Tuesday, September 7, 2010

The value of integrated solutions

If you are part of the TIA community you probably know about our solution and the fact that it is an integrated solution for property and casualty insurers.
In many ways the TIA Solution resembles a variety of other standard solutions used for running businesses. Examples could be the SAP Business Suite, Microsoft Dynamics, Oracle E-Business suite, Siebel, JD Edwards etc. etc. Although these solutions are not meant for a P&C insurer they share the characteristics of an integrated solution with TIA.
The notion of one integrated standard solution used to manage core parts of an entire business has evolved during the 1990’es and really matured and expanded during the 2000’s. Especially for companies within manufacturing and distribution these solutions have become de-facto standards as opposed to bespoke solutions or knitting together multiple best-of-breed systems.
This trend has during the 2000’s also emerged in the insurance space with the TIA Solution as one of the front-runners - for many good reasons. As I see it the integrated, standard solution has a number of advantages over loosely coupled best-of-breed components.

  • Predictable release cycle allowing longer term planning
  • System and integration tested “out-of-the-box”
  • Common user experience
  • Single technology platform
  • Single set of business rules and logic
Predictable release cycles
With an integrated solution like TIA, customers should expect a predictable release cycle from the vendor looking at least 18-24 months ahead. This enables predictable planning within the customers business and IT staff and is a pre-requisite for reaping the benefits of an upgrade path. Customer can harvest the true value of a standard solution, being lower TCO and speed of delivery of new business capabilities, technology enhancements and features in general.

System and integration tested “out-of-the-box”
As opposed to a loosely-coupled, best- of-breed component approach, the integrated solution will deliver high quality across the board, being thoroughly integration and system tested with each release. This reduces the effort significantly at the customer side, lowering the cost of gaining new capabilities in the business. By implementing multiple components from multiple vendors no single entity (besides the customer) has the responsibility for ensuring everything works. I expect this to be the primary reason for the growing success for all integrated standard solutions. Bearing the cost for making sure that everything works requires a significant effort. For the vendor of a standard solution this again requires a significant customer base to fund the quality measures necessary to put in place. Today the TIA Solution has a customer base of more than 50 insurance companies spread across more than 31 countries. This kind of coverage is simply necessary in order to sustain a high quality of deliverables of a standard solution.

Common user experience
The value of users only having to familiarize themselves with single user interface should not be underestimated.
Having one place to find customer information, policy information or claims information with a common user experience is attractive to most users. The ability to move from one or the other part of an application within a familiar user experience lowers the cost and increases the efficiency drastically. The training of users is simplified and the general quality of the data and execution of business processes will be higher than relying on several different user experiences.

Single technology platform
The aspect of technology platform becomes especially interesting when “customizable” standard solutions are in focus. For quite a lot of companies where a standard solution is the choice, the solution may however only meet part of their requirements. Typically what we see is the 90% of our customers’ requirements are met by the solution, but what about the rest? This is where configuration and customization comes into play subsequently the technology platform. By having one integrated solution you will have one technology platform underneath to adopt. In the TIA Solution case that would be the Oracle Fusion stack with the underlying Oracle database.
Imaging having several best of breed solutions/components – each one with it’s own technology stack with it’s own data model, business process language, rules, user experience and release cycle. It can quite fast become quite messy.
By adopting a standard integrated solution much of that complexity is left to the vendor of the solution (like TIA) and resolved once and for all for all customers running the solution. A good example of this is the adoption of new Oracle technologies within the TIA Solution (Oracle 11G Database and middleware releases) or the prebuilt standard interface from TIA to SAS Institute. Developing and testing that everything works is a fairly complex task, which would be cost prohibitive for insurers individually.

Single set of business rules and logic
Avoiding duplication of code is a well-known design goal which helps reduce the maintenance and upgrade cost in the long run. Knowing that data is updated correctly and that business rules are the same no matter what is essential. Consider an example; whether a quote is entered through a user interface or inserted through a web service call , there should only be one set of business logic executed, ensuring correct update of the database. This again also simplifies any customizations required. There is simply only one place to customize the behavior of the logic.

In general it is my opinion that the advantages of a standard solution far outweighs any drawback there could be. Only in very few cases would a unique bespoke system be the choice. This could for instance be in a situation where there is absolutely no “repeatability” identified (“once in a lifetime” examples – like a rocket launch..) or if the usage of the solution is so narrow that there is no one else in the world doing the same. Apart from these examples – where customers are willing to pay an exorbitant amount of money for a unique solution - I would say that a standard solution is preferred.

Then of course the trick is to pick the right one!

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