The Architecture of Adaptation: Enabling Flexibility With Business Architecture and BPM
Related Sidebar: Keys to BPM Success
The increasing speed of business requires insurance carriers to not only adapt to a changing market, but to do so expeditiously. This means not merely bringing products to market faster, but being able to rapidly reconfigure all the necessary processes of the business to move in on emerging market opportunities before competitors do.
As a result, effective use of business process management (BPM) grows more urgent as insurers increasingly attempt to support policyholders, producers and business partners through multiple channels while continuing to focus on cost control, according to Erik Mann, SVP, insurance group, MindTree Consulting (Warren, N.J.). When it comes to the insurance value chain, "The power is moving outside of the enterprise," he asserts.
"In personal lines, consumers' expectations are ramping up faster than the average carrier's support capabilities," Mann continues. "In commercial lines, more products -- such as business owner protection -- are moving toward commodity status, putting pressure on producers to move faster and exposing differences between best-in-class and lagging carriers."
Pressures such as these have caused a resurgence in interest in the potential of BPM, but carriers are yet to break themselves of bad habits that bar BPM success, in the view of Cindy Maike, cofounder and partner of strategic advisory firm Smallwood Maike & Associates (Overland Park, Kan.). "When you design your business processes, you have to have a services-oriented mind-set characterized by the notion of process decomposition," she says. "You need to break your business processes down to the lower-level activities and tasks that you perform rather than looking at them from an end-to-end perspective."
For all the value that workflow technology has brought to the industry, it has conditioned a high-level linear approach to process that fails to take into account all the component parts of processes and their proper disposition, Maike notes. For BPM to succeed, however, "You need to have people who fundamentally understand business process decomposition as opposed to people who just understand workflow -- and it's a lost art," she laments. "We've gotten too much into putting things automatically into a swim-lane diagram. The flow of process is just the 'how.' But to be agile, companies need to focus on the 'what.'"
To fully leverage BPM's potential for agility, insurers need to be able to either sequentially or nonsequentially reorder processes at the appropriate level of granularity based on the information required to power those processes, Maike advises. Drawing an analogy to the Capability Maturity Model (CMM), at Level 5 business process maturity, insurers could orchestrate business processes in near real time while measuring their effectiveness, she says. "At Level 5, you are actually monitoring what is going on through dashboards and able to quickly and confidently act on the results," Maike comments.
Currently, however, most companies likely are approaching only Level 2 in terms of their ability to deconstruct and reconstruct process, Maike believes. "If you want to get to the ability to manage and monitor business processes and reach a high level of agility, you need to move beyond workflow and use service-oriented concepts to design your business processes."
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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