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Insurance & Technology: The Blog« July 2007 | Main | September 2007 » August 28, 2007From the 2007 Gartner FS Technology Summit: How to InnovateThis afternoon, I ventured 20 blocks uptown from Insurance & Technology's offices to attend the 2007 Gartner Financial Services Technology Summit, at the New York Marriott Marquis. And contrary to popular belief, I went for more than just the free lunch. Between meetings--including a very interesting one with ITM, a player that's gaining interest amongst insurers--I was able to attend a few track sessions, namely one directed by Annemarie Earley, managing vice president, insurance industry advisory services, Gartner. Earley, who spoke on “Balancing Innovation and Proven Practices for the Insurance Consumer,” told attendees that an insurer's ability to innovate is largely dependant on its level of risk acceptance and organizational cultural change. “It's a cultural shift, not a technology shift,” Earley told the audience. “I wouldn't want you to believe that you can go back to your office tomorrow and start innovating. It's a longer process than that. You have to have the right infrastructure, the right commitment from senior level people and the idea of what it is that is important to the fabric of your organization that may require innovation.” In order to innovate, some risk needs to be involved, Earley says, and that acceptance of that risk needs to be a part of company culture. “Don't go wild and accept any ideas that come down the pipe. You have to understand your risk appetite,” she explains. Earley did mention a few technologies that could help support innovation, such as business intelligence, modeling and analytics, but also cautioned against implementing new technologies specifically to increase innovation. “Use what you have. You get so invested in the new technology that you can forget about the innovation and creation,” Earley says. “Be more creative with the innovation part, and less needy with the technology part.” From an organizational standpoint, Earley pointed to Humana, the Louisville, Ky.-based health insurer with recent innovations such as real-time claims capabilities. Humana has an innovation team with dedicated employees. However, twice a year, someone from the innovation team is moved to the business team for a six month period and vice versa. “It's not a complete move. It's just one or two people, so that innovation staff members understand the business and can replicate and design in a way much more in tune with what is need,” Earley relates. Further, business team members gain insight into the processes the innovation team goes through, such as efforts to create a business case for a given project--helping reduce animosity on the part of the business team members who may believe that the innovation team has little day-to-day work. “That's really not what the [innovation team] environment is like, but that's what people think. It takes the mystique out of the innovation team. When you move them in and out of that environment, the jealousy-factor goes away. Misconceptions of what happens are changed.” To finish the presentation, Earley left attendees with several recommendations, such as taking on innovation only with a commitment from management, making sure your understand your company's own appetite for risk and making a good business case for every new idea. Posted by Nathan Conz Posted by Nathan Conz at 05:06 PM | Comments SOA Architectures Touting Big Wins, But Could Fail At A Large ScaleIn my previous post, G-Man commented that SOA was a sorely overused acronym. This may be true. Almost all the RFPs going out have at least one question regarding support for SOA. Most, if not all, policy administration system vendors list SOA compliance as a feature of their systems. Both carriers and policy administration vendors are locked in this dance, a dance that we've done before. SOA is the latest architecture to hit the scene. The benefits being touted are the same that were promoted with past architectures. Having gone through the millenium revolution, I'm seeing the promises being made again. With '00 we had the opportunity to fail at a small scale; SOA lets us fail at a large scale. I seriously doubt SOA will improve the ability to do an out-of-sequence endorsement. It will allow information to be interchanged among different systems. It's still too early in the adoption cycle to see if SOA will live up to the advertised benefits. By Howard E. Kennedy Posted by Howard Kennedy at 04:13 PM | Comments Editor’s Note: Alternatives to OffshoringOffshore outsourcing can seem a questionable and at times very unfair practice, particularly if you've just lost your job to a cheaper counterpart overseas. Is it good policy—is it good citizenship—to sacrifice American workers to foreigners for the sake of profit? In response one might argue that "for the sake of profit" is a loaded expression, and that the guiding principle is one of economy—doing what makes sense for investors and also for consumers by reducing operational costs. If the offshore option is available, decision-makers have to consider it the way they would other options; if offshoring is prudent and cost-effective, CIOs may have no choice but to outsource. And besides, America has been lecturing about the benefits of free trade as against protection for a very long time. It would be unseemly and counterproductive to change its tune when its own industry or labor force began to feel the pinch of competition. Opponents of offshoring might respond that there is no level playing field for labor. Through the efforts of organized labor and the enlightened decisions of many employers, the United States has built a better standard of living through better wages and salaries, to say nothing of other features, such as government regulated workplace safety standards. Offshoring overturns those accumulated benfits in one quick-and-dirty step. That’s a hard point to argue against, but America would nevertheless appear unfair in its trade practices, were it to go protectionist on outsourcing. And in the world of diplomacy, appearances matter more than reality. Better, perhaps, to focus on maintaining an edge on work higher up on the value chain. But there may be yet another response: developing competitive domestic alternatives to offshore outsourcing. While the arguments are developed at greater length in my piece in today’s I&T News, the gist is that the United States has an underutilized workforce, including students and retirees, that can do work at comparable cost and less risk than offshore alternatives. I am aware of at least one small-but-growing company that has begun to succeed through utilizing this approach, and whose proprietor believes the model can be replicated across the country. And a study commissioned by the Information Technology Association of America includes recommendations for government, academic and public sector cooperation that can only have a beneficial effect not just for competitive outsourcing alternatives but for the quality of the American IT and business workforce in general. Personally, I like the idea of the economic interdependence between countries like the United States and India and rejoice in the greater well-being the business of outsourcing can bring for people in less prosperous countries. But I also like the idea of creating more opportunity for domestic students to make a buck and gain invaluable experience. It is also pleasant—as we hear ad nauseam about the aging population of the United States and the West in general—to envision our nation’s superannuated IT experts rocking on, like the Rolling Stones, and making a novel contribution to the nation’s competitive capabilities, both for now and as the foundation for a better future. Posted by Anthony O'Donnell Posted by Anthony O'Donnell at 02:54 PM | Comments Offsite But Not Offshore: Promoting a Domestic Outsourcing AlternativeOffshore outsourcing has been both boon and bane to the insurance industry and others owing, on the one hand, to its being a low-cost alternative to domestic services, and on the other hand to its being a low-cost alternative to domestic services. Senior executives and stockholders like the economic benefits that offshore outsourcing provides (which also benefit consumers, of course), but others decry the loss of jobs by American citizens. Insurance CIOs are caught in the middle, having no wish to harm their countrymen (or irritate Lou Dobbs) but bound to diligently seek the most economical solutions available for their employers. American IT professionals and their supporters will probably continue to complain about the offshore outsourcing, and politicians will continue to make the odd populist statement against the practice. But it is hard to imagine that offshore outsourcing will cease to be a part of the IT market for the foreseeable future. However, while offshore will likely continue to be an important sourcing option, some IT industry observers and participants are beginning to push low-cost domestic outsourcing alternatives. According to the Information Technology Association of America (ITAA; Arlington, Virginia), concern about the United States’ long term competitive viability in the IT sector, along with perceived dissatisfaction with outsourcing efforts, led the body to commission an independent study on the global trends for cost effective outsourcing. The goal was, says the ITAA, “to help policy makers, business leaders and others answer the following question—Is there a viable niche opportunity for lower cost domestic (LCD) sourcing?” One of the key findings of the study, conducted by Conscient Partners, LLC (Palo Alto, Calif.), was that: The US has a unique opportunity to positively impact the economy by emphasizing jobs and skill sets that enable participation in a global economy and promote cost-effective LCD sourcing. Today the US is still the dominant supplier of IT resources, and remains desirable on every sourcing selection criterion except absolute labor costs. There are many lower cost rural and mid-sized cities that have a talented IT workforce, with colleges and universities eager to collaborate with prospective employers on IT oriented curricula. Thus there are many niche opportunities for both private and public sector entities to utilize LCD destinations to obtain cost-effective IT solutions and delivery. In its recommendations, the study advocates coordinated efforts between government, industry and academia. Those efforts, the study elaborates, should address workforce-related issues by promoting investment in science, technology and mathematics at every level; by preparing IT professionals with skill sets that will be valued in the future, complementing their technology proficiency with business and people skills; and by fostering the development of programs between IT companies and educational institutions. The study also recommends intensified recruitment of skilled knowledge workers from other geographies and developing skilled professionals from among U.S. military and Baby Boomer retirees. Among non-workforce focused issues, the study recommends the enactment of policies and the provision of incentives to dramatically increase the speed and availability of broadband—in order to provide essential infrastructure for leveraging the potential domestic workforce—along with an aggressive branding effort for U.S. sourcing, both domestically and abroad. New Jersey-based consulting firm EWA exemplifies the spirit and some of the recommendations of the study. It’s founder and principle, industry veteran Ed Williams—whose CIO credits include Blue Cross Blue Shield of New Jersey (now Horizon BCBS) and American Broadcasting Corporation—believes that America’s competitive advantage resides in its students and its trained and skilled retirees. Both groups are amenable to flexible work schedules and lower pay scales than pre-retired IT professionals with college degrees. Students, particularly at the graduate level, have the requisite skill for many IT tasks typically outsourced, and retired IT professionals have invaluable experience in addition to highly marketable skills. “Combining experience with youth creates a workforce that is unequivocally superior and cost competitive to any other outsourcing options,” Williams asserts. Williams has put the concept to work at EWA’s Application Testing Center, located at Syracuse University’s CASE Center Incubator, where Syracuse students are currently doing quality assurance work for AXA Equitable. EWA is currently setting up a program for a major New York City insurer and is also negotiating with a health insurer in upstate New York and a major New Jersey-based carrier. EWA is also working to set up a program at the New Jersey Institute of Technology (NJIT, Newark) identical to the Syracuse University program. While Williams’ concept has a strong element of community service, including a focus on developing minority talent, it is most definitely a for-profit endeavor, and one based on the benefits it provides customers, including a lower risk relationship than offshore partners can offer but within a comparable cost structure. “Our platform can bring up to 50 percent savings because of our scalable pay-usage model,” Williams claims. Posted by Anthony O'Donnell Posted by Anthony O'Donnell at 01:18 PM | Comments August 14, 2007Why You'll Respond To This Editor's NoteWhen Anthony O'Donnell's editor's note, Spitzer Schadenfreude, from our last Insurance & Technology newsletter led to some debate between readers, it got me thinking about how the emergence of the Web as a medium for news and information has increased the direct interaction between readers and content producers like editors and reporters. In fact, if recent developments from Google News are any indication, soon the subjects and sources contained within our articles could even get in on the act. I, for one, welcome the increased interaction between a writer and his audience. And, knowing Anthony's appreciation for healthy debate, I'm sure he feels the same. The informal character of blogging lends itself to increased writer-reader interaction, perhaps more so than more traditional news writing. Writing as bloggers and not reporters, we're able to interject our thoughts a little more, which, of course, means there's more content for readers to agree or disagree with. An Editor's Note is an opinion piece and one of the few opportunities we have to step outside the insurance industry with our writing. So, I guess it's no surprise that it's also the place where we're most likely to elicit a strong response from our readership. Today though, rather than ruffle a few new feathers, I thought I'd share with everyone some feathers that I previously ruffled. It shows what happens when a less intelligent readership than that of Insurance & Technology provides a writer with "feedback." Back at my old job as a reporter at a weekly newspaper, I wrote a story about the Ultimate Warrior, a former professional wrestler who now spends his time as a very controversial right-wing flamethrower. The gentleman, who legally changed his name to Warrior, got himself into some hot water at the University of Connecticut when, during a speaking engagement, he caused a near riot after making anti-homosexual remarks and sending a few vague insults towards a disagreeable student he believed was of a particular ethnicity. In response to an article I wrote on the aftermath, I was called many names by wrestling fans near and far. My favorite came from a Warrior supporter who declined to give his name, but -- using poor grammar and circular logic -- had explained that I was, in fact, the prejudiced one and not Mr. Warrior. He finished off his comment by exclaiming, "SEE, IT IS YOU WHO ARE THE ONE WHO IS THE RASISTS!!!" OK, so maybe all feedback isn't good feedback. Still, I implore you to comment away in the I&T blog. I'm looking forward to engaging readers in dialogue, especially when that dialogue has little to do with retired professional wrestlers. - By Nathan Conz Posted by Nathan Conz at 06:12 PM | Comments Unum Rolls Out New Integrated Product and Service PlatformOnly a few months ago, in a 2007 Tech Savvy CEO profile, Thomas R. Watjen, president and CEO of Chattanooga, Tenn.-based employee benefits provider Unum Group (2005 assets of $51.9 billion) described Simply Unum. A new operating platform, Simply Unum was a project two years in the making that, Watjen said, would simplify the process an individual might go through to service a customer. Earlier this month, Unum officially launched the new platform, calling it one of the most significant product and service initiatives in the company's history. The platform, designed specifically for small and midsized business owners, represents substantial changes in the technology and processes in place at Unum. "It's been a very transformative initiative for us," says Kathy Owen, senior vice president of business applications at Unum. "It really covers the entire insurance value chain. All the way from quote and proposal to the payment of the claim." Owen says Simply Unum is unique because it combines a very broad set of products under a single platform, giving customers more choice and increased simplicity at the same time. "It's a combination of process change, technology change and a new way to view product," she says. "How you bring the voluntary and employer-paid products together has really been one of the dilemmas in the [employee benefits] marketplace. So, from a platform perspective, we've tried to bring something together that offers a more simplified process that enables that." In the first phase of the roll out, which launched this month, Unum enabled four of its offices to begin quoting and selling products offered under the new platform. In November, a second wave will add the corresponding back office administration pieces. In January, the platform will be rolled out to the rest of the marketplace. The new system will allow Unum to quote multiple products and create integrated proposals. Customers will have access to a single Web site and increased self-service capabilities. "It enables employers to view all their benefits from one point of view," Owen says. Several new tools were implemented leading up to the launch of the new platform, which is built around a services-oriented architecture, including a workflow solution from Tibco, Microsoft Customer Care, Microsoft BizTalk and Exstream's Dialogue document management solution. Regarding the buy versus build debate, Owen says Unum likes to buy when it's looking for capabilities that are fairly standard in the marketplace. "We look to vendors to provide the plumbing, so looking at a workflow tool would not be something we would choose to build," Owen explains. "Where we really do invest more of our time is around core business logic. That is an area where we think we have some unique knowledge. Spending time and energy on those things will be a value for the company." Posted by Nathan Conz at 05:15 PM | Comments August 13, 2007Goodstein Runs AXA IncubatorBarbara Goodstein may not be a technology executive, but as AXA Equitable's new chief innovation officer, just about everything she does will have a technology dimension. Goodstein's job as director of a newly-formed Marketing and Innovation business group begins with identifying growth opportunities and ways to exploit them through innovative solutions in areas such as new product delivery/speed-to-market and Web functionality. However, her job doesn't end there—Goodstein is responsible not only for coming up with innovative initiatives, but also prioritizing them, assembling the necessary staff and external experts and actually executing on them. "We are the incubator for new ideas," she says. Goodstein's office operates with a degree of autonomy to ensure that experimentation can be conducted free of resource competition and the pressures of day-to-day business. Goodstein characterizes her sphere of authority as "focusing on the business but not in the business." Goodstein is currently engaged with AXA Equitable's technology leadership in driving innovative Web solutions. "[AXA Equitable CIO] Kevin Murray and I are co-executive leaders of the Web strategy project, and we are looking to not only upgrade and revamp all of our Web sites but also implement some new, state-of-the-art capabilities," she relates. Another area of priority for AXA Equitable's Marketing and Innovation group is product innovation. "We're looking at new ways to market and distribute our products, as well as creating innovative products apart from our existing lines," Goodstein says. In addressing the need for greater speed-to-market and other potential areas of competitive distinction, Goodstein and her team will be studying not only the performance of effective insurance competitors, but that of companies in other industries as well. "We're looking not only within our category but beyond it," Goodstein remarks. - Anthony O'Donnell Posted by Anthony O'Donnell at 10:04 PM | Comments August 03, 2007How Much Is Insurers' Tech Awareness Behind The Push For An OFC?Not surprisingly, there has been a lot of official support and approval from both carriers and industry groups for the bipartisan House version (H.R. 3200) of the 2007 National Insurance Act that was introduced last week by Representatives Melissa Bean (D-Ill.) and Ed Royce (R-Cal.). With the presentation of this companion legislation to S.40, authored by Senators Tim Johnson (D-S.D.) and John Sununu (R-N.H.), which was introduced in May, it seems clear that the momentum for an Optional Federal Charter (OFC) is growing in Congress, although of course it remains to be seen whether insurance regulation reform will be a front-burner issue when the legislators return from summer breaks. The official statements that came out from entities such as Nationwide, Allianz of America, ACLI, The Council of Insurance Agents & Brokers and Agents for Change emphasized the by-now-familiar arguments that an OFC will bring efficiency to the market and benefits to consumers in terms of lower rates. Only time will tell if these benefits actually ensue from an OFC, should it eventually be approved. Obviously carriers wouldn't be able to take advantage of the reforms without improved internal processes and infrastructure that also enable efficient operations and speed-to-market. While there's obviously corporate self-interest behind the push for an OFC (no matter how much companies talk about helping consumers) one hopes that the movement also signifies objective recognition among insurance executives that the business is changing –- especially in terms of who the customers are and how they are going to do business with insurers and other financial services providers. That's why the official statement that came out yesterday from Des Moines-based Principal Financial Group was particularly interesting to me. Larry Zimpleman, president and COO of The Principal, stated in the release: "E-commerce and globalization of financial services brings an added dimension to an already complicated industry." It's encouraging to see senior-level recognition of the fact that technology is transforming the business. Posted by Kathy Burger Posted by Kathy Burger at 12:16 PM | Comments It Looks Like An Inside JobTwo stories that hit the news lately were the leaking of the last book in the Harry Potter series, Deathly Hallows, and some of the fall TV pilots on the Web. Listening to the experts discuss the leak of the Harry Potter book, they all agree that it was someone who had access. Experts are unsure as to whether the leak of the fall pilots was a publicity stunt or internal leak. In the P&C industry, we do not have access to multi-million dollar blockbusters but we do manage sensitive information within our policy administration systems. In this industry, we do a good job of creating security within our applications. But what are we doing about securing the systems themselves? How are we helping our clients to secure their systems? At a security conference that I attended, one of the presenters told of a client that glued all the USB ports on all company computers to prevent the loss of information. This is an extreme solution to the problem. There is no easy answer to the problem. If you use a cryptographic file system, that will prevent unauthorized users from gaining access to the files. Authorized users can still view the information and the files will be automatically de-crypted when copied. It appears as though new operating system releases will help provide means to better restrict access to the system. There are some third party tools out there to manage file transfers but there is no silver bullet to solve this problem. - By Howard Kennedy Posted by Howard Kennedy at 10:19 AM | Comments August 01, 2007Skywire Software/Whitehill Deal Makes Sense in Today's Insurance Technology EnvironmentThe insurance software landscape keeps changing, with the August 1 announcement that Frisco, Texas-based Skywire Software will acquire Whitehill Technologies. Although I had not heard any previous hints or rumors about this deal, the news was somehow unsurprising and logical. Skywire has emerged as an aggressive player in the insurance software space, positioning itself as a provider of "best-of-breed components to assist insurers managing the life cycle of an insurance policy," according to a company statement. In a press release, Skywire explained that the acquisition "will solidify [its] position as a dominant, vertically focused software company." Whitehill itself has gained market share through acquisitions –- specifically, its 2006 purchase of InSystems and 2005 purchase of the technology assets of Metaserver. The deal beefs up Skywire Software's capabilities in the document and content automation/management space, an area that, while not new technology, has been the focus of a considerable amount of insurance IT investment recently. These initiatives have been driven not only by the age-old quest for operational efficiency, but also by a range of customer experience, regulatory compliance, operational risk and channel integration requirements and opportunities. At the same time, concepts such as value chain, straight-through or end-to-end processing, and enterprise connectivity are moving beyond rhetorical or buzzword status in insurance and becoming realities. This is not only because of advances in connectivity, integration and flexible architectures (read SOA), but also because a growing number of solutions providers are able to cover all the operational bases, so to speak -– either through partnerships (a la Microsoft Insurance Value Chain partners) or via branded solutions that they have developed or acquired. With more insurers opting to buy rather than build, it's smart for a company like Skywire Software to expand its capabilities and offerings with strategic acquisitions such as the Whitehill deal. Posted by Kathy Burger Posted by Kathy Burger at 04:27 PM | Comments
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