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Experts Debate Value, Future of SOA

"I can believe, given all the hype, that we are, as an industry, once again on the cusp of doing something stupid," said Judy Johnson, Patni.

By Anthony O'Donnell

Ever the controversialist, Judy Johnson, VP and principal solutions architect, Patni, speaking at the Monday, June 4 session "Analysts & Vendors Debate Insurance Technology," at the IASA Educational Conference & Business Show in Minneapolis, Minn., rhetorically asked whether SOA was the new SEMCI, as an example of vast, quixotic spending toward an elusive object.Johnson was joined on the annual discussion panel, noted for its informed, frank and often humorous treatment of key issues, by Matt Josefowicz, Celent; Chuck Johnston, Oracle; Pat Saporito, Business Objects; and Rick Hoehne, IBM.

Josefowicz, managing director of Celent's global insurance group, began the discussion with his take on what is new in insurance and technology. "There is no 'next big thing," he commented. "It's just about doing things a bit better."

The only truly 'big thing' in recent history for insurance technology has been the emergence of the Internet as a business and consumer tool, which continues to shape the business. However, insurers are working on significant projects in areas such as those that spring from treating data as a strategic asset, Josefowicz said. He also noted the growth of business process management, which he characterized as a kind of souped-up "workflow, coming together with [enterprise application integration]."

Josefowicz cautioned against believing the hype surrounding SOA (services-oriented architecture), but said that, "SOA [enables] more efficient ways to do the same things as EAI." SOA wouldn't suddenly transform the industry, he said, but "there are incremental improvements to be made."

Data, Demographics & Differentiation

IBM's manager, business solution sales, Rick Hoehne, affirmed the role of technology in driving globalization, speed to market and valuable new architectural approaches, but focused on three specific areas where technology was especially relevant: data, demographics and differentiation.

"Differentiation will be key because technology is lowering the barrier of entry to our business," he commented. "You have to be more differentiated in products and how you work in the marketplace." Outside competitors with novel ideas threatened a complacent industry, Hoehne implied: "You should ask yourself, 'What would Richard Branson do if he wanted to attack the insurance business?'"

A self-satisfied insurance industry is also liable to underestimate the impact of demographic changes, particularly the generational differences with regard to use of information technology as a part of daily life. "The Information Age has changed what people expect from every industry," he asserted. "As much as adoption of the Internet has changed things, it's nothing compared with what consumers will expect going forward."

But consumers are not the only participants in the industry who are changing, Hoehne added, but also employees, distributors and other business partners. The businesses that will survive are not necessarily those with prior longevity and economic clout, he argued, noting that, "significant businesses are no longer around; it has nothing to do with size but rather responsiveness and agility."

Data is a key area because we are moving from treating data as a somewhat static asset to a resource, according to Hoehne. "It moves from being something you own to something you consume," he explained. "The future will see us moving not away from structured repositories, but in expanding what we can do with sparse and unclean data from diverse sources...growing at astronomical rates."

Success, Hoehne concluded, depended on the judicious use of that data in combination with a focus on the imperatives of differentiation and demography.

Pat Saporito, Business Objects' director, insurance solutions, continued the focus on data. "The growing amount of data becomes a liability to an extent, so the real trick is to make that data actionable," she said.

In the future state, the boundaries between applications, processes and the analytics they employ will grow increasingly indistinct, Saporito predicted. "Analytics become absolutely embedded in your systems and processes," she commented.

Chuck Johnston, senior director, insurance industry strategy and marketing, Oracle, predicted change in the areas of governance, risk and compliance. At a recent industry meeting Johnston recalled European executives being "horrified" at how little Americans had done with regard to compliance, for example in such areas as risk-based capital. The American attitude is, "We've got things covered; it's a process issue," Johnston said. "But are we really doing enough about governance, risk and compliance?"

Johnston concluded with a more optimistic take than Josefowicz on the degree to which SOA and BPM could reshape business. "Now that you've broken everything down [via a SOA approach] into 500 services, [BPM] allows you to weave it back together in new ways," he said.

Patni's Judy Johnson took issue with Johnson's optimism, saying, "I can believe, given all the hype, that we are, as an industry, once again on the cusp of doing something stupid."

SOA is a boon to CIOs looking for an opening to create something strategically compelling; it will generate abundant work for consultants and it will give service companies the chance to "get inside a company that they will never leave again," Johnson warned. But such eventualities would be a waste of resources because, she added, "the issue is that we have so many things wrong with the systems we already have, mixing them around won't fix them."

SOA, according to Johnson, assumes a 10-year vision to fundamentally change the way an insurer does business. The problem, is "I've never seen an insurance company whose senior leadership has a 10-year vision that they want to share with the technologists," she claimed. "Technology and architecture are not the vehicles of competitive advantage-knowing how to run the business is."

Celent's Josefowicz countered that while, "technology is not the answer, it will be part of the answer." Whereas the senior executives of insurance companies in the 2002/2003 time frame might have said to their CIOs, "Just shut up and spend less money!" they had come to the realization that underinvestment in technology was holding their companies back, Josefowicz asserted.

IBM's Hoehne was more specific in defense of SOA, saying, "I disagree that technology and architecture aren't the vehicles of differentiation. I think SOA is part of the answer."

The problem with much of the SOA hype is that it too often tends to sell SOA as a "thing" that will solve all of insurers otherwise intractable technology problems, Hoehne argued. However, he maintained that SOA is a means to move toward innovative products, sold through innovative channels. "It's not a quick fix," he affirmed, "but if you're going to be innovative, technology will help you to do it.""I can believe, given all the hype, that we are, as an industry, once again on the cusp of doing something stupid," said Judy Johnson, Patni.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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