Staying Ahead of the New Network Explosion
Insurance Networking News, August 2007
The typical insurance carrier is increasingly becoming a networked organization, albeit at a slower rate than other industries.
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The pressure is on to support a range of new initiatives, such as customer and agent e-business channels, Web services, service-oriented architecture, collaborative computing and mobile computing, which require robust networks with higher bandwidth thresholds. Add to this a plethora of multimedia files, which individually run into the multi-megabytes in size-that are choking current systems. For carriers, growing volumes of digital photos, workflow documents and customer data are taxing current systems.
The industry may have not been ready for this onslaught of network bandwidth and networking requirements, Hersh points out. For example, insurance companies were not on the dot-com bandwagon at the beginning of the decade, and therefore did not build out their capacity as companies in other industries did. However, new types of applications are changing this need, resulting in an explosion of networking needs across the insurance industry.
"A carrier's network may be unprepared for that new imaging workflow system that passes thousands of huge images back and forth a day, or these rich Web clients running on every desktop for every conceivable transaction," says Hersh.
As a result of this explosion of new activity, capacity management has become a front-burner issue for many insurance companies, particularly those that have been through mergers or other changes in their business lines, relates Greg Beat, senior consultant for Compass, a Naperville, Ill., IT services firm. "We have seen many insurance companies with significant levels of excess infrastructure capacity-for example, 50% utilization of LAN ports, which is excessive," he points out. "This situation leads to higher costs for maintenance and support."
Pressure to keep a lid on network costs is another factor, Beat continues. "The pressure to reduce costs is being driven by the need to manage excess infrastructure capacity." For networks, he calculates, "hardware and software constitute at least 60% of the total costs. The remaining 40% comprise services or personnel providing operational support." As a result of these cost pressures, he adds, he has seen some insurers actually reduce personnel and maintenance of the infrastructure.
Yet, network growth will only keep accelerating. IBM, Armonk, N.Y., estimates that, by 2010, the amount of digital information is expected to double every 11 hours. One industry study recently estimated that over the past three years, Fortune 1,000 companies have, on average, seen their total data environments grow from 190 TBs to one petabyte (one million gigabytes), and data at midsize companies has grown from an average of 2TB to 100TB, according to TheInfoPro Inc., Redwood City, Calif. Another new study conducted by IDC, Framingham, Mass. for Hopkinton, Mass.-based EMC Corp., put the total "digital universe" at 161 billion gigabytes (161 exabytes) - the equivalent of 12 stacks of books, each extending more than 93 million miles from the earth to the sun. This is predicted to grow at a rate of 57% a year to 988 exabytes by 2010.
CAPACITY AND AVAILABILITY
At Columbus-based Nationwide Mutual Insurance Co., a growing e-commerce business has required increased capacity. Company growth has put pressure on the network, "so that manifests in a number of ways," says Jim Gay, assistant vice president of Internet technology solutions at Nationwide. "Our internal network has to grow to support increasing capacity. We have many applications now facing customers on the Internet, requiring us to consistently add more capacity bandwidth to our Internet connectivity."
Not all demand for more robust network capabilities comes from sexy new technologies and multimedia presentations. Events over the past few years have driven concerns around companies' abilities to recover from disasters. The ability to ensure business continuity within carriers' operations call for robust network infrastructure that is based on the establishment of secondary data centers and systems that are linked into the primary data centers as close to real time as possible. Nationwide also has also beefed up its network infrastructure to achieve higher availability, Gay added. "As you need higher availability, and you want to do disaster or continuity management planning, you end up with building redundancy into your network."
Celent's Hersh also advises carriers to stay ahead of the curve in terms of networking capacity. "Once a decision gets made to go with a bandwidth-sucking technology, it's late to be thinking of upgrading your network at that point. It's a relatively inexpensive way to stay ahead of the curve," he says. "Even if your enterprise isn't doing anything today to cause huge bandwidth issues, they will. It's just a matter of when. So get out ahead of the curve and stay there. It's one of the least expensive things to do for the value. And the cost of not being ready when the need is there is significant."
Nationwide, for one, has taken care to plan at least six months ahead for upcoming network needs. "We really have to be six months ahead of normal capacity planning," Gay says. "Provisioning still takes time. You can't really order something, particularly a high-speed connection, and expect to get it in even 30 days. So we need to get out in front of that." Nationwide also employed application performance and capacity planning solutions from HyPerformix, Inc., Austin, Tex., to predict, optimize and validate end-to-end performance of mission-critical, enterprise applications and IT infrastructures.
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