By: Jeetu Patel and Joshua Shehab, Doculabs
As insurers allocate their IT budgets for 2002, they face a wildly different economic environment from that of one year ago. Even before the events of September 11, the economy was in the midst of a decline that was rapidly approaching recession levels.
In the near term, the insurance industry will suffer due to claims settlements from the September 11 disaster, as well as the general decline caused by a slumping economy. Yet, after these near-term losses, we believe the insurance industry stands to experience a phase of significant growth. In the face of national uncertainty, individuals and businesses will buy policies and bolster existing policies in order to secure their financial futures and ensure long-term stability.
Technology will be a catalyst to helping insurers correct near-term lossesand capitalize on longer-term opportunities. Technology enables insurance companies to streamline business processes, increase overall efficiency, and ultimately reduce operating costs. Moreover, technology can help insurance companies attract new customers, retain their existing customer base, and increase the profitability of each customer account.
There are a host of technologies and vendors that are jockeying for the attention of insurance IT professionals and management. At Doculabs, we think the most important ones to focus on in 2002 include:
-- Customer Relationship Management
-- Content Management
-- Integration Technology
Customer Relationship Management
One technology that will be key to meeting the needs of the insurance industry both now and in the future is customer relationship management (CRM). Implemented in conjunction with a comprehensive enterprisewide CRM strategy, CRM solutions can help companies with some of their most pressing needs: attracting, retaining and servicing customers efficiently. CRM solutions can include a number of different functional components, including customer service and marketing automation.
CRM ensures that customers receive the same level of service, regardless of the channel, by providing a common view of a customer's account information and contact history throughout an organization. As such, anxious customers seeking information won't be left feeling as though their critical information is missing because they've had to re-state their request and information every time they switch contact channels. Customers receiving the best service will not have an impetus to switch insurance companiesespecially given the current state of the economy and world events.
Among the leading CRM vendors are suite vendors such as Siebel Systems (San Mateo, CA) and Kana (Menlo Park, CA), which provide integrated packages for customer service, marketing automation and sales force automation. In addition, there are smaller vendors that target these individual application areas.
At the same time, CRM is gaining favor not just as a stand-alone category but as one of the strategic infrastructure layers needed for successful e-business. Thus, CRM software will continue to evolve from specialty solutions into the primary layer for supporting the businessjust as enterprise resource planning (ERP) systems have evolved into primary layers for back-office application support. In fact, we're already seeing some convergence in the CRM and ERP arenas, as PeopleSoft (Pleasanton, CA) and Oracle (Redwood Shores, CA) have added CRM offerings to their ERP suites.
Finally, we're already seeing e-commerce vendors such as Intershop (San Francisco) and Blue Martini (San Mateo, CA) extend platforms by incorporating CRM capabilities into their solutions. This is likely to blur the lines between different software categoriesthe capabilities of CRM will still be critical, but you may be able to use a variety of systems in order to get them.
Content management solutions are essential to insurers that seek to streamline business processes and maximize back-office productivity. Most carriers store vast amounts of customer data in a number of disparate repositories. Often, the data from one system is incompatible with another, much less useable by a CRM solution for Web presentation. As a result, companies must update multiple repositories as information changes, especially regarding policies. In addition, much of the data resides on paper, which results in storage costs.
Today's Web content management products come from different legacies, which will in some ways dictate the types of applications that they are best suited for. For example, some content management systems are provided by document management vendors, such as Documentum (Pleasanton, CA), FileNET (Costa Mesa, CA), and Open Text (Waterloo, ON). E-commerce-centric products from vendors such as Open Market (Burlington, MA) and BroadVision (Redwood City, CA) manage content that is needed to support the commerce process. Finally, there are a number of vendors, such as Vignette (Austin, TX) and Interwoven (Sunnyvale, CA), which have entered the market with "pure-play" solutions that are specially designed forWeb content management. These systems were built specifically for managing content and delivery on the Web, no matter what type of business application is supported.
In an effort to prepare for a wave of new policies following the September 11 losses, insurers will need to invest in infrastructure technologies and integration components. Such technologies are necessary for system interoperability, and for ensuring the reliability, scalability and performance of applications that involve disparate systems. Deploying integration technologies will strengthen the foundation for all other initiatives.
Enterprise application integration (EAI) technology is designed to tie all of an organization's applications together, allowing them to communicate with one another. EAI products come with adapters and connectors for common legacy applications, databases, ERP systems, and newer systems such as CRM solutions, content management applications and e-commerce platforms. EAI products also include connector development toolkits, to build connections to systems that did not have connections included with the product.
Prominent EAI vendors include iPlanet (Santa Clara, CA), Tibco (Palo Alto, CA), Vitria (Sunnyvale, CA), and webMethods (Fairfax, VA). However, insurance organizations looking at EAI products should be aware that the landscape is changing and the technology bets you place today will have ramifications on your infrastructure in the future. For example, there is clear convergence among EAI, application servers and e-business platforms. Vendors such as BEA (San Jose), IBM (Armonk, NY), and iPlanet now offer technology in all of these areas. In addition, there is convergence with the portal space, as companies such as Tibco use their own EAI technology as a key piece of their portal strategy for aggregating applications and content in a single access point for users.
Finally, an important technology consideration, both now and in the long-term, is security. After September 11, we tend to think of terrorist attacks only in the narrow scope of violent actions. However, it is likely that further attacks would take a variety of forms, including cyber-terrorism. As the nation scrambles to shore up its physical security against further attacks, insurance companies face an immediate and critical need to shore up the security of their technology systems.
Security must be applied to multiple levels of a technical infrastructure. At the most basic level, physical security must be in place to ensure that only authorized personnel are able to access computer equipment. At the network level, technologies such as firewalls and secure routers are needed to prevent unauthorized access to a company's network from an external source. Security at the application level involves encryption and authentication. Data encryption renders data in a given repository unreadable until an authorized user decrypts it, and data-stream encryption does the same for data as it is transferred between systems.
Security vendors offer widely varied solutions. Vendors such as Entrust (Plano, TX) offer public key infrastructure (PKI) solutions, which comprise a number of the components mentioned above. Check Point (Redwood City, CA) and Cisco Systems (San Jose) offer secure routers and firewalls. Other leading security vendors include Siemens (New York), Computer Associates (Islandia, NY), Verisign (Mountain View, CA) and Baltimore Technologies (London). Given the unique security needs of insurers, it is imperative to conduct a comprehensive audit to assess the current level of security, identify potential vulnerable areas and modify or upgrade the infrastructure to meet security needs.
In the future, given the state of the economy, many companies may make the assumption that procuring these technologies should wait until the market rebounds. However, because financial losses are virtually certain, it makes sense for organizations to maximize their loss opportunities at a time when such losses are expected. In this way, insurers can build efficiencies before the market rebounds, and put the key components in place in order to take full advantage of the market upswing.
However, it is essential that companies make the right buying decisions when they adopt these technologies. Buying the wrong solution is always detrimental, but the current business atmosphere and economic conditions would further enhance the negative effects of a misstep. Developing and executing a strategic IT plan, followed by an informed IT selection process, will help ensure that insurance companies partner with vendors that are in the best position to meet their specific business, functional and technical requirements.
Jeetu Patel is executive vice president of research and Joshua Shehab is a technical editor with Doculabs, Inc. (www.doculabs.com), a Chicago-based independent research and advisory firm that helps companies plan their e-business strategies and select and exploit technologies for e-business.
Key Technologies for 2001: Overview
CRM: Provides a common view of the customer across the enterprise, regardless of channel (phone, e-mail, Web-based chat, etc.); includes applications for customer service as well as marketing automation and campaign management.
Content Management: Manages critical customer information that resides in multiple repositories and legacy applications across an organization; translates the information into a common format that can be used for print and Web presentation.
Integration Software: Links all of an organization's key systems so they can exchange data and transactions, without requiring costly and time-consuming point-to-point integration. Key to helping disparate systems interoperate, leveraging legacy investments, and integrating in the wake of M&As.
Security: Technologies and architectural designs that limit access to a company's information systems to authorized users; protects a company's technical infrastructure from malicious attacks.