leveling the playing field with saas...leveling the playing field with saas frank petersmark, cio...

IASA 86TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

Leveling the Playing Field with SaaS

Session # 676


Frank Petersmark, CIO Advocate – X by 2

Frank Petersmark is the CIO Advocate at X by 2, a technology consulting company in Farmington Hills, Mich., specializing in software and data architecture and transformation projects for the insurance industry. As CIO Advocate, he travels the country meeting CIOs and other senior IT and business executives at insurers, learning about their goals and frustrations, sharing lessons learned, and offering strategic counsel. Formerly Chief Information Officer and Vice President of information technology at Amerisure Mutual Insurance Company, Frank has more than 30 years of experience as an information technology professional and executive. Widely published and quoted, Frank is a regular contributor to a variety of industry publications, and is a sought after speaker and commentator at insurance industry events.

Session Context How do small and medium insurers compete with the "big boys" in today's tech-filled landscape? Tier one insurers have the revenues and direct written premiums to acquire and implement the latest and greatest technologies, and they have the big marketing budgets to make certain everyone knows. Where does that leave smaller, niche insurers trying hard to compete? While there is no single silver bullet that will do the trick, using a Software-as-a-Service (SaaS) implementation and deployment model to transform internal architecture can create a more nimble company that can absolutely compete on a leveled playing field. Yes you can have modern technology, capabilities and infrastructure while increasing your ROI and getting your company back in the game. During this session, insurers will share details about successful SaaS implementations that have transformed their companies into competitive modern businesses.


SaaS for the Rest of Us: Variations on a Theme

Three perspectives on how you might level the market and technology playing field by using SaaS solutions:

1. From a former CIO at a mid-market P & C;

2. From an insurance business technology practitioner;

3. From an insurance solutions provider;

And finally, some trend information to consider for the future from Microsoft.


Session Participants:

• Frank Petersmark, CIO Advocate – X by 2

• James Laing, President – Wolverine Mutual Insurance Company

• Tony Novielli, EVP Sales – Innovation Group

• Anthony J. Jacob, Managing Director, Worldwide Insurance –Microsoft


Software as a service (SaaS) is

often defined as software that is

owned, delivered, and managed

remotely by one or more

providers.

The provider delivers software

based on one set of common

code and data definitions that is

consumed in a one-to-many

model by all contracted

customers at anytime on a pay-

for-use basis or as a subscription

based on metrics.

An Industry Definition - SaaS


Cloud computing is a general term for

anything that involves delivering

hosted services over the Internet.

A cloud service has three distinct

characteristics that differentiate it

from traditional hosting.

It is sold on demand, typically by the

minute or the hour; it is elastic -- a

user can have as much or as little of

a service as they want at any given

time; and the service is fully

managed by the provider

An Industry Definition - Cloud


So is there a Difference between SaaS and Cloud? It Turns Out, there is… The cloud, or more descriptively, cloud computing, provides computing

resources that are not tied to any specific location. Think of network, data, and server capacity for rent and you’ve got it. The only thing to add is that you (usually) have no control over where this capacity is located.

SaaS, on the other hand, is any software application that you run that is not located on your premises. It is a full-blown application, not a component part of something else, a way to build applications, or a plug-in to other applications. It is never something that sits on your own computing devices, whatever they are.

That's primarily the difference: SaaS offerings are applications that are fully-formed, end-user applications. Cloud computing is computing infrastructure and services that you can rent.


Some cloud services you might know: • Netflix

• Siri

• iCloud

Some SaaS software you might know: • Google

• Twitter

• Facebook


A Few Examples of Note

One SMI CIO’s definition of SaaS:

1. The answer to all my problems.

2. The beginning of a new set of problems.

3. Systems I can’t control.

4. A line item on my IT services budget.

5. Something a business function acquired.

6. An opportunity.

7. All of the above.


The SMI Conundrum

Many find themselves still on legacy core systems and applications – modernization has been delayed until premiums and profitability return.

The cost of modernization is often too big a nut for SMIs to swallow all at once. This has led to hybrid modernization approaches and/or simply delaying what’s ultimately necessary.

As legacy systems linger, their costs and care requirements increase over time, sapping limited financial and IT resources that might be more effectively used elsewhere in the organization.

The result of all of this is a slow erosion of market responsiveness, capabilities, and competitiveness.


The SMI ChallengeThe competitive challenges SMIs face against larger insurers are the same as they always have been, however the recent market downturn of the past few years served to intensify those challenges. Now that the market is coming back, many SMIs find themselves in catch up mode – not a happy place to be. For many SMIs, the short but daunting to do list back to competitive advantage is as follows:

• Lowering the cost of operations to improve financial strength.

• Increasing operational agility through product and service innovation.

• Modernized technology that allows for agility and responsiveness to market opportunities.

• Organizational readiness to expand into new geographies and markets as opportunities present themselves.


The SMI Opportunity

Amongst a number of other options, SaaS has emerged as a viable opportunity for many SMIs. From the perspective of a former CIO, SaaS based solutions help to offset a number of SMI challenges:

• Lower acquisition cost thresholds.

• Outsourced infrastructure costs that don’t put additional demands on scarce internal IT resources.

• Ability to more quickly implement system changes.

• Increased responsiveness to business and customers.

• Flexibility to quickly retire system(s) if necessary.

• If done correctly, lower annual expense run rate for systems.


SaaS in an SMI Context – To Core or Not to Core? One way to think about SaaS in an SMI context is this. In an insurance world full of

seemingly unfair competitive advantages, deftly employing a SaaS model for non-core, and perhaps even core systems, is a way to begin to level the competitive playing field.

A SaaS architecture for non - core systems, things like CRM, ECM, HRM, collaboration and messaging platforms, help and service desk, etc., is a good first step where there are proven providers with good track records.

An emerging area of SaaS capabilities, and where SMIs could start to make real strides toward competing against larger insurers is in the core systems space – policy, claims, billing, and the like. This is a bit riskier from a control and accessibility perspective, but increasingly the risk reward calculus is tilting in favor of a SaaS model for SMI core systems as a viable, and perhaps even game changing, option.


Final Thoughts: No Silver Bullets, Only Silver Linings

As with anything in IT, SaaS is not a silver bullet for SMIs, but rather should be viewed as another useful tool that can be used to simplify one’s business technology architecture.

For SMIs, where IT expenses are watched more closely and bad systems decisions more difficult to recover from, a SaaS approach can be a lower risk way to get into a modernized technology platform.

Looking ahead, SMIs have an opportunity to think about SaaS in a strategic as opposed to operational way – so as a way stay on a competitive par with much bigger companies, rather than a way to address IT expense and resource issues.


17

Thank you for your time and attention. If you have questions specifically regarding this portion of the presentation, please contact:

Frank Petersmark

CIO Advocate

X by 2, Inc.

Email: [email protected]

And now, our next speaker, Jim Laing of Wolverine Mutual.


mailto:[email protected]


James S. Laing, President – Wolverine Mutual Insurance

Jim represents the third generation of the Laing family to preside over Wolverine Mutual, having succeeded his Brother, Father and Grandfather….the original founder of the Company in 1917. 56 years of age, Jim joined Wolverine Mutual as General Counsel in 1994, leaving his partnership in the Chicago based law firm of Keck, Mahin and Cate. In addition to his role as General Counsel, Jim ran the claims department and was responsible for Wolverine’s participation in the Insurance Institute of Michigan (IIM) from 1998—2008. During that period Jim was active as Chairman of the IIM Legal Affairs Committee. Jim was elected President of Wolverine in 2006. Since 2009 Wolverine has substantially improved its top line and bottom line under Jim’s leadership, having increased its independent agency contracts by nearly 50 percent and its surplus by nearly 60 percent. He says the Company remains focused on delivering the highest levels of personal service and that, simple as it sounds, service to agents and policyholders is Wolverine’s most important differentiator in the market. Jim has attained degrees from Stanford University and the University of Michigan Law School.

Wolverine Mutual Insurance Company…Who Are We?

Wolverine Mutual Insurance Company, founded as an auto insurer in 1917, merged with a local fire company in 1954 and has provided personal lines homeowners’ and dwelling fire since that time.

A family-operated insurance carrier, our success has been attributable to our relationships with our independent agents through quality service.

Now more than 45,000 policyholders in Michigan, Indiana and Wisconsin rely on Wolverine when things they value are damaged or lost.

Our goal is to provide “exceptional service” to both our independent agents and our policy holders for their home, car, motorcycle, boat, recreational vehicle or rental property needs.


Wolverine Mutual Insurance Company…Who Are We?

Wolverine Mutual’s commitment is to provide a strong financial future for its policyholders, achieved through…

1. Conservative growth, investment and underwriting standards

2. Focus on personal service

3. Insistence on competitive technology for purposes of augmenting service,

product development, and pricing

Through three generations and four family members carrying the load we have weathered many a storm and have the strongest balance sheet in our history.

We have superior loss ratios to our national and super regional competitors which allows us to compete despite higher expense ratios.

Current focus is to use technology to drive down relative

costs while growing the top line.

This is Wolverine Mutual!!


Our Market Challenge!

National and super regional carriers targeting our client base. Retention becoming an issue in some markets.

Independent agents demand more support and service. We have to be competitive on the agents desktop and the customers cell phone.

Current policy administration and claims management platform unable to meet all the evolving Wolverine Mutual business initiatives.

A “best of breed” insurance solution, in a traditional deployment model (e.g. upfront payment of services and licenses) was not feasible.

Geographically limited information technology resources (e.g. Dowagiac, Michigan) to deploy a new insurance solution.


The Market Challenge!

For the past 10 years, we haven’t kept up with “real time” demands of our agents and thus saw this as an opportunity to reengineer process to drive down costs and improve the overall customer experience.

There is urgency to grow our business by offering new products and services that will strengthen our customer and agent relationships.

We need to stay focused on our core competency – personal service and ease of doing business. Enterprise wide IT platforms are expensive and complex to install and implement.


The SaaS Opportunity! To empower Wolverine’s envisioned direction, we need a new insurance platform.

As our past success was built on our relationships with our agents, we desired a true customer-centric policy administration solution so that we have a 360 degree view of our agents and policyholders.

We did not go in search of a SaaS solution. We were looking for specific software attributes and functionalities from a partner we could trust and afford.

The best option for us was to deploy a SaaS-based policy administration and claims management solution.

This option needed to meet the following requirements:

All of our policy and claims functionality

Flexible

Configurable

Scalable

Security

Enhance our agent/customer experience

Total cost of ownership (TCO)


The Selection Process & The Path We Took

Market evaluation leveraging analysts, conferences, relationships, for all possible insurance software vendors.

Narrowed down the list to about 12 vendors

Invited all vendors for on site interviews and demonstrations.

Our selection criteria included:

Full satisfaction of our business requirements

Speed to deploy (e.g. time to get new solution up and running)

Stability of company

Research & development (past and ongoing)

Core policy, claims & analytics functionality

Insurance knowledge

Experience in our markets

A vendor we can trust


The Selection Process & The Path We Took

Our selection criteria included (continued):

Full service company (software, services, hosting, post production support, etc).

Wanted a solutions provider where we were not a “small fish in a big pond” or vice versa.

We wanted the perfect fit (people, software, process and technology)

Price structure we could work with.

Proof of development of core functionalities we demand.


The Path We Took…. The Innovation Group and the SaaS Insurer Suite We selected the Innovation Group since they met all of our requirements and provided a

foundation for Wolverine to grow our business

Innovation Group is working with us on the right business model that will help us transform our operation to more aggressively compete in the personal lines market particularly with our larger, more tech savvy agents.

Innovation Insurer gives Wolverine a modern technology platform (Policy & Billing, Claims Management and Analytics), while strengthening our relationships, introducing new products, gaining business insight through analytics and reinforcing our commitment to service, today and in the future

From the beginning, Innovation Group’s partnership approach and their culture of trust and integrity, stood out and was a critical factor to our decision.

We feel we are benefitting from their years of experience in two ways. As we develop work flows and data elements they are able to offer solutions drawn from prior deployments. Second, their system is robust and flexible and the vast integrity of our requirements are included.


Embrace an “out-of-the-box” capable solution otherwise

able to impact:

Scope Creep

Upgrades

Total Cost of Ownership

Time to Deploy

Contracts and service level agreements (SLAs)

Number of interfaces impact cost and timeframes

SaaS model reduces the dependency on IT resources and hardware infrastructure.

Relief for us from certain database, hardware, license and software upgrades and

maintenance.

Disaster Recovery decisions made easy



James S. Laing

President

Wolverine Mutual Insurance


And now, our next speaker, Tony Novielli of Innovation Group.




Tony Novielli, Executive Vice President Sales, North America, Innovation Group

Tony Novielli is the Executive Vice President of Sales, North America, for Innovation Group. With more than 30 years of insurance and financial services experience in the U.S., Canada and Latin America, Novielli brings an impressive sales and delivery track record of working directly with customers, and extensive experience servicing regional, super regional, national, third party administrators and large international clients. At Innovation Group, he is responsible for the company growth initiatives for the U.S. and Canada, and developing overall sales and business development strategies. His background includes extensive management, sales, marketing and solutions delivery experience. He has a breadth of insurance industry experience in claims, policy administration, analytics and customer service. Prior to joining Innovation Group, he held various positions at CGI and Xerox Professional Services Insurance Practice. Prior to Xerox, Novielli was the Insurance Team leader for NCR. He has a Bachelor of Arts (BA) Degree in Economics from McMaster University-Hamilton, Ontario.

SaaS: A Vehicle for Equality

David and Goliath

Smaller carriers have challenges with:

Technical resources based on geographical location

Funding for expanding hardware needs

Disaster recovery

Program and regulatory changes

Speed-to-market for products and entry to new states

Limited IT budgets

Limited resource pool with the right skill sets

Greenfield and white label opportunities


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Example Demographics for SaaS

1400 property/casualty insurance company members

135 million auto, home and business policyholders served

$196 billion in member company policyholder premiums

50% of the automobile/homeowners insurance market

31% of the business insurance market

200 thousand people employed by NAMIC member companies

I attended the NAMIC Conference and guess what the resounding themes were?


“National carriers are taking our business and we lack funding to compete against them.”

“It is becoming more and more expensive to maintain our legacy PAS and we can’t find the resources to support us.”

“I am looking to acquire Tier 1 insurance software functionality, but at a Tier 3 pricing model.”

Executive Comments


“We are looking to deploy a new product into another state, but I don’t have the resources or the technology to get me there.”

“ We have a very good information technology department however they have projects that are piled a mile high, not enough people and a budget that far exceeds their contribution.”

Executive Comments


Rule of One

Single Data Model

Configuration

Toolset

Workflow /Rules

General Ledger

360% Client View

Analytics

Claims

Policy

Alternative – Insurance Suite in the Cloud – as a SaaS Solution


SaaS: A Vehicle to Compete and/or Step Change Carriers who desire Tier 1 functionality however

restrained with limited budgets and resources –affordable solution with no large up front costs. Quick to deploy

Minimal to zero infrastructure costs

Seamless upgrades

Guaranteed service level agreements (SLAs)

Disaster recovery and contingency plans

Back up and data recovery

Performance guarantees

Scale effortlessly

Security

Less risk to deploy



Tony Novielli

Executive Vice President Sales, North America

Innovation Group


And now, our next speaker, Tony Jacob of Microsoft.




Anthony J. Jacob, Managing Director, Worldwide Insurance - Microsoft

Tony Jacob is the managing director for the Worldwide Insurance industry team at Microsoft. Tony’s role includes working with key Microsoft product teams to help make those products more relevant to insurance carriers and brokers globally, working with insurance customers, researching new solutions opportunities, and leading business development efforts with strategic solutions partners. Tony joined Microsoft in 2005. Prior to leading the insurance practice, Tony led core solutions activities and business development for the insurance team. Tony also served as the global industry marketing director for Microsoft's Worldwide Financial Services team, driving the global marketing strategy across banking, insurance, and capital markets/securities. Before working in the software industry, Tony worked on NASA and Lockheed Martin programs, including a program to develop a next-generation space shuttle. Tony also served as an on-air commentator for NASA television during coverage of three space shuttle science missions.

evolving definition of computing models

47% of New Apps are on-prem

89% of Sockets in corp.

datacenter

98% of large Orgs have some

degree of virtualization

20% of Orgs have Private

Clouds

Majority of cloud growth is

IaaS

Majority of new cloud apps are

PaaS

Most efficient model for cloud

development

~16% of new Apps qualify as SaaS

Business model, not hosting model


On

Premises

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Applications

Runtime

Yo

u m

an

ag

e

Infrastructure(as a Service)

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Applications

Runtime

Man

ag

ed

by v

en

do

r

Yo

u m

an

ag

e

Platform(as a Service)

Man

ag

ed

by v

en

do

r

Yo

u m

an

ag

e

Storage

Servers

Networking

O/S

Middleware

Virtualization

Applications

Runtime

Data

Hosting Models

Software(as a Service)

Man

ag

ed

by v

en

do

r

Storage

Servers

Networking

O/S

Middleware

Virtualization

Applications

Runtime

Data

Business Model

Man

ag

ed

by v

en

do

rLeveling the Playing Field with SaaS

>80% of new apps in the next 5 years will be distributed/deployed on clouds

from infrastructure to application platforms

The strategic focus in the cloudwill shift

34% of CIOs say technology as a service (cloud) will have the most profound effect on the CIO role in the future

Sp

eed

(IT

support

of

the

busi

nes

s)

Economics

Simulation

& Modeling

Core

Systems

Storage

& Back-up

Dev/Test

Cloud Platform

Production

Cloud

Infrastructure

B2B/B2C

Applications

Departmental

& Productivity

Applications

Business IT(cost take-out)


Fixed device

Costs – device, install, SIM,

data, analysis

~ $250-$300

ODBII Plug in device

Costs – device, data,

analysis

~ $150

Smartphone – FNOL, drive

profile Costs – App, Data,

Analysis, Service

~ $50

Aviva:

• Commercial lines & personal lines

• Phone accelerometer

• Windows Phone, iOS, Android

• SQL Azure for data

• 300,000 app downloads

• Gamification

• Raised net promoter score

Telematics Devices


Brought-In Devices

• Enabling the in-vehicle-

infotainment system to

be the interaction surface

for a Windows device

brought into the vehicle.

• Standards-based

connectivity.

• IVI + Windows. The best

of both worlds.


Connected Home



Anthony J. Jacob,

Managing Director

Microsoft


And now for the Q&A portion of today’s program.




Q&A with Today’s Speakers

Frank Petersmark, CIO Advocate – X by 2

James Laing, President – Wolverine Mutual Insurance Company

Tony Novielli, EVP Sales – Innovation Group

Anthony J. Jacob, Managing Director, Worldwide Insurance –Microsoft

leveling the playing field with saas...leveling the playing field with saas frank petersmark, cio...

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