For insurers, service-oriented architecture can enable interoperability among systems and foster more effective application integration, while leveraging previous investments in core applications.
Q. How can insurance companies benefit from service-oriented architecture (SOA)?
A. Guru Vasudeva, Nationwide: Insurers can benefit from SOA because various business functionalities often are invoked across different delivery channels and different processes. Exposing these functionalities as services would enable insurers to write them and access them from anywhere. This is especially valuable in the insurance industry, since a number of these business functions are embedded in legacy code that can be refactored and made available as services. SOA would enhance our flexibility and enable us to respond to market changes by improving the agility of automated processes to change as business needs change.
A. Chris Brown, Hartford Life Insurance: The biggest potential benefit is effective application integration, particularly in mixed environments. This is possible with the standardization that has accompanied the SOA movement. Major vendors have agreed on common approaches that allow interoperability between application components on different platforms. Ultimately, this allows for better enterprise integration design and "future proofing" for new applications, as well as a viable strategy for integrating legacy applications.
A. Rod Travers, Robert E. Nolan: Done right, SOA can help insurers integrate the information chain between departments, policyholders, agents, brokers, service suppliers and information suppliers; leverage investments in existing core applications (e.g., policy administration and claims) by extending their functionality; reduce product time-to-market, as SOA reduces the technical roadblocks that often hamstring business process changes; and adopt and remain current with industry transaction standards, such as those from ACORD.
A. Alistair Farquharson, Digital Evolution: The most talked-about benefit of SOA is the opportunity it offers for cost saving and efficiency improvement with service reuse. However, the most important, and interesting, opportunity SOA offers insurers is the use of XML and Web services to drive efficient partner interaction. The use of XML and Web services for B2B transactions will quickly become a qualifier as large distribution channels begin to require that partners use Web services to interface with them.
Q. What are the obstacles to implementing SOA?
A. Brown, Hartford Life Insurance: SOA across an enterprise presents significant design complexity, and large implementations will meet with some obstacles. SOA will share some of the challenges that impacted component-based software design, including hurdles in achieving optimal reuse of exposed services. Addressing performance will be important. One potential cost of this flexibility is speed, and it's important to ensure that this is thoroughly considered in planning and design. Capacity and performance management will have to get more sophisticated to accommodate a more complex interaction between multiple systems. In addition, there are still security implications that need to be addressed.
A. Travers, Robert E. Nolan: The biggest obstacle to realizing business benefits from SOA is one that has plagued insurers for decades. The cultural divide between business and IT. Removing this obstacle is a shared responsibility. IT must become more service-oriented, more knowledgeable about the business and more oriented toward business impacts versus technology itself. Business leaders must learn more about technology, become a creative force in how technology is leveraged and be accountable for the business payoff from technology. Another obstacle is aging infrastructures. Many companies still depend on legacy systems that don't fit the SOA model.
A. Farquharson, Digital Evolution: The use of XML and Web services, both within the enterprise and among partners, has a few minor technology challenges, including the immaturity of some of the standards and the potential performance and bandwidth overhead of XML. These challenges are not insignificant but are easily overcome with the right technology solution. The bigger challenge is an organizational one. It is inevitable that grassroots development will overtake the capabilities of the larger organization, leading to inefficiencies and subsequent rebuilding.
Q. The terms "service-oriented architecture" and "grid architecture" often are used interchangeably. How are SOA and grid similar? How are they different?
A. Vasudeva, Nationwide: Grid is different from SOA. Grid architecture is all about leveraging the computing power that is available across the network to perform a task. It is really a distributed computing version of parallel processing. Grid implementations may leverage Web services and SOA concepts. Similarly, SOA implementation may leverage grid to distribute the workload across multiple servers.
A. Brown, Hartford Life Insurance: Grid architecture addresses the ability of applications to collaborate on tasks that need serious scale, such as immense calculations. SOA is focused on creating a service-centric way to expose, combine and use application components and functionality to achieve more effective integration. There is work underway that aims to integrate SOA and grid architecture, ultimately allowing more flexible application utilization of grid capabilities.
A. Farquharson, Digital Evolution: Grid and SOA are certainly related, but they are not the same thing. Grid is about sharing resources, including computing, network, storage and application resources. SOA can be both the way grid is implemented (i.e., shared storage operations delivered as a service) and an example of a grid architecture (i.e., offering part of an application as a service to other applications).
Q. What developments in SOA can insurers expect to see in the future?
A. Brown, Hartford Life: You will see a maturation of both the tools and their usage in the future. The hype cycle will settle down a bit, the performance and security concerns will be reduced with the advent of stronger approaches and products, and both the technologists and their business customers will have a bit of experience under their belts to guide best practices and decisions in future implementations. Insurers will benefit as they realize lower cost integration through standardization and the resulting efficiencies that are attained.
A. Travers, Robert E. Nolan: SOA and related technologies have been taking shape for several years. Perhaps one of the most significant developments is the advent of BPM [business process management] systems, some of which provide the integration elements of SOA. More importantly, BPM systems enable a process owner to manage the many components that make up a business process: workflow, business rules, systems, people and performance. As SOA becomes more prevalent, we can expect such process orientation to become more common (and more practical) in core applications such as claims and policy administration systems.
A. Farquharson, Digital Evolution: From a technology perspective, SOA will continue to evolve toward a policy-driven environment, allowing organizations to centrally define security and management policies and monitor their services compliance with these policies. The insurance industry will most likely be an early adopter of SOA for partner communications given the competitive advantage SOA offers this sector. This means that the insurance industry should expect to see large insurers, and large distributors of insurance products, mandating the use of XML and Web services for all inter-organization communications.
The Experts: Soa
Assistant Vice President of Life Advanced Technologies, Hartford Life Insurance,(Simsbury, Conn.)
Guruprasad (Guru) Vasudeva
Enterprise Chief Architect, Nationwide, (Columbus, Ohio)
Senior Vice President, Technology, Robert E. Nolan, (Dallas)
Vice President, Technology Digital Evolution, (Santa Monica, Calif.)
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio