CSC Moves Away from Rip and Replace

One of the major topics of discussion at last week's CSC Connect and FutureFocus conferences, held simultaneously in Orlando, Fla. was the Falls Church, Va.-based vendor's push towards more componentization and incremental implementations.In a press and analyst event at the conference, CSC executives said that company had recognized that it has become increasingly difficult for carriers, especially large ones, to replace core systems under the traditional "rip and replace" approach. By taking a more service-oriented architecture (SOA) track, CSC says that it will enable insurers to incrementally modernize their systems while avoiding the downtime and other pitfalls of a "rip and replace" process that doesn't make sense anymore.

In a Q&A session, Celent senior vice president Craig Weber asked perhaps the most interesting question regarding the news:

"It seems to me that there's a little bit of tension between a componentization strategy and your business model, where you have traditionally found revenue and how much control you're willing to cede to your customers, competitors and other partners," Weber said. "I'm just curious to know -- am I misreading that your componentization strategy is at odds with your broader competitive strategy?"

Jay Otterbacher, VP of Exceed Delivery within CSC's P&C division, was the first to answer. Otterbacher said that CSC's biggest asset is its number of existing customers, which makes maintaining and growing that customer base extremely important.

"The growth opportunity we see...is primarily large, tier one carriers that say, 'there is no way I would ever replace my billing system [for example]. If [a new solution] were free and perfect, I still couldn't afford the disruption,'" Otterbacher explained. "We see, by ceding some of this control, by allowing them to take pieces and parts of these systems and successfully implementing them, that we are growing our foundational customer base. We think that will give us a bigger piece of the market. It will be different for us up front but I think long term that's where the industry is going to end up."

Jeffery Schwalk, president of CSC's P&C division, acknowledged in no uncertain terms that there was indeed tension between the business model and where the company was headed with its componentization push. "But, I would rather recognize the tension and help facilitate the change," Schwalk said, suggesting that the industry would inevitably move towards a more componentized approach. "We're trying to position ourselves in front of that curve and to develop solutions and offerings that not only meet customer needs but also put us ahead of the wave of that natural conflict that is going to occur."