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July 06, 2005 at 08:00 PM
Microsoft and IBM want to talk about your business
By ara c. trembly
Where there’s a boatload of money to be had, people can come up with the most ingenious strategies and solutions to pry that money loose, no matter how much security stands between those people and their goal.
Take the late Auric Goldfinger, villain of the classic James Bond film that bears his last name. Here was a man who had designs on knocking over Fort Knox, the gold repository of the United States, which today holds more than $66 billion in gold bars and coins (by my unofficial reckoning using a $450 per ounce gold market price and a reported 147.3 million ounces held).
Goldfinger’s strategy involved fatal nerve gas delivered by gorgeous female pilots, the near vertical bifurcation of 007 with an industrial-strength laser, and the irradiation of the entire gold reserve with an atomic bomb (guarded by an insidious chauffeur with an odd name and lethal headgear). Now, here’s the evil genius part: If the gold were rendered radioactive (untouchable for 100 years), that would drive up the price, making Goldfinger’s own gold holdings worth much more.
That grand plan–like many such schemes–didn’t work, but such failures, real or fictional, don’t deter those who see a fat pot of gold at the end of some rainbow. One such prize in today’s world is the information technology budgets of the insurance industry, and the two key plotters are familiar ones–Microsoft and IBM.
According to a report from TowerGroup earlier this year, IT spending in insurance for the U.S. alone is expected to be $36.4 billion–and that doesn’t include spending by agents, third-party administrators and other parties. It’s only a little more than half of the Fort Knox holdings but apparently still worth going after.
IBM has long been a player in our industry, selling and later supporting the mainframe technology that is still in place at many insurance companies. About two years ago, however, it began saying it was more interested in talking about the insurance business (as opposed to why insurance companies should buy IBM products). This shift in marketing strategy paralleled the vendor’s larger theme of delivering services first and products second.
As recently as May 2004, Microsoft was still touting the advantages of its .NET technology over archrival IBM’s offerings. At last year’s ACORD conference, it brought together lots of media in a lush Las Vegas hotel suite and made the case for its platform while bashing IBM.
Why the aggressive push on the insurance industry? “It’s been the most profitable vertical for IBM,” said Dennis M. Maroney, insurance industry managing director for Microsoft’s Financial Services Group. “It makes sense for us to move in, [too].”
