By

Theres mounting interest in buying and deploying customer relationship management software packages as a way to better service internal and external customers. But many insurance carriers have also found that packaged CRM applications alone are no panacea.

Its not that CRM packages arent good at what they do. Instead, what most carriers have already learned, or will likely discover, is that existing (also called legacy) systems may stand in the way of letting CRM packages do their job. There is, however, a way around the problem that can save companies a great deal of time and money. It also ensures that carriers will maintain their technological competitive advantage.

The solution involves an integration technique called enterprise application integration. The process centers on the selection and integration of software called “middleware.” You might think of EAI as the most cost-effective way to build a high-performance CRM engine.

Using the automotive analogy, the best way to build a CRM engine is to carefully examine the “engine block,” which, in this case, is the combination of critical back-office systems. A closer look at the back-office systems will eventually dictate the need to make choices.

But first, its important to understand that back-office systems store the core information and transaction activities that are required to support a CRM solution. The systems are typically comprised of multiple “components” developed and maintained over many years. Policy administration, billing, agency support and accounting are just a few examples.

In many cases, carriers have multiple systems of each type to support different products or distribution systems. Taken together, these systems equate to an enormous investment made over time. These same systems also serve as collection points for invaluable intellectual property. The access to that information is critical to a carriers competitiveness.

For the record, however, most carriers legacy systems are essentially databases built on mainframe computers installed 10 or 20 years ago. Old as they are, they often continue to perform the functions for which they were created, and they do a remarkably good job.

But whats important to know is that any significant CRM initiative will likely require new, front-office CRM functionality that needs to be integrated with the information stored in the back-office systems.

The only hang-up is that most of the older systems wont support the functionality of new CRM packages. The challenge comes into play when the back-office legacy systems try to provide current, real-time information to the CRM software. In non-technical terms, it often doesnt work because most legacy systems just werent built to work that way.

For years, many carriers only considered the two most obvious choices to address the situation. The first is to replace the legacy system. In many cases, however, this also means multiple systems need to be replaced. In addition, it involves migration of data from legacy systems to these newer, state-of-the-art systems. It quickly becomes obvious that the time and cost involved in this type of change can be significant–if not prohibitive–in todays environment, where information technology resources are often limited.

Another approach is to search for and upgrade, or fix, the individual component systems that are causing the worst problems. But this fix-it-approach can be a painful experience in terms of cost and effort. In addition, it can often result in the creation of an infrastructure thats even more difficult to maintain over time.

The approach that is gaining increasing popularity is EAI, because it uses existing legacy systems and eliminates the need to retool major components, thus saving time and money. In addition, it allows carriers to retain the competitive advantages they may have built into their existing systems over the years.

EAI uses middleware to link diverse systems through a common communications interface. This is often referred to as messaging.

Essentially, middleware is a layer of software added between the legacy systems and the new CRM software. This new layer serves as a buffer that allows the CRM software to talk to the legacy system, pull the required data, and manipulate it as needed. The biggest advantage, meanwhile, is that it allows carriers to leverage what the legacy systems do well in a new customer-focused business process.

This is a simplistic explanation and its important to understand that implementing this approach often requires outside assistance from firms that are adept and experienced at building this type of solution. But ultimately, the cost of this type of engine “upgrade” will very likely be less than legacy systems replacement, or upgrades.

EAI extends the functionality of legacy systems by allowing carriers to add new business processes and services that support new initiatives, such as the applications made possible by CRM software. In addition, EAI provides much needed scalability because new business functionality can be added directly into many of these middleware tools. Meanwhile, the legacy systems remain virtually untouched.

Of course, there are times when legacy systems need to be modified. In this situation, tapping into an experienced outside partner often takes on more significance because the firm can identify the modifications that deliver the most benefit. The main point, however, is that the competitive advantages provided by original systems remain intact.

The implementation of an EAI/middleware solution also provides a short turnaround for enhancements, which are often accomplished by the business areas requiring the change.

Take, for example, the need to improve relationships with both customers and agents and brokers. In the life insurance industry, many would welcome the ability to speed up the new business medical underwriting process. Thats because this is a traditionally slow process driven by legacy systems that dictate the use of a manual approach.

Carriers, however, can add middleware to the legacy environment relatively quickly and automate the process. The immediate payoff is a significant reduction in not-taken rates, which greatly increases satisfaction for agents and brokers. In addition, the ability to capture more business and reduce operational costs ultimately results in increased revenue for the carrier.

In the EAI world, there are many middleware vendors ready and willing to show how their services are the best strategic fit for your company. Each set of tools is different, with some offering enhanced messaging services for communications between systems and others offering very robust business process management tools, among other things.

The best bet when considering an EAI solution is to thoroughly identify critical requirements for your particular environment. Equally important is the need to research several different vendors to find the one that will best support your strategic goals.

Most middleware vendors offer implementation support, either via their internal service organizations or by using system integration partners. When implementing this type of strategy it is usually a good idea to work with a company that has experience in complex software development integration work, which can be thought of as “heavy lifting.”

There are a number of other factors that will also influence the ultimate decision, including the solution used by ones competitors. Management may also come into play and lead an IT department down a certain path. Whatever the factors involved, a complete understanding of all available options, including EAI, will ultimately lead to the best and most cost effective solution.

In the final analysis, many carriers need to look no further than their own legacy systems to find powerful, affordable and scalable approaches to more effective CRM. With an EAI approach, companies can take advantage of what their own systems do best and extend them to where theyre needed most–providing the functionality to improve customer relationships.

is director of the Insurance Industry Practice at ThoughtWorks Inc., based in Chicago. He can be reached at RHunter@thoughtworks.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 28, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


Copyright 2002 by The National Underwriter Company. All rights reserved. Contact Webmaster