The problems that result are significant; huge EAI troubles, slow data feeds (overnight is too slow), and inaccuracies resulting from assumptions made about historic data that’s in a format different than the warehouse. SOA orchestration—and observing those processes—can help significantly. I believe this is the next step.

Ruth Fisk, director of insurance solutions for Hyland Software: Over the past few years, insurance carriers have been zoned in on the customer—offering better products, improved responsiveness, more access to information, you name it. But, as a result, sometimes the distribution channels were overlooked.

The good news is carriers have already recognized that customer self service can dramatically improve how efficiently they do business. Now, they need to jump on the same opportunity for agents.

Self service to the distribution channel is a game changer for insurance carriers. It’s not necessarily a new concept—agent portals have been around for years. But, the opportunity that carriers have is to make these portals more comprehensive, extending them to be true point-of-sale or point-of-service solutions.

Sometimes, I’ve seen insurance carriers not go down this path because they fear it will hurt how the distribution channel views their ease of doing business. In my opinion, the reality is that it’s the exact opposite. When the distribution channel has the most up-to-date, complete information to get the business and the right content management tools to ingest more information to process the business, everybody wins. The agents are bringing in more business faster and getting paid faster, while perceiving the carrier as being agent-friendly.

In this business, it’s all about using information to empower. When insurance carriers empower their distribution channels in this way, they will differentiate themselves by having a lower total cost per sale and happier, more loyal agents.

Courtlandt Gates, CEO of Clearwater Analytics: In our area of core competence—investment portfolio accounting and analytics—many insurers currently rely on a combination of installed point solutions and spreadsheets that are not ‘integrated-by-design’ and require internal databases, layers of middleware, custom coding, and manual intervention, which are costly, complex, and risky. At the same time the importance of the investment portfolio from a strategic perspective and the absolute requirement for portfolio transparency are top of mind for Chief Financial Officers and Chief Investment Officers and emerging accounting issues are top of mind for treasury and accounting.

Forward looking insurers are exploring a combination of technology and outsourcing to deliver accurate, timely, actionable information to key constituents in accounting, finance, treasury, investment management, and senior management. In many cases this level of transparency is beyond the capability of the current processes and incumbent solutions.

We believe it is critical for the four key parameters of investment reporting—accounting, compliance, performance, and risk—to be constructed on the same set of aggregated and reconciled tax lots. We further believe that investment reporting should be daily and Web-based.

Technology is clearly the most graceful way to meet these objectives. The application of technology has the added benefit of freeing scarce human resources from manual processes and providing them with the time and information to make better decisions.

Are insurance carriers making the right steps in the area of project management to ensure they are taking the right steps from selection to implementation of software? What do they need to do better?

Fisk: For many years, IT and project management have driven technology projects from selection, procurement through to implementation. Yet oftentimes, even if they have the best intentions to bring high-value solutions to the hands of their users, unfortunately, they are not always the most relevant technologies to address the business need.

A trend I’m seeing more of is a collaborative environment between the business and IT sides. In fact, there is a shift of the project management role to be led even more by the business side, something that’s been a major positive move in the industry.

This has clearly improved the insurance organization to get the right software in the first place. But, an even larger positive effect is on the life after implementation.

Software that’s not fully utilized, or “shelfware” as we call it, has historically been a huge problem in insurance. But because the business side understands the specific pains they’re targeting, not to mention how they want them addressed, solutions aren’t just selected on how many features are available. Rather, they’re also selected based on things like total cost of ownership, which includes how easy software is to modify based on process changes, role-based views, etc.

Also, a proof of concept and modeling solutions during selection process is becoming commonplace. I think this has to do with a new expectation on the vendor—that just as the carrier is invested in the success of the solution, so should the vendor. The carrier wants to see how much the vendor actually cares about addressing the business need beyond a flashy interface and process modeling is often a good way to do that.

Gates: We see a broad range of approaches to project management in the selection and implementation of software. The common themes for successful project management are an understanding of the problems to be solved, asking the right questions and managing the critical path.

With regard to understanding the problems to be solved, we recommend a holistic approach with cross-functional buy-in. For example, in the realm of investment reporting there are numerous constituents with interest in the underlying portfolio data and the reporting that can be built upon it.

Projects that replace an existing accounting solution can also meet critical requirements in investment management. On the topic of asking the right questions, it is important to be as specific as the individual problem to be solved. For example, if it is important for accounting and risk numbers to tie-out, address that issue directly. If it is important to track compliance according to both internal policies and state guidelines, include that specific requirement.

On managing the critical path, we are strong proponents of Web-delivered software or software as a service, because the impact on IT is significantly reduced and much of the heavy lifting can be handled by the service provider.

Neugebauer: Carriers that use project management offices and a formal development methodology generally are better off. The idea of an RFP is very much inadequate except as a means to get a more meaningful demo. What’s really required, far further in the process, is a solid vision and set of requirements. While that takes a lot of time, starting with the end in mind is far more productive that letting the vendors define your requirements as you go.

Do most insurance carriers look at you as a partner in the solution process or as a vendor?

Fisk: It may sound cliché, but it’s true: Insurance carriers want a trusted advisor, not a vendor. I’ve had insurance companies ask me for advice on how a process should work, implying that I’m not just there to provide a product to automate what they already have in place. Rather, I’m giving them a tool that can improve the process they have in place. In other words, what I do isn’t about selling a product to automate an existing process, like claims, anymore. It’s about working with the insurance organization to optimize that process and others like it, with the right technology enabling it to happen.

This brings up an interesting point. What makes a trusted advisor today? Is it knowledge of the product, or knowledge of the insurance industry that’s more important? In my opinion, you can’t have one without the other.

Insurance carriers should expect a vendor to know the product—not just for what it is, but also for what it isn’t. Too often, products are oversold into being the panacea for solving all the technology needs of an insurance organization. And, on the flip side, insurance carriers should choose a vendor that really gets their business processes and what makes them successful. Only with these two pieces in place are insurance carriers not risking just buying technology for the sake of technology.

Neugebauer: I’ll answer from my point of view as a CIO. I see some vendors as partners and some as vendors. Over time, the vendors essentially put themselves into one of those two categories. If they understand insurance and provide insight and solid solutions, they are partners. If all they do is sell, then they’re vendors.

Gates: Successful relationships are built on honesty, trust and open communication. By virtue of our business philosophy and our service model we see ourselves as a partner rather than a vendor in the conversion and in the ongoing relationship.

From a business philosophy perspective, we are committed to listening to our clients and prospects and solving problems that are urgent and pervasive. We are transparent about our existing functionality—the functionality on which we are working—and the priorities in our roadmap for the future.

On the subject of our service model, the data and software resides on our servers and we take complete responsibility for portfolio aggregation, reconciliation, and reporting which consists of daily, Web-based, accounting, compliance, performance and risk. Our clients have dedicated account managers who are deeply familiar with the investment portfolios, the relevant accounting bases, and the reporting and analytics. This is a very different relationship than one where the client is operating software installed on its own servers.