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Deconstructing the Business

Business process management software and process discipline are providing the means to introduce new levels of efficiency and transparency of operations. But while interest in BPM began with cost-cutting, it has become a weapon of strategic opportunism.

In the early 20th century, Frank and Lillian Gilbreth built upon the time study work of Frederick Winslow Taylor to develop time-and-motion studies. Perhaps better known for their family memoir, "Cheaper by the Dozen," The Gilbreths' passion for economy led to their development of a set of basic motions that allowed them to analyze and deconstruct any manual process.

Now, at the beginning of the 21st century, technology has provided the basis to deconstruct and reengineer not physical, but information-based processes, with revolutionary implications for information-based businesses, such as insurance. Business process management (BPM) discipline and technology have some distance to go before reaching maturity, according to industry analysts, but BPM projects already are scoring important victories -- and they are pointing to the promise of a far-more-efficient future for insurance operations.

"The promise of BPM for organizations like ours and others is to drive greater discipline and awareness that companies need to define what their operational model is, what their business delivery is, and, therefore, at the highest level, what their business architecture model is," says Todd Ellis, senior vice president, Chubb & Son, and CIO of Chubb Commercial Insurance (CCI), the largest operational division of Warren, N.J.-based Chubb Group (more than $14 billion in 2005 revenue). >>

In May last year, Chubb went live with its new Commercial Underwriting Workstation Inventory Management System, utilizing Baltimore-based MetastormBPM software, which serves as a front end to a reengineered rate-book-issue (RBI) process that preserves locally based underwriting and agency management while gaining the efficiency of a centralized service function, according to Ellis. Where CCI used to have multiple local RBI processes corresponding to its 40-plus field branches, it now has one standardized process, and its formerly disparate service force will soon be condensed into three service centers.

In addition to significant immediate efficiency gains enjoyed by Chubb, the success of the initiative "positions us to have greater cost transparency, deliver greater quality, deliver higher degrees of throughput, and to track down bottlenecks in our processing life cycle," Ellis claims. "In the long run, that will help us reduce our overall delivery costs, improve our overall quality and improve our overall efficiency -- and all that benefits our agents, our policyholders and, ultimately, our shareholders."

From Frugality to Opportunism

Chubb's BPM success marks an advance in the understanding of BPM for the insurance enterprise, according to Laura Mooney, senior director, corporate and product marketing, Metastorm, Inc. Interest in BPM began in earnest three to five years ago, when companies looked at the BPM technology as a means of simply cutting waste out of an organization and streamlining operations, she asserts. "Along the way they realized that many of their core functions revolve around business processes and that their strategic objectives thus depended on them," Mooney says. "That led to a realization that BPM was more than just technology -- that it involves people, change, improvement and a process-centric focus on how to run a business."

Put another way, insurers' interest in BPM is increasingly motivated less by cost anxiety than by strategic opportunism. An organization such as Chubb -- having achieved greater productivity, service and accuracy in its commercial RBI function -- will begin to see other vistas opening, Mooney predicts; they begin thinking, "Let's start looking at how we can expand this across the enterprise and start taking advantage of process [improvement] for more-strategic initiatives -- to generate innovation in the business, become more agile, and to use the visibility into processes that we now have to take advantage of other opportunities."

Organizations without the insight Chubb has gained are likely not merely to fail to envision opportunities, but actually to act to impede them, in effect, by investing in more point solutions for underwriting, claims, compliance, etc., according to Mooney. "It's about achieving end-to-end visibility across your business and having a process platform that connects the point solutions that you already have," she argues. "Adding more point solutions will only add greater complexity versus bringing the applications all together under one umbrella that you have end-to-end visibility into."

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

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