Though some view it as controversial and others consider it mandatory business strategy, outsourcing is here to stay. And it is no longer strictly about reducing costs; it's about doing things better, quicker and more efficiently.
As the industry continues its outsourcing adoption, we've seen a recent shift in focus. Early outsourcing initiatives focused on IT development, while many companies are now considering business process outsourcing (BPO). The shift comes with a strategic focus on improving business and strengthening core competencies.
With the last 20 years spent reengineering business processes and implementing seamless workflows, how do we now take a portion of this well-oiled operation and ship it elsewhere? Maintaining the integrity of the business process is the number one priority. While good people resources and skills are critical pieces of the puzzle, technology will enable the required integrated, yet distributed, process.
If not already in place, an insurer should start its BPO readiness by implementing a global connectivity strategy (i.e., Web-enabled), ensuring the operational agility required to effectively move a piece of the process to another location. If we think of the operational groups as connected by the technology equivalent of rubber bands, the operational components can theoretically be moved, or "stretched," anywhere, while keeping the connection intact.
In addition to the obvious need for a wide-reaching communications infrastructure with ACORD XML at the high level and channels such as virtual private networks (VPN) and the Internet as the infrastructure plumbing, an effective connecting strategy is dependent upon: distributed workflow engines, low-bandwidth image transfer capabilities, and Web-enabled policy administration systems
Distributed Workflow Engines
With a Web-based workflow application to tie the organization together at the process level, outsourcing can be accomplished by extending this seamless workflow beyond the walls of the operation, gaining access to top-notch expertise and services.
To be quick and nimble, the workflow application must be dynamically modified (i.e., redirecting work queues from one location to another, on the fly). Successfully supporting portions of the operation in far-flung locations with minimal headcount requires an intelligent workflow system capable of self-monitoring and automatic management notification of any workflow problems.
Latency issues with image transmission were an early roadblock to BPO. Moving (pushing) any image volume between locations required a significant amount of bandwidth. With a "pull" philosophy and new imaging compression technologies, the insurer can maintain an image repository, distributing a work token rather than the entire image. With the token approach, users pull an image from the repository the few times the actual image is required, as opposed to having all images pushed to them.
Web-Enabled Policy Administration
Problems with remote access to core record-keeping systems typically made earlier BPO an all-or-nothing proposition. Early initiatives required installation of the application at remote locations, raising issues such as software and data synchronization, and security.
Web-based policy administration systems enable an efficient distributed environment, requiring nothing more of users (wherever they may be) than Internet access and a Web browser. A single copy of the application and data is retained and maintained at the home office, conferring the benefits of reduced security issues, no data synchronization challenges and a single version of the software.
With efficient, feature-rich Web applications, business issues (not technology issues) are the major drivers of an insurer's decision to outsource segments of the business flow.
Good outsourcing partners and skilled users are key, but the technology will be the glue that binds and makes it all possible. To be successful, however, an insurer needs to take a holistic approach to its operation and implement a solid connecting strategy before stretching the "rubber band" across BPO waters.
Eric Miller, CPA, CFP, is senior principal with Charlotte, N.C.-based Highpoint Partners.