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August 10, 2005 at 08:00 PM
Choosing the right technology can bring competitive gains
For the small to mid-sized insurance firm, technology spending is perceived as a major expense with nominal return on investment or competitive advantage. Typical hardware lifecycles are short, software licensing and staff training is time-consuming, and creating a modern network for sharing electronic data information between agents and agencies requires cost prohibitive IT overhauls. It may seem like the only people deriving “value” from small business IT are those vendors who sell it.
However, a strategic investment in the right technology can, in fact, offer cost savings and competitive gains.Technological advances in frequently overlooked areas such as middleware are offering small and mid-sized insurance firms a low-cost advantage while vastly improving the overall functionality of their information systems.
Disparate data sources
A big technology challenge for small agencies is that historically, back-end IT was comprised of mismatched systems. Agencies purchased a database or an entry-level server to address a particular need. As business expanded or the way of conducting business evolved, a new appliance was added to the mix.
While this transition was well-intentioned, over time the system became an intricate weave of hardware and software that was difficult to maintain and costly to troubleshoot. Gaps in functionality produced isolated islands of policy data that hindered sharing amongst internal agency staff, not to mention mobile agents. As a result, the recent demand for online policy transactions was next to impossible to fulfill.
Without the benefit of an integrated system, paper remains the default business communications tool for insurers. Paper-based records are entrenched in the insurance agency culture, but they can be quite easily misplaced, damaged or lost. Manually distributing policies or ACORD forms is slow, as staff is relegated to hours of copying or scanning files. Also consider that peering into someone’s detailed personal history can be as easy as rummaging through a file on a desk. In an age where the protection of personal information is a paramount concern, it is clear that new processes are necessary.
So, the question remains: Is it possible for a small agency to patch together a collection of incompatible systems, reduce its paper reliance, protect policyholder information and gain a competitive advantage over larger competitors without shattering IT budgets? It’s a very tall order but, for many, the answer may lie in middleware software.
What is middleware?
Middleware is a form of software technology designed to help manage the complexity of IT systems. Acting as the “glue” or a bridge between disparate applications, middleware solves many connectivity and interoperability problems that typically impede the seamless exchange of information. Think of it as a universal translator that lets IT systems such as databases and servers communicate better with one another.
First appearing on the software scene in the late 1980s, middleware was described as “network connection management” and was developed to make it easier for systems integrators to program and network legacy systems. But with network computing only gaining widespread acceptance in the mid-1990s, middleware’s value was rarely recognized beyond IT departments.
As middleware evolved through the 1990s, organizations running on networked systems, such as those in banks and governments, began to understand and embrace its value. By reducing time spent on programming and lowering integration costs, middleware emerged as a boardroom discussion topic. Nevertheless, implementing a middleware solution was still an expensive undertaking, causing many businesses to stay the course until costs came down and more compelling reasons to link disparate systems were identified.
