Montana State Fund (MSF, $238 million in net earned premium) has taken what its CIO terms a huge step out of its legacy environment with the successful deployment of Guidewire Software's (San Mateo, Calif.) Web-based ClaimCenter end-to-end claims processing platform. The Helena-based public workers' compensation carrier engaged HCL Technologies to lead the implementation effort in two distinct engagements.
Guidewire ClaimCenter replaces an 18-year-old, mainframe-based legacy claims system that MSF CIO Al Parisian says was used "for the entirety of its life on an ad hoc, convenience and opportunistic basis." Over the years, the system had seen multiple code accretions and extensions to a data schema as old as the application itself, according to Parisian.
While MSF currently provides coverage to over 70% of Montana's employers, Parisian says, the limits of the legacy system threatened its competitive position owing to its limited functionality and the difficulty of integrating it to more modern systems. High maintenance costs were also a driver for replacement.
MSF faced a serious challenge in moving to the Guidewire system both because of the stark transition to ClaimCenter's modern data schema but also because of limited internal capacity for large IT initiatives. "Like many insurers, MSF is coming off a family of legacy applications and our appetite for change is greater than our capacity to introduce it right now," Parisian says. However, the insurer calculated that it the cost of engaging an outsourcing partner was more than justified if it meant a faster transition to a more modern state. "We determined that what we would lose by being in the past for 10 years longer was too high a price to pay," Parisian adds.
MSF embarked on its relationships with both Guidewire and HCL in 2004. By March 2006 the carrier went live with Guidewire ClaimCenter 2.0. Of the implementation challenges, Parisian comments that HCL had developed tools that enabled the outsourcer to analyze MSF's legacy data schema. "They were able to show us for every field how much of the data we had was consistent with the new set of parameters demanded by the Guidewire application, and how much wasn't," he says. "Knowing that up front in such an organized fashion helped us direct the work of our own business teams and developers, as well as HCL's work, to ensure that we had a successful migration."
The success of the initial implementation motivated MSF to immediately invest in an upgrade of ClaimCenter. "That decision was made, and our relationship with HCL was strong enough that we called them and reengaged them to work with us on the upgrade," Parisian recounts. "The upgraded system went into production May 20, 2007, it's stable and we're already talking about the next project."
From an operational standpoint, the ClaimCenter deployment has supported a reduction in MSF's average temporary total disability (TTD) duration-the time an employee is on total disability status-from 43.5 weeks to 29.6 weeks, owing to the granularity with which the system enables management of cases. Parisian says the system has also introduced a radically improved degree of business agility. "We get requests dozens of times a week to make changes to the application that are completely addressable within the rules engine of the Guidewire application-we're able to make changes on the fly as to how the application looks and behaves for the business operation, and we're able to do it without even taking down servers," he reports. "The business operation has been introduced to a level of responsiveness and flexibility that was technically impossible before."
Parisian adds that another important gain yielded from the Guidewire implementation effort was that, "it taught us that we could effectively partner with a modern outsourcing company without losing any control or confidence in our own business operations and IT support."
When Montana State Fund (MSF) engaged HCL Technologies to help the public workers' comp insurer replace its homegrown legacy claim system, CIO Al Parisian expected "a market basket of services." What MSF actually found was a deeper and more productive partnership, which resulted in the extension of the relationship to other projects, a standing invitation for HCL to bid on future work, and greater confidence on the part of MSF to leverage outsourcing relationships in the future.
"We knew we were hiring qualified coders, but HCL's ability to help us with change management aspects of the implementation were more strategic than we anticipated," Parisian says. "What we've come to understand about HCL's capabilities is that there may be higher-order intellectual development that we don't have to grow internally because we can safely park it with a company like HCL," Parisian says.
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