PLM Technology: Get Your Ducks in a Row First
Insurance Networking News, January 1, 2009
Product lifecycle management (PLM) systems promise carriers the ability to create new products, reuse components and manage products over their lifecycles in a starkly more efficient manner. However, many life insurers aren't biting, as growth of PLM technology has been tepid and may get even weaker. Factors stalling adoption are insurers' severe financial constraints, addiction to legacy systems, or their concern that they must first have a new overarching product development strategy before making such a drastic technology shift. Yet, there are those who are staunchly touting PLM systems as vital in their drive to get a leg up on competitors, in particular, by getting products to market more quickly.
Before implementing PLM systems, which are designed to help insurers understand and manage product data from the product's inception to its retirement, some insurers see the need to cultivate an internal cultural and behavioral shift so these systems can be implemented effectively. For instance, if insurers are looking for actuaries to start modeling their products on such a system rather than using their Excel spreadsheets and much of their historical data, then not only do processes change, but a cultural change also is required.
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Hartford Life hasn't adopted PLM systems because it must first analyze why it hasn't been able to get products to market as quickly as it would like, says Karen Chamberlain, VP of IT for the global operations and technology group of the company. The Hartford, Conn.-based carrier doesn't want to put the cart before the horse and adopt such technology before understanding the business case and strategizing more. "If you implement a bad process with technology, you still have a bad process," says Chamberlain.
Karen Chamberlain
In mid-2008, the company began a 12-week process to evaluate its end-to-end lifecycle of product development, starting with the retail products group. Its aim: to reduce the time for new product launches by 50% through process reengineering. "We are not sure where it makes sense for us to externalize rules or calculations, or whether we actually should conduct more of an end-to-end workflow approach," explains Chamberlain. "So as we are reengineering the process, we want to get at the low-hanging fruit and process changes that we can address immediately and see what that actually yields for us in terms of time and schedule."
With economic hardship either upon them or looming, insurers may be even more cautious about undertaking big, bold, expensive technological shifts. "Possibly this isn't one of the areas that companies are ready to invest in," says Chamberlain. "There are so many other things that we need to look at in terms of data, administration, service and sales tools that maybe it just doesn't make the top of the list." SEG Software LLC, Hartford, Conn., for one, has five insurance customers, but recently lost two potential deals due to the flagging economy, says Ric Young, SVP of sales and marketing for the provider of policy administration software for the annuity and life insurance industry.
Conscious of budgetary concerns and firmly believing that its officials know its products best, Hartford Life is calling upon in-house staff, rather than a management consulting firm, to reduce its product management inefficiencies.
OPPORTUNITIES FOR PLM GROWTH
Other life insurers believe that PLM systems must be paramount for CIOs now, and perhaps even more so amid the financial turmoil. If insurers are not nimble and flexible enough to make product changes and respond to today's market conditions, then they will not be able to compete effectively, according to Kevin Murray, EVP and CIO for New York-based AXA Equitable Life Insurance Co. Within the next three to five years, competitive insurers will need to have a product rules engine and a policy administration system that can change products quickly, he believes.
Kevin Murray
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