Getting There First
One Size Doesn't Fit All
Of course, speed-to-market initiatives that make economic sense for some carriers won't for others. The difficulty with moving to a packaged solution such as Sherwood's, according to Bill Devine, vice president, information services at Newark, NJ-based Prudential Financial , $379 billion in assets), is that ""the architecture requires an enormous investment to convert from where you are."" For a company of the sheer scale and business-process complexity of Pru, he argues, ""it's very difficult to create any business case around moving from one platform to another.""
Prudential is in the midst of an business/IT partnership initiative called ""Product Variations."" The goal is to ""identify the business levers we need to incorporate into the underlying infrastructure within systems that will allow us to very quickly modify or adjust products on a periodic basis or create 'clones' of products without having to go through extensive development,"" according to Dave Sutcliffe, vice president, product development.
The partnership is driven by a keen sense of the importance of sound business and information technology practices melded together in strategic fashion, according to Sutcliffe—a thesis he says is supported by PRIDE (Product Initiation, Development and Effectiveness), the recently published study by TCi Consulting & Research (Creskill, NJ, see table on pg. 47), in which Prudential participated with 13 other major insurers. ""It's really the first time that the industry is looking at a benchmarking study across different companies, and what we're finding out is that in many cases the underlying technology doesn't differentiate one company from the other in their ability to respond effectively to market conditions,"" Sutcliffe asserts.
The lesson to be drawn from the study, Sutcliffe ventures, is ""understanding the business levers, the things that allow you to build the initial foundation and chassis for a product."" By way of illustration, Devine notes that in the past, automobile manufacturers used to issue a radically different product every year. ""You now see a base design lasting years before the next major model change,"" he says. ""We see product development for insurance products as very similar: building a chassis that is flexible enough to allow you to enhance it in a go-forward way to maintain competitiveness.""
The current insurance product manufacturing process falls short of this ideal, in Devine's opinion. ""If you have to shut down to retool the factory every time a product comes out because you don't have a good understanding of what are the levers to give you increased revenue and speed to market, you're going to be behind the competitive curve,"" he says.
To get ahead from a technology point of view requires exploiting existing resources and working in partnership with vendors—including traditional providers of core legacy systems and code—to find a way clear to new technology options, according to Devine. Prudential's strategic platform for variable products is CSC's (Austin, TX) Vantage-One. CSC is working to streamline the product development in an initiative called the Strategic Technology Program, which utilizes ""business-objects and a surround strategy to Web-enable the launch platforms they've had in place and in production for years,"" Devine says. ""They're also moving to introduce XML as a surround strategy for all their existing tables and databases,"" he adds.
""What we're doing is challenging CSC and others to not only create the technology, but to help us understand the business case for us to invest in these additional tools,"" Devine explains. While newer companies hawking radical solutions have a contribution to make to the speed-to-market problem, ""we're trying to challenge a marriage between the new technologies and the proven production experience,"" possessed by the old, established vendors, he adds. ""If the newer players would combine in some sort of alliance to increase the options for larger insurance companies, there would be business for everyone and we would be able to improve ourselves.""
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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