How Enterprise Architecture Prevents Creeping Costs, Integration Pitfalls
Insurance Experts' Forum, April 25, 2013
What are we missing in efforts to improve or migrate policy administration systems? Often, it's a healthy enterprise architecture (EA), in which a multi-year technology roadmap is laid out for the organization.
EA is the best weapon against complexity, which vexes many policy admin upgrade efforts. That's the view of James McGovern, chief architect for insurance at a large integrator, former enterprise architect with The Hartford, and well-regarded across the industry as enterprise architect extraordinaire. I had the opportunity to connect with McGovern in preparing a recent piece for INN titled “10 Questions that Need to be Asked When Moving to a New Policy Administration System.”
First, EA helps provide transparency into the true costs of upgrade projects, McGovern points out. With lots of moving parts, costs can quickly get out of hand. “Most enterprises have a sense as to what their systems cost to run, but don't really have a great sense as to how they connect to a larger ecosystem at a detailed level,” he says. “It is not enough to know that a policy administration system connects to a rating engine or other high-level concept, but to know exactly how many interface points there are with upstream or downstream systems.”
This lack of transparency often results in budget miscalculations, often erring on the low side, he continues. “As costs creep, executives can enter an endless cycle of having to re-justify why they are doing this initiative.” Never a good thing.
This is why a strong enterprise architecture makes all the difference. It provides “visibility into the interconnection between enterprise applications and their system qualities—availability, scalability, security, etc.,” McGovern explains. Without such architectural discipline, the company ends up relying on “simplistic project estimation techniques alone.”
McGovern goes on to explain where companies typically fall down in policy admin integration projects:
- Attempting to leverage existing contractual relationships with outsourcing providers that don't know the target admin platform. “This creates a scenario of paying a large quantity of freshers to learn on your nickel,” he points out.
- Choosing an administration platform based on the recommendations of a single integrator. You want vendors continually competing for your business, McGovern says. “The ideal scenario would be to choose a platform that allows you the choice between a variety of competitive integrators.”
- Focusing on component parts over the ecosystem. At the same time, you don't want too many different components from two many different vendors, he adds. “What happens when you purchase hardware from one vendor, admin platform from another, testing from another, BPO from yet another and so on? You then increase the amount of overhead in coordination.”
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