At a time when massive projects are anathema, and insurance companies are looking for incremental deliveries on shorter timetables, the California State Auto Association (CSAA), has turned to IBM BCS (Business Consulting Services) to help it engineer a radical business and technology transformation due to be completed by the end of 2006.
The San Francisco-based affiliate of AAA (Heathrow, FL) is on the verge of finalizing a contract to use IBM's Insurance Transformation Solution to replace legacy systems and introduce new business processes in order to remain relevant in an increasingly competitive market. "Our approach to this was, to say that if you look five, seven years from now, we don't have the infrastructure to stay in the game," says Bob Wilkes, CSAA's CIO and senior vice president of sales and service. "Given a hundred years of history, we felt we needed to take the risk."
CSAA's goal, according to Wilkes, is to become a customer-centric organization through creating "one system containing membership and insurance information and a customer relationship overlay, all with Web-based technology to serve not only our agents and customer service reps, but to provide our insureds with the seamless channels," that are increasingly demanded by today's customer.
In addition to its core emergency roadside service offering (ERS) and travel agency services, CSAA offers automobile and homeowners insurance. "Because of our reputation and our brand, if a customer calls and changes some aspect of their membership, they automatically think it changes their homeowners or auto," Wilkes notes. But with two different systems, with further disparate internal elements, it's hard to prevent errors and provide a level of service that matches customer expectations. "For a membership company to take advantage of the AAA brand and image we need to get our systems working together," Wilkes explains. "Our current legacy systems for insurance, membership and travel don't necessarily talk to each other, and the customer data lies in four or five different files."
Over the past 180 days, CSAA has worked with IBM on requirements in a process involving about 50 IBM professionals to supplement a large contingent of CSAA staffers. "We have about 80 subject matter experts working many hours making sure we have the requirements and helping design the test matrices for the deliverables," Wilkes says. "The business needed these changes in order to be competitive, and we needed to get them to commit--which they have."
The transformation plan involves replacing "most of our policy administration systems for both membership and insurance, our product factory, rating engines, commission systems, billing systems and overlaying a CRM model over the top of all it," Wilkes says.
Among the new vendor products CSAA has decided to implement include a policy administration system and a rating engine from TiG (The Innovation Group, London), "with San Rafael, CA-based Fair Isaac's Blaze as a rules engine overlay," Wilkes says, as well as a Callidus (San Jose, CA) system for compensation, and E.Piphany (San Mateo) for CRM. "We've moved our middleware to IBM's WebSphere," Wilkes adds.
CSAA's transformation is being executed in accordance with IBM's concept of an "on-demand" organization, characterized by "responsiveness in developing new revenue-generating services, offerings and policies...variability" in the capacity to scale capabilities up or down according to current needs, "focused on transforming capabilities," and resiliency, according to IBM. But Wilke's buy-in to the idea has as much to do with his good opinion of the process and technology guidance of IBM as its manner of collaborating with the client. "The most important thing has been the spirit of the deal, the collaborative effort," he remarks. "Over the last seven months we've spent about eight days off-site talking about how the relationship works and put the written contract off to the side. That has really helped move the process forward and has created a solid partnership."
From IBM's perspective, "the joint team of IBM and CSAA has really come together to envision an end-state, supported by a strong value proposition, that allows the team to focus on the end-game and the true benefits that can be gained," says Pat Hamilton, associate partner, insurance practice, IBM BCS. "This has allowed us to lay out a path that will be supported by both process and technology reengineering, but fully supported by the business goals."
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