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Is Your Global Technology Infrastructure in Order?

Infrastructure considerations such as performance, capacity, scalability, and reliability are critical to an insurer's ability to deliver on its business strategies—especially in an increasingly global industry.

By: Todd Hollowell and Linda Andrews, Doculabs.

In many respects, insurance is an industry in the process of reinventing itself. It's offering new products and expanding into new product lines—the result of regulatory changes that have created enormous opportunity. Worldwide, the convergence of insurance, banking, and asset management continues unabated, as does the ongoing wave of mergers and acquisitions, both domestic and international. In fact, leading insurers are now poised to become global players in the financial services industry.

But these developments also mean that insurers now face competition from new sources. Moreover, they are being asked to deliver their products through more channels. Customers who can now buy insurance at banks and other retail outlets also want to obtain insurance products and services not just through agents, but through contact centers, e-mail, Web, fax and wireless devices. And business partners such as agents or healthcare providers are increasingly demanding access to the networks of insurance organizations. US carriers have further concerns: compliance with regulations such as the Health Information Portability and Accountability Act (HIPAA) and the Gramm-Leach-Bliley Act, which present new requirements for protection of personal health and financial data.

For insurance organizations, many of which have had only minimal online presences, these changes present major challenges. Technology issues such as security, availability, capacity and scalability have been moved to the forefront.

In the midst of this vastly altered global competitive landscape, what are the implications for an insurer's information technology infrastructure? At Doculabs, we see business strategy and IT strategy as intertwined. Here, we look at some of the key technical and organizational issues an insurance company must address to enable its infrastructure to meet the challenges of an increasingly competitive and international marketplace.

Technical Concerns

The technology infrastructures of most organizations have been built upon and around existing systems, legacy applications and proven business models—a situation that is particularly characteristic of the insurance sector. As organizations add capabilities and functionality through the integration of systems such as customer relationship management (CRM) solutions, supply chain systems and portals, there is an increasing need to add capacity and to take steps toward an infrastructure that is fast and scalable, yet secure. Among the foremost technical concerns in this process are those involving data sources, integration and security.

Data sources are among the most critical elements of an insurance company's technology infrastructure. IT operations of most insurers include many disparate data sources: relational database software systems, mainframe systems, line-of-business systems, and even external data sources—such as those of partners, suppliers or customers.

The key is to be able to get at these data sources. Consider customer service environments, where customers want the ability to access all their data via any channel—in person, by customer service rep, Internet, or wireless. The data they want may reside in disparate back-end systems, so companies need a way to provide seamless access to it. The architecture of the database software a firm uses will have some impact on scalability and performance. While some databases are well architected for processing and data-mining applications, others are more optimized for serving up Web content.

Major scalability improvements at the data source layer actually have more to do with the management of database access than with the design of the database itself. For example, an insurer may achieve significant gain by adding a layer that efficiently manages database requests, optimizes queries, makes efficient connections, and handles connection pooling.

Plug-and-Play Approach

Integration solutions are typically used to address issues related to transaction processing or data exchange among disparate systems. These solutions also help bring a "plug-and-play" approach to the integration of these systems, and help ensure transaction-processing integrity. Types of integration solutions include transaction monitors, message queue servers, brokers and enterprise application integration (EAI) or business-to-business integration (B2Bi) components. Among the leading integration vendors today are TIBCO (Palo Alto, CA), SeeBeyond (Redwood Shores, CA), Vitria (Sunnyvale, CA), IBM (Armonk, NY), BEA (San Jose, CA), and webMethods (Fairfax, VA).

From the scalability standpoint, the major consideration at the integration layer is the technique with which the components are integrated with back-end data sources and other applications. The most efficient means of integration is through proprietary adapters provided by the integration vendor. A good alternative (although potentially less efficient) is to use standard object technology such as Enterprise JavaBeans (EJBs) or open techniques such as Extensible Markup Language (XML) interfaces.

An integration solution is imperative for any organization with multiple, disparate back-end systems that must be integrated at the application level—a situation that's become increasingly common as the insurance industry continues to consolidate and organizations with different legacy systems must find a way to make them work together. Any commerce application or transactional application should leverage an integration solution to protect data integrity and ensure that customer transactions are processed correctly. The added advantage is that an integration solution allows you to optimize past investments by utilizing existing infrastructure and applications.

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