Most insurers' IT budgets are eaten up maintaining outdated IT systems, leaving them stuck in a rut and unable to innovate. Traditionally, insurers have had only two ways out of this situation: Either create new custom applications from scratch or replace existing systems with commercial off-the-shelf (COTS) applications. However there is a third choice: using business process management (BPM) as an application development platform.
Both traditional choices require inherently risky "rip and replace" approaches, and neither choice adapts well to changing business conditions. Custom-developed applications offer a perfect fit, but with high upfront costs and added expense for even small functionality changes later. It would seem COTS products could go into production quickly, but COTS implementation and testing can take six to 24 months, or even longer. If you want to make changes to COTS, you're dependent upon that vendor's roadmap. You may even find yourself changing your business process to fit their application.
Modern BPM systems put application modification in the hands of business users, and applications can be changed to suit business conditions quickly and easily.
The insurance industry uses BPM in three key ways:
To automate processes traditionally done manually. Even today, many aspects of the insurance business are often done on paper or via e-mail, and are not very well tracked. BPM can control those systems, bringing automation and insight to processes.
To extend the life of legacy applications. Shortcomings in legacy applications can be addressed by putting BPM in front of them, avoiding "rip and replace." This makes it possible to quickly add modern capabilities such as automated work tracking, native mobile access, and social collaboration.
To rebuild core applications Insurers are using BPM to rebuild entire core systems. They develop applications from scratch to get exactly what they want, usually in less time than installing a COTS application. The most advanced BPM systems require no computer coding at all. Development moves quickly as system users and developers can sit in front of the same screen, building the application together with a visual configuration interface.
Applications insurers have rebuilt with BPM range from claims processing to underwriting to policy and administration. Insurers considering BPM to streamline operations should consider the following advice for a successful implementation.
Pick the right platform. Many business process management platforms are actually collections of numerous distinct software packages. As such, they are not particularly well integrated, requiring specialization among developers. This creates unnecessary complexity and can substantially slow the development process. Focus on platforms where all the components have been created from the ground up to work together.
Look for native mobile and social capabilities in BPM architecture. Insurance customers expect to interact with providers over mobile devices. Likewise, insurance companies can benefit from mobility for scheduling claims adjusters, or enabling independent agents to submit applications remotely. It's not necessary to create a separate application for enterprise, mobile and social environments. Modern BPM platforms help create these applications natively on all major mobile platforms all at once, without extra development costs.
Approach BPM as a platform. The companies that are most successful with BPM are those start out with a plan for multiple applications. The cost of each subsequent one decreases as they leverage a common license purchase and internal teams gain experience. At the same time, the value of each incremental application goes up as you're building a common platform that people can come to for all types of work, rather than having to log into a whole range of systems.
BPM can be a springboard to address a multitude of application problems, helping insurance companies modernize and automate core systems quickly, easily and affordably. It's a new way to think about the applications that will drive your business through the 21st century.
About the Author: Evan McDonnell is vice president of solutions at Appian, a Reston, Va.-based provider of BPM solutions.