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SOA and BI Marriage Produces Many Benefits

September 2007

How can carriers capitalize on the convergence of service-oriented architecture (SOA) and business intelligence (BI)? Insurance Networking News asked Mark Gorman, strategic research advisor, insurance, and David West, research area director, insurance, for TowerGroup Inc., Needham, Mass.

INN: More and more carriers are seeing the value of SOA for BI (i.e. business intelligence services). Why? What are the drivers?

MG: Business intelligence services represent the convergence of two very important trends in the insurance marketplace. Insurers today are looking for the ability to make better decisions, and to apply those decisions when, where and how they want, in order to gain competitive advantage.

Insurance carriers are increasingly looking to the promise of BI to help them make more precise, more accurate, more consistent and more timely decisions across a wide array of business processes. To do so they are enhancing their capabilities at capturing, analyzing and utilizing data.

Carriers are also looking to apply those decisions at the appropriate time, in the appropriate place and in the appropriate manner to enhance their opportunity for competitive advantage.

The promise of an SOA is that the service is potentially available to any person, process or transaction regardless of the timing, location or type of transaction being executed.

DW: In addition to improvements in consistency, accuracy and timeliness of decisions, a key value proposition of SOA for BI is its financial return, which is realized in two ways. First, service-oriented BI systems carry a lower total cost of ownership. This architecture enables organizations to optimize their use of hardware so that components of BI systems run on the platform that makes the most sense from a cost/performance perspective.

Furthermore, the cost of maintenance is reduced as changes can be made in a central repository rather than on multiple desktops. Changes can be made more rapidly and with less disruption than with older generation systems.

Second, the benefit of greater access to information, timely and accurate decisions, and consistency comes from competitive advantage. Competitive advantage yields greater revenue. The bottom line is that SOA for BI produces benefits on both the revenue and the cost side of the profit equation.

INN: How does SOA for BI help insurers move from an application- to a function-centric mentality?

MG: If you are talking about moving from technology selection and purchase decisions focused on buying applications (i.e. claims systems, billing systems, policy administration systems, etc.) versus buying reusable functionality (i.e. BI solutions), I'm not sure it helps to move from an application-centric to a function-centric mindset as much as it clearly differentiates the two.

Many of the legacy applications don't adapt easily to BI functionality due to data formats, data access difficulties, lack of a robust "what if" environment, etc. Insurers have historically viewed BI functionality as something separate from legacy applications, and as functionality to be applied or accessed separately.

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