By William N. Pieroni

The rumors of the death of the mainframe have been greatly exaggerated.

Mainframes have played a significant role in core operations and customer-facing capabilities since their inception and continue to do so. Despite predictions of its demise, statements of cost inefficiency and reports of inflexibility, the mainframe has emerged in the e-business environment as a critical mainstay of every insurers information technology (IT) strategy.

Over the last decade, mainframe usage has increased at a compound annual rate of 20 percent in the insurance sector. This critical asset continues to receive heavy research investment, innovative system software development and an increasing number of IT workers familiar with its capabilities.

The enduring strength of the mainframe has been its ability to run large, enterprise-wide systems at a relatively low total cost of ownership and in a fault-tolerant environment. For insurance companies, the mainframe continues to serve as the core infrastructure component, able to effectively and efficiently manage large volumes of transactions around underwriting, policy administration and claims.

Current technologies are advancing past the monolithic, water-cooled mainframes of yesterday into new high-end servers with ever improving processing and storage capabilities. Todays mainframes continue to provide unsurpassed reliability, stability and security. Moreover, mainframes provide a cost effective, integrated platform to consolidate the expansive server farms that arose during the failed client-server era and more recent server push.

As new e-business enabled multi-channel, multi-product business strategies emerge, the mainframe continues to serve as the cornerstone of IT infrastructure. In this new e-business era, the mainframe is a critical enabler of deep computing capabilities, rich media content management, pervasive wireless access and high volume transactions. Vast networks and access devices will also be built around mainframe architectures in order to support timely and cost effective data access and transaction processing.

Mainframes continue to receive multi-billion dollar investments in order to ensure relevance across the stakeholder community. New initiatives in research and development are pushing the current mainframe boundaries in new directions that will further reduce costs and the complexity of the IT infrastructure for insurers.

The new challenge is to allow computing systems to operate autonomously in order to simplify the overall insurance value chain. The primary focus of current research is to build computing systems that self-diagnose and self-heal. These mainframes will minimize the degree of human management required when operational problems occur, and will improve performance and efficiency.

Additionally, advances in mainframes will include real-time risk alerts, comprehensive performance analysis and identification of issues to ensure that disruptions are identified and resolved on a real-time basis. In the context of todays uncertain environment post-9/11, these strategies can have a significant impact on risk assessments not only for insurers core infrastructure but also for their customers. These defensive measures will provide a more stable operating environment and monitor concerns prior to business interruption.

The third-party marketplace continues to build a significant number of solutions that operate in a mainframe environment. These companies focus on the mainframe not only because of the significant installed base, but also because of the ease of installment and the cost effectiveness of mainframe operations. Emerging software development in the open source community continues to support the mainframe value propositions for insurers.

With the evolution of Linux, mainframes continue to increase in popularity and usefulness by further reducing the cost to build applications and improving the stability of the application framework. Additionally, new server advances, in combination with Linux, allow insurers to consolidate hundreds of disparate systems within a single footprint for a reduced total cost of ownership.

Insurers have greater flexibility and choice around business processes through the use of emerging mainframe technologies and application development approaches. Currently, third-party providers in the insurance industry are producing applications that allow for a more robust use of the back office mainframe infrastructure.

For example, new applications are leveraging the existing processing power of the mainframe in order to provide real-time, multi-dimensional customer interactions, based on a customers requirements and the insurers value propositions. Advanced customer management software is currently being developed by several vendors to draw upon the diverse set of legacy systems, to integrate all customer communications channels and to automate best customer practices throughout the enterprise. This allows insurers to simultaneously manage multiple product and service offerings across various channels for a single insured.

Additionally, software vendors are focused on leveraging the mainframe to provide insurers with increased options in order to address restrictive legacy infrastructure issues. This allows insurers to expand their value propositions in a unique way by providing alternatives to full legacy replacement.

Through the use of messaging among various systems, data can be linked to provide a single, consolidated view of the customer in real time. This technology is able to support self-service transaction capabilities for customers and agents over the Internet and wireless devices, as well as to leverage existing mainframe technology investments across multiple systems. This reduces producer and customer administrative costs, enhances broker access options and simplifies transactions.

With the continuing advancement of mainframe hardware and applications as well as extensive leverage by the insurance industry, there continues to be strong demand for mainframe IT skills. As emerging e-business strategies and tactics continue to rely upon the mainframe as the core infrastructure asset, there will be a high demand for mainframe skill sets.

New mainframe skills will increasingly be sought around security, auditability and enhanced control features spanning across the enterprise. Additionally, skills in the traditional and emerging programming languages such as Linux will continue to see increasing demand as insurers enhance and replace their core infrastructure portfolios on the mainframe.

Clearly, mainframes have played and will continue to play a materially significant role in supporting insurers strategies and tactics for the foreseeable future. The strength of this technology is evident in its enduring presence as part of the core daily operations of insurers worldwide. Mainframes enduring resilience is a testament to the technologys ability to adapt and evolve to todays dynamic IT and business environments. Given the heavy investment from the vendor and insurance community, mainframes will continue to push new limits on technology and serve as the foundation for cost effective, robust solutions.

William N. Pieroni is general manager of Global Insurance Sector, at IBM, Armonk, N.Y.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 15, 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.