For many insurance CIOs and IT executives, it isn't an accident that "hype" is a four-letter word. Past experience has taught them that the "next big thing" in insurance technology doesn't always live up to its promise.
So when the idea of SOA -- and all the hype that has come with it -- hit the mainstream several years ago, it wasn't a surprise that insurers were skeptical. Wasn't SOA just another buzzword, a new way to describe concepts that already existed? And how can you cost-justify investment in SOA, an inherently abstract idea, to the business?
Looking back now, though, evidence is starting to emerge that SOA has outlived the hype and, for some insurers, has delivered on its promise. Early adopters are seeing gains in flexibility, process reuse and speed to market. "The maturity levels of the organization are rising," says Cindy Maike, cofounder and strategic partner of Smallwood Maike & Associates, an Overland Park, Kan.-based insurance consulting practice. "We're starting to see some reuse of the services from an IT perspective. We're also seeing better governance around some of the initiatives."
"We've gone down these paths in the past, and there have been these flavors of the month, but I truly believe that there are a number of things that SOA provides that give you the ability to respond, whatever the context is at hand," adds Andy Edwardson, VP of information technology at McPherson, Kan.-based Farmers Alliance Mutual Insurance (FAMI; $145 million in annual written premium). "If you implement things correctly, you should be able to build a nimble environment."
As insurers continue to realize real business value from SOA, the concept of service-oriented architecture has changed from an abstract idea to a tangible, long-term strategy. "SOA is here for the long haul," Smallwood Maike & Associates' Maike suggests. "It's not like it's the latest fad. It's an architectural style that can really help us from an IT perspective as well as a business perspective."
Perhaps with that sentiment in mind, fewer insurers are wondering whether SOA can deliver on its promise, but instead are examining what needs to be done from a workforce, cultural and governance standpoint to ensure that their SOA projects succeed. And they'd be well served to do so, contends Vivek Mehra, VP, global financial services and insurance, for San Ramon, Calif.-based global IT services firm Keane.
Mehra says that many insurers have been unable to realize the full benefits of SOA, particularly around reuse. "The reason for that is not technology, it's the governance around it," he explains. "Reuse typically requires a little bit of design overhead. You have to design for it."
"Typically, you still find a lot of rogue IT [developers] within different lines of business," Mehra continues. "So they have little incentive to work with somebody else in the organization to design a service that can be commonly used."