What is your organization's IT fitness level? Is your team out of breath on short distances? Or is it ready for long-distance hauling? Final performance depends on the workout, and if standards adoption isn't part of your IT team's fitness regimen, your team may be doomed to under-achieve, despite any obvious talent in the lineup.Standards use can be likened to gym membership: Everybody agrees that it's a good idea, but its only as good as the number of times you actually go and workout.

ACORD's gym is open, and its members are beginning to see some very muscular use of the ever-growing list of ACORD XML standard business messages. They see XML standards implementation as critical to the future health and prosperity of their organizations. Their IT teams are in training for long distance markers of straight-through-processing and true enterprisewide data integration.

For ACORD's members, standards implementation is no longer a "good thing to do" or a "nice to have." It is a strategic business decision that is a foundation of their future IT strategy.

A Stake in the Ground

Straight-through processing (STP) has been a long-cherished technology goal of large and small insurers and related financial services companies.

STP is an integration effort that connects islands of computing so that information entered into one system is fed automatically to other related systems. It is easy to visualize how this kind of connectivity would improve customer-distributor, distributor-carrier and carrier-reinsurer relationships.

STP would decrease errors, increase volume, reduce cycle times, reduce transactional cost and reduce overall operating infrastructure. It is much harder to see how it could be possible to link multitudes of disparate systems to achieve this.

XML essentially is a common language that makes it easier to build applications and easier to connect systems, computers and other devices. Native-built standard XML applications can communicate seamlessly, and legacy systems can be mapped through XML to each other and to those new applications. And that is ACORD's task for the insurance industry: to develop the common XML language for all business processes, and to do it smartly.

ACORD and its industry-sponsored volunteers have been building XML business messages since 1998, and it currently has hundreds of business messages and thousands of data elements already minted. They cover all lines of business, and are available for most transactions in new business, inforce and claims, and include a host of related information flows.

There is nothing overnight about XML standards implementation, however. For these companies, their STP vision is a stake in the ground placed a couple of years out. But they are having incremental successes on the road to integrated data-sharing. And they're finding that once the initial investment in architecture is made, subsequent application development is achieved at savings of anywhere from 20% to 50% in time and money.

In addition, they are investing in a new XML-based technology that promises to propel them past their business markers sooner rather than later. Technologies such as Web services.

What's driving all the interest in Web services? The proponents of this new technology describe it as a new approach to corporate information systems.

The basic premise is that companies will purchase information technologies via the Internet rather than owning and maintaining all their own hardware and software. Web services is viewed as one of the core technologies that will be used to bring the industry closer to STP.

Web services provide a standardized approach for publishing and accessing services that can be provided via internal and external networks. They define technical standards that enable carriers to expose business functions (services) to intermediaries and partners.

The benefits of Web services outlined by its backers include its use of open standards, easier business process management, easier integration of internal applications and external trading partners, greater flexibility, and improved and cheaper customer service.

Standards and Web Services

The very nature of Web services is all about standards. That was the message of three representatives of major technology companies that recently discussed the importance of standards in the development of a Web services environment at the Insurance Standards Leadership Forum held in New York.

All three representatives-Rick Hoehne, program manager, IBM; Kevin Kelly, managing director, Microsoft; and Jim Del Rossi, chief strategist, Sun Microsystems-found uncharacteristic accord on agreeing that software standards such as WSDL, UDDI, and XML, and communication protocols, such as SOAP, HTTP and TCP/IP, are essential to assure that Web services can be accessed consistently-regardless of the technology used to build them.

Much of the universal, cross-industry XML standards required for Web services is being built through the work of organizations such as OASIS, ebXML and UN/CEFACT, efforts that ACORD is contributing to. And in the insurance sector, ACORD's XML standards are part of the fundamental architecture that is bringing Web services to life.

The quest for STP and the burgeoning prospect of a mass migration to Web services poses a serious question for the insurance industry's business and technology leaders: How open are your systems? Do they provide connectivity that allows you to quickly add trading partners and improve customer response and market response times?

Senior managers in the insurance industry should be checking their IT team's fitness. Is the right architecture being built to harness the power of XML? Do we need to collaborate more with industry partners to develop open standards through the ACORD standards process that we will need for future connectivity? A top down, strategic, long-term vision is needed to guide technology efforts toward the goal post of internal and external business integration.

The networked economy is driving the evolution of eBusiness and integration through standards is the key. Standards will form the foundation of successful future IT strategies.

With industrywide support and implementation of standards, the next generation of eBusiness solutions for the insurance industry will be realized more rapidly. ACORD has committed its resources to this task and welcomes the broadest possible industry participation in the effort.

Ron Dudley is vice president, standards, for ACORD, Pearl River, N.Y.

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