ISLF Coverage: Building With Standards

Business architecture, like any architecture, is all about planning: The insurance industry, in the midst of a major move from legacy systems to integrated enterprise systems, needs to map out each step in detail. Key to that planning is the development of standards that enable the building process -- that was the chief theme at the Insurance Standards Leadership Forum, produced by Insurance & Technology and ACORD, held on Sept. 30 in New York.

"Progress in history has been enabled by standardization, and insurance has lived without standards for some time," said Michael Boyle, CIO and vice president of Allstate Financial, in his keynote address. Explaining that the standard width of Roman chariots dictated the width of the Roman Empire's roads -- and eventually that of British and American railroads -- Boyle related that standards allow familiarization and facilitate change. Using the impact of DTC (Depository Trust Company) standards on the capabilities of Wall Street, Boyle drove the point home: "Trades that cost $600 to process 15 years ago now cost $9.99 over the Web."

Allstate is trying to revamp back-office operations by going 90 percent paperless, and the way they plan to get it done is through standards-based technology, according to Boyle. Tools like Web services and XML cut out some of the grunt work by allowing reuse and customization, he said. Comparing Allstate's plan to that of Southwest Airlines, Boyle added, "Southwest flies only one kind of plane, where other airlines will have 40 to 50 different kinds of planes. The variation on models keeps pilots and mechanics from becoming experts."

In the session, "Beyond ROI: Winning the Resources Challenge," Gary Knoble, VP of data management, the Hartford Financial Services Group, and a panelist at the conference, discouraged the use of "quick and dirty" short-term implementations that do not use standards. "It is important to develop a process for consistent implementation of standards across the company and find out how to move them throughout," he commented. Knoble also explained the advantages of using ACORD definitions, XML language and SOAP (Simple Object Access Protocol) for both internal and external systems. "The first thing a programmer usually does is define data -- standards cut this step out. Reusable components can provide employees with flexibility and industry best-thinking without relying on your own people for everything, and increase the number of vendors and business partners you can work with."

To illustrate the current state of affairs in the IT organization of the industry, Boyle compared some organizations to an artists' colony. "Some IT employees paint in blue while some paint in red, and those that paint in blue don't speak to those that paint in red," he related. Allstate is trying to put an end to the artists' colony mode of operation and build what Boyle described as an engineering facility, with standards in place to allow both open communication and growth. "We want the type of organization that talks to users and each other and puts architecture in place as an enabler."