandem with the Web is crucial to address "incoherent IT infrastructures that have developed over time, and the proliferation of formats-both industry standard and proprietary-that frustrate the ability of both users and systems to communicate and share information."

XML has been a cryptic and misunderstood concept to many senior-level insurance executives, who may have questioned the relevance of XML-related expenditures. But through the demystification of XML, that sentiment appears to be changing.

"In the past year, carriers have embraced XML more readily," Ronald Young, general manager, insurance group, San Mateo, Calif.-based e-business technology solutions provider Siebel Systems Inc., says. "They've worked to determine the transaction types they want to support. Particularly property and casualty carriers are recognizing XML standards by ACORD as a good jumping off point for them."

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