The software can be hosted either on the vendor s server or on a third party server. Saas is primarily based on a multi-tenant architecture where a single instance of the application is accessed by multiple client organizations (mostly with different user interfaces). This multi-tenancy of saas offering makes it a cost-effective solution for the vendor and the consumers of the applications. Saas applications have been popular in the the non-mission critical application space (MCA) and are becoming popular for mca. Saas non-core Insurance functions Customer Relationship Management Vendors like m and Oracle crm onDemand have become hugely popular in crm space. Few of the key services offered by saas crm vendors are multichannel collaborative selling, customer life cycle marketing, integrated customer service, sales force automation, data migration and integration. Many small and medium insurance carriers and insurance distributors avail the on-demand crm service. Enterprise content Management Another interesting and emerging area in Insurance especially for smis where saas is gaining momentum is Enterprise content Management (ECM). Ecm strategies directly impact the expense ratio of an insurer, which in turn will decide their profit margins.
The following three dominant services are popular in the cloud solutions space - infrastructure-as-a-service (iaas platform-as-a-service (paas and Softwareas-a-service (saas). Iaas is the core storage and computing platform offered as service. Iaas gained popularity because it eliminated the costs and complexity of evaluating, buying, configuring, and managing all the hardware and infrastructure software required for enterprise applications. These applications are delivered as a service over the Internet. The current wave of storage and computing platforms are offered from companies like microsoft and m Inc. Paas is the service offered through web for end-to-end application development, which includes integrated development environments (ide application integration environment, tools and apis for common services and quick application building, aggregators and. Following are few popular paas vendors - m, google App Engine for Content centric applications, microsoft Sharepoint application for online collaboration and content centric solution. Saas is providing software as a service.
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In the current scenario, business strategies are customer centricity, use of multi channels for growth, more automated business processes and emphasis on business processes performance measurement. Considering the business strategy, it is imperative that existing it system needs an overhaul for most of the insurers. The implementation of new technologies to drive and sustain business is almost unavoidable. This scenario becomes a burden for the smis because of the huge upfront it investment and gives rise to few critical questions such as: Can smi s afford so much upfront investment in an uncertain business environment? Will there be reasonable roi? Will that impact other polish business growth?
Is the future it technical landscape a bubble? The quest for low-risk and low-cost it investments has prompted carriers to more closely look at saas extended based solutions. Saas based solutions were popular in non-critical business areas until now. Smis will be more inclined for a saas based solution even for mission critical applications. This could be because a saas based solution does not require an upfront investment and provides risk-share basis cost structure. Figure 1 represents the reasons why smis would be more eager to adopt saas solutions. Faster High saas time to market smis On-premise solutions adopting saas outsourced Services Ease of maintenance total Cost of Ownership Low Figure 1: smis adoption of saas 5 7 Cloud Solutions At the outset saas solutions come under the family of Cloud Solutions.
3 5 smi business Case for Transformational Change Insurance premiums continue to slide across all lines in the Property casualty (P C) domain. Lesser auto and housing sales, closing of many smb and large business houses are affecting the insurance business in a big way. A 4 recent survey report by council of Insurance Agents and Brokers suggest a drop.9 in the premium rate during Q2-09. Large drops in premium rates were observed in commercial property, construction risk, marine and worker s compensation (around 10-15). As the new businesses are considerably down, there is an increasing completion in getting new businesses among all carriers.
Key strategies in this downturn for smis are to optimize the operational cost, retain the existing customer base, expand to new geographies to increase the new business and enhance coverage capability by entering new lines of business. In order to improve the operational cost, businesses are focusing on automated business processes, use of analytics for better customer segmentation, claims prediction and overall risk management, use of multi channels to reach wider customer base, incentive based agent management system and customer centric product. Many mid size carriers are buying up specialty carriers to increase their coverage portfolio. For example, the midsize carrier hcc insurance holdings Inc acquired Surety company of the pacific to expand their surety coverage. To augment their strategy, smis should have clear goals in order to sustain and increase their business. The goals can be summarized as follows. Low Cost of Operation: smi s ability to operate on low cost may eventually determine their sustenance smis Operational Agility: A continuous innovation on products and services is the only way to sustain and grow in a highly competitive market Modern IT: Rich User Interface.
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Tcs offering in insurance solution space is also discussed in this paper. Smi: Analysis of Technology Trends 3 A recent Celent writing survey based on insurer willingness in changing wood their system infrastructure and technology of business application portfolios suggests that more smis are contemplating change. Smis are more inclined to change their legacy system in future. Smis are also in favor of adopting new technologies. The smis eagerness for this transformational change can be attributed to many factors. Following are some of the key factors: Most of the smis operate on legacy applications which attribute to high cost of maintenance, more lead time for introducing new products and not very intuitive. The demand from new user group - generation y, for rich user interface, quicker and accurate response has become a major consideration. Innovative product and quicker implementation, more customized products based on different segments and use of multiple channels for distribution has become necessary for business sustenance Operational cost, risk management and compliance require robust approach. A flexible cost structure and sophisticated analytic methods are the need of the hour.
One important strategy, which is emerging from this economic crisis, regardless of industry, is the focus on having a flexible it cost structure. As the economy recovers, the focus will shift towards winning new businesses keeping overall it cost structure still low. This is the driving factor for companies continuing their it investment in 1 saas. A forrester s survey comparison for Q buy shows more saas usage than a similar study conducted a year 2 earlier - enterprises piloting or using saas has increased from 18. In addition, the adoption of saas to different types of applications has evolved from crm type applications to financial and mission-critical applications. This white paper will give a brief overview on the smi technology trends, challenges faced by smis, how saas can help overcome these challenges and the different options available in the saas space to smis along with important considerations for vendor selection. Since independent software vendors mostly managed insurance software realm until now, the role of Independent Software vendors (ISV) such as Tata consultancy services Limited (TCS) in the saas world is also touched upon in this paper.
Tcs in saas space. Summary Acknowledgements References 12 2 4 Introduction Decrease in profit, new business and return on investments have virtually crippled the insurance companies and may take years for them to recover. Though there is a global impact for all types of carriers, the impact on smis is enormous.
Largely, insurers are slow in adapting saas due to several reasons: data security, software availability, stability of provider and conventional mindset. This writing white paper intends to provide guidance for smis who think of taking the saas road for core application portfolios like policy Underwriting and Administration, Claims and Billing. This paper also discusses the role of independent software vendors (ISV) in providing saas offerings for core insurance applications. 2 About the authors Feroz khan eroz is a solution architect in the Insurance vertical of tcs. He has more than eight (8) years of experience on several facets of it software development spanning from application development, project management and program management. He has dominant experience on the Insurance industries core business functions. In his eight years of tenure, he has worked in large-scale transformation programs. The author can be contacted at Sitikantha kar Sitikantha kar has 12 years of experience on several facets of it software development spanning from application development, project management and program management. He has dominant experience on the Insurance industry core business functions encompassing Insurance policy Admin Systems, Claims and reinsurance Applications.
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1 A study on Software-as-a-service for Small and Medium Insurers The global economy crisis has affected the survivability of many life/non-life insurance companies, especially small and medium insurers. In these economic conditions, large insurers resume have more wiggle-room in terms of their it budgets, which would enable them to aim for a bigger share in the market. Small and Medium Insurers (SMI) do not have this luxury and hence have to rethink their business and it strategy. Though it expense reduction is an important aspect, a holistic approach needs to be followed, as it is the key driver for any business growth. There has been an impact on the investment on major strategic projects but future business growth driver will require investment in new technologies. This contradicting situation has made many smis to adapt out-of-box solutions. One such solution, software-as-a-service (saas looks promising. The compelling benefits of saas such as reduced total cost of ownership and access to new and emerging technologies can help smis focus on providing business value to their customers and not fear of coping up with technology advances of larger insurers.