Ten years ago, we were reading articles about why insurers should migrate from mainframe to client/server architecture. Today, we still are.
The arguments for migration have, however, changed. Before, some selling points were GUIs and more flexible front-end toolsyou know, touchy-feely stuff. But over time, better analytic applications have become available for mainframe systems, and presentation layers have been offered to dress up even the ugliest green-screen system.
Todays discussions about replacement of insurers legacy systemsboth mainframe and first-generation client/serverhave distilled to more objective analyses. Of course, the best reason for replacement still is It doesnt run any more, something we didnt think wed hear so soon after completing Y2K-driven remediation efforts on decades-old systems.
Most of these [legacy] systems are patchwork quiltsislands jerry-rigged together, said Cal Braunstein, chairman/CEO and executive director of research of the Robert Frances Group. He added that this trend was, in some cases, exacerbated by companies who rushed to install some first-generation client/server systems as point departmental or line-of-business solutions. You needto find an architecture that can meet future business needs.
Meeting those needs was the motivation that started the current and ongoing migration at Anthem Blue Cross and Blue Shields Midwest Division. Mergers, acquisitions, and technology components spread across three states had resulted in nine different core processing systems servicing the Midwest Divisions business. This hodgepodge seriously restricted its ability to provide effective multi-state service, create new products, and distribute workloads among staff.
Anthem first looked at choosing one of its several mainframe systems to handle the entire business load, but decided none was suitable. Some were beginning to fail, others didnt have the functionality we needed to deliver across the three states, and others werent scalable, said Shirlee Cassidy, vice president of Anthem Midwests business and information systems.
Anthem selected Facets by Erisco (now TriZetto), and began implementation in 1999. The two-tiered client/server system runs on a series of RS/6000 boxes. To date, Anthem has completed the migration of one million members to the new platform, has retired mainframes in Kentucky, will soon complete migration in Indiana, and recently began the process in Ohio.
A patchwork can affect viability of systems beyond the pure operational level as well. At another level, working better with agents, having better information about the client, being able to service them betterthose are really the key issues, said Christine Ingold, vice president of global financial service at PeopleSoft. How to bring customer information forward so insurers have a complete view of the customer and understand the relationships among the different channels, is a challenge for carriers faced with systems with a transactional focus or with individual systems supporting different customer touchpoints.

Finding Your Center
Insurers are looking to their IT departments to develop systems and strategies that develop customer-centric packages, and thats not how they were developed; they were line-of-business packages, Braunstein said. And the problems with bringing siloed systems together to develop any sort of three-dimensional customer view are many. There are different databases with different field names of different lengths, as well as combinations of relational databases, hierarchical databases, and flat-file formats that may maintain key information in miscellaneous fields.
[This] becomes very frustrating to an IT executive who said, Ive got all the damn data, lets bring it together and use it, and IT is saying, You cant, Braunstein said. And you dont want to start creating other shadow databases and synchronizing them on an ongoing basis. These are problems that make somebody finally turn around and say, I need [a new] architectureIve had my fill of this.
Thats exactly what happened at Grange Insurance, headquartered in Seattle. The company had been using TFG from the Freedom Group and Encore from the (now-defunct) Heritage Computer Corporation on IBM 390 architecture, running VM and VSE.
We need to be able to generate reports quickly, to slice and dice the data, and take different views and assess where the business is going, said Ralph Carlile, Granges vice president of information technology. For the mainframe, there are some tools that allow some acceleration, but theyre expensive, and the mainframe environment is just too difficult.
The other driver was, as we develop and procure applications, we want to have standardized interfaces, being able to revolve around standard data schema like XML. In a mainframe environment, no one seems to be able to master how to standardize interfaces for a complete range of technologies, said Carlile.
For other insurers, the key motivator behind migration to client/server is the inability of their legacy mainframe system to quickly respond to new marketing opportunities and to expand to meet the growth goals of the enterprise. Denver-based COPIC Insurance was faced with those issues in its homegrown administration systems that resided on their HP3000.
We dominate the Colorado medical malpractice marketso our intention is to expand into other states and broaden our product line, said Bill Donohue, COPICs CIO and vice president of information technology. Additionally, The support for the operating system was being withdrawn by HP, so we would have had to do a migration at some point, probably this year.
COPIC completed its migration to Delphi Technologys Oasis system in December 2001. Oasis handles policy, claims, financial, and risk management for COPIC, runs on Sun Solaris servers, and leverages the insurers existing database investments in and experience with Oracle.

We Can Always Throw Iron at It
Regardless of where insurers fall on the spectrum of reasons for legacy system replacementfrom the necessary to the purely desirableeach faces tremendous risks in the migration process. The greatest risk is putting in systems that dont work, or at least dont work as well as those being replaced.
Thats one reason why some insurers, such as Prudential, are maintaining functioning legacy systems for existing business, while bringing in client/server systems only for new business. A degradation of performance that follows the replacement of existing systems is the biggest fear of Ron Belmont, vice president of information systems in Prudentials life insurance division. Not necessarily in response time, because we can always throw iron at it, but in terms of work we get done for each technology dollar spent. What is my run rate? Thats our biggest technology challenge.
Prudential is therefore maintaining its homegrown mainframe application for its pre-demutualization book of traditional and variable life as well as a Vantage mainframe system by CSC for any new variable life. However, for its post-demutualization book of new business term life, the company uses LifePro by Professional Data Management Again, which it installed about eighteen months ago on an IBM system running AIX.
Our investment has been in building what we call goal-oriented transactions, which is a layer above the admin engines to make business-oriented transactions look the same regardless of what platform you are accessing our services from, Belmont said. Essentially [its] a surround strategy. That benefits our customer service people, and as we push out self-service to the Web, it allows us to port those functions to the Web space. Thats where were making our most significant investment in client/server as it relates to the admin platforms.
In deciding what to do with their mainframe systems, life insurance companies are also limitedor, perhaps, aidedby the nature of their business. A policy sold in 1958 stays the same between 1958 and 2001, said Bill Ball, vice president of information technology services at John Hancock. In property/casualty, the policy renews every year, so you can have a conversion strategy where you put renewing policies on a new system.
Like Prudential, John Hancock is retaining its in-house developed mainframe-based systems, and is not converting the data on them. It did convert a legacy client/server application from Trimark to McCamish Systems VPAS. Additionally, it installed PolicyLink, a client/server system from Leverage (now CSC) in 1998.
Conversion is costly and difficult to make a strong compelling business case, particularly when the systems we have runs pretty well, Ball explained. And if youre saying, Im not putting any more product on them, Im just going to enhance the functionality, it becomes a less expensive alternative to investing $5 million to convert them to another platform.
Balls energies are therefore focused on front-end technologies to provide access and operational efficiencies. Your high-volume, call-center-type transactions, those are the ones you want to front end, he said. You want people to be able to process the most common and least complex transactions quickly. Unlike property/casualty, were not worried as much about the efficiency of claims systems in life. Instead, he explained, Hancock is using Internet technologies to build the front end, eliminating multi-system issues from the perspective of the end users, distributors, and customers.
The other reported problem for insurers the size of John Hancock and Prudential is a dearth of systems and vendors on the market with the power to support their operations. Particularly with an existing customer base like Prudential has, there arent that many products out there that are built to accommodate us, Belmont said. Were the 800-pound gorilla. There are specific volume concerns that are not shared by all our competitors.
Insurers of any size face other, well-documented risks involved in any system migration: data quality issues, cost overruns and delays, inability of the vendor to deliver. And particularly when it comes to core administration systems, the typical length of the project itself poses its own problem.
The thing to be leery of with anything that represents a multi-year project is not to create a single multi-year project, said RFGs Braunstein. The longer the project, the greater the risk of failure. The other piece is [that] technology will change as you work your way through the process, so youve got to try to look at where it will be in a few years, and to make sure that what youre putting in wont be obsolete.
The means to mitigate migration problems arent revolutionary. Provide intermittent deliverables. Vet the vendor. Cleanse the data. The more cleaning you can do before youre trying to migrate, the better youll be, said Chris Mears, vice president of development at Delphi Technology. If you try to clean when you migrate, you cant tell if the problem is in the migration, if the new system has a bug, or whatever.