New Tools Connect SOA to Business Success
Insurance Networking News, January 2008
Service-oriented architecture (SOA) is seen as a beacon of hope for insurance companies long beleaguered by tangles of incompatible legacy systems and networks. However, while the technology is now widely available, selling SOA to the business can be an uphill climb. Line-of-business executives outside the orbit of IT may not fully see or grasp the benefits of SOA.
The challenge for SOA proponents is to be able to demonstrate how the architecture can tackle even the most vexing business problems, and provide a return to the business in places where it counts most.
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SOA has been known to generate new services, such as Web services that are tied to specific systems. But SOA needs to be sustainable over the long haul, with proven, repeatable processes that can be applied to any business requirement.
“The key to success in SOA is not the number of services that you have; it’s how often your services are shared,” Gerald Shields, CIO of AFLAC, Columbus, Ga., explains.
Such has been the experience across many successful industry SOA projects in which the results are strongly linked to the business.
“Insurers are discovering that the SOA approach is not just about Web services—it also creates the business and technology benefits of agility and flexibility,” says Scott Mampre, insurance practice leader for the Financial Services Strategic Business Unit of Capgemini, Paris.
At AFLAC, for example, SOA-based services are enabling the company to get to market quicker with new offerings, such as the company’s new Web-based self-service system. “We built that much quicker due to previous work that was done in 2006 and 2005,” Shields says. “For our new system offering policyholder self-service functionality, 30% of that code had been laid in services that we simply reused.”
Chicago-based Kemper Auto and Home Insurance uses SOA to modernize the company’s network of legacy systems, avoiding the need to take systems offline for months at a time and disrupt business. “The vast majority of our systems were developed in the late 70s and early 80s,” explains CIO Keith Sievers. “Our SOA strategy is basically directed at replacing those systems. Some are candidates for forklift replacements with packages; some are candidates for SOA replacement.”
By using an enterprise service bus from Bedford, Mass.-based Progress Software Corp., Kemper can update its systems on an incremental basis rather than taking them offline for one to two years for forklift replacements.
ELUSIVE BUSINESS METRICS
One of the reasons SOA has been a tough sell to the business is that SOA proponents have been hard-pressed to demonstrate tangible returns to the business. The returns to technology operations are easier to document. For example, Shields says, parts of AFLAC’s claims system are being rewritten and deployed as services. Such benefits may not become immediately apparent to the business, but will begin delivering over the long run.
“Our claims system—a ‘fat-client’ application—was put in several years ago,” Shields explains. “What value is there to go back and rewriting it? Is the claims system itself going to work any faster, any better? Is the average claims handler going to see any difference, because they put these as services? You could argue ‘no.’ But we’re an insurance company, and we’re going to be paying claims forever. SOA is an investment to make legacy code more agile and more responsive. And by having these services, we can share these services with online apps, such as self-service.”
Kemper’s Sievers agrees that direct return on investment to the business is difficult to measure with SOA projects, noting that SOA’s benefits are still seen “more at a philosophical level than at a financial level. It’s very hard to figure out your ROI on SOA—the true net cost of SOA.” For example, he says, SOA may require more time up front to build a new application, but cut down the time spent building follow-up applications. The time it takes to build the next application may be faster with SOA components, Sievers says. “However, it’s difficult to go through and try to figure out what your ROI is on each of your services.”
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