After two major tech builds fell short of expectations, Johannesburg-based specialty insurer Professional Provident Society (PPS) passed the baton to incoming COO David Gnodde and incoming head of business applications and operational finance Stephan Clark. PPS had introduced only one new insurance product in three years, Clark says. "The problem was an overly interdependent legacy system with functionality distributed across multiple applications," he adds, noting that the legacy platform had been developed in-house.
Gnodde and Clark had worked together with IBM's Insurance Application Architecture (IAA) model at Liberty Life (Johannesburg) and brought a strategy based on that experience to PPS (US$1.6 billion in total assets). "Under a goal of widening member financial offerings, flexibility and reduction of total ownership cost were the drivers," Clark says. "PPS' board had decided the IBM-IAA model defined a solution that solved the business challenges."
According to Armonk, N.Y.-based IBM, its IAA suite of models integrates applications and processes across the enterprise, speeding deployment of insurance applications. Among the benefits, the vendor says, are a single customer data repository, seamless channel integration and consolidated reporting.
Clark describes the development process, which began within two months of his hiring in 2005, as "evolutionary rather than a typical RFP process." Software firm Silvermoon Business Systems (Cape Town, South Africa) built the PPS-specific components of the platform and commissioned the solution's generic components.
PPS operates an IBM X Series platform running Microsoft (Redmond, Wash.) Windows Server and a SQL database. Its virtual environment and middleware are powered by open source software from JBoss (a division of Raleigh, N.C.-based Red Hat). IBM WebSphere Business Integrator (WBI/MQ) handles the interactions among the modular components.
"The objective was not to change technology for the development," Clark explains. "The only change was to develop using [Santa Clara, Calif.-based Sun Microsystems'] Java, and some upgrades of existing hardware to address database size and planned performance changes." Total cost for the full end-to-end solution, according to Clark, was approximately US$7.7 million.
Phase One development began in September 2005, and approximately 25 developers delivered the generic components, and generic core and PPS-specific processes in June 2006, Clark reports. At that time the financial systems and stakeholder databases were decommissioned. Phase Two deliverables, completed in April 2007, comprised generic intermediary components and management elements. Over the next two months, the team delivered additional components and decommissioned most of the legacy workflow.
Though the core conversion to the IAA model won't conclude, under budget, until June 2008, PPS already had introduced nine new insurance products by June 2007. "The cost of all new financial products was fully absorbed and paid for in IT savings while reducing the IT spend during development," Clark notes. "We are now extracting administration cost reductions and efficiencies." Next up, he adds, are the decommissioning of stand-alone quoting, and the addition to the platform of the P&C line and third-party medical service providers.
Case Study Profile
Professional Provident Society (Johannesburg, South Africa; US$1.6 billion in total assets).
lines of business:
Specialty insurance for graduate professionals.
IBM's (Armonk, N.Y.) Insurance Application Architecture (IAA) and IT services from Silvermoon Business Systems (Cape Town).
Overhaul legacy application architecture to improve business agility and enable product innovation.