NEEDHAM, MA, May 16, 2007 – While the paradigm of service-oriented architecture (SOA) holds tremendous promise for the insurance marketplace, a new study by TowerGroup finds that both carriers and vendors must be more aggressive in establishing enterprise governance in adopting both process and data standards, and in supporting the testing and management of service oriented solutions in order for SOA to reach its touted potential.
The TowerGroup report is a result of interviews held over the last several months with senior insurance executives and technology vendors that offer SOA solutions to the insurance market. The study found that insurers are generally dissatisfied with the information they currently receive from vendors in implementing SOA. They want vendors to provide pre-built functionality and services that carriers can quickly adapt to their needs. Carriers are also looking for clarity and accuracy regarding product descriptions, especially relative to SOA integration and implementation capabilities.
Conversely, the study found that technology vendors are impacted by the lack of consistency and standards in the market around which they can build and deliver SOA functionality. Consistent business and technical standards would allow vendors to invest in the resources required to advance solution offerings, permitting them to more reasonably predict insurers’ utilization and gain a reasonable benefit from their investment.
“SOA promises a path to system consolidation, process flexibility, enhanced reporting, and expanded analytics, all resulting in a more efficient and effective business operation as well as improved customer service,” said Mark Gorman, strategic research advisor in TowerGroup’s Insurance practice and author of the study. “While carriers and vendors both recognize the potential of SOA, they must now take a giant leap forward and collaborate to address the marketplace issues that inhibit realization of the full opportunity SOA provides for business transformation.”
Additional highlights of the study include:
- Insurers need to establish a business architecture, enterprise steering committees, architecture councils and SOA stewards to realize the business gains the SOA paradigm promises.
- Vendors must commit to adopting insurance industry standards, offering applications that insurers can use across the enterprise, collaborating with insurers on industry-wide commodity processes, and making performance information available for analysis and reporting.
- TowerGroup believes that vendors have an opportunity to take a more active role in the governance process, to help further encourage insurers to successfully adopt SOA solutions.
“Insurance carriers want clear, consistent, accurate, and timely information in order to effectively anticipate business benefits and manage project costs and project risk,” said Matthew Macauley, senior research associate in TowerGroup’s Insurance practice and co-author of the study. “We believe that SOA has the opportunity to fulfill these goals, however carriers must come together with vendors in order for both to successfully address the industry’s needs.”
A report on The TowerGroup study, titled “Service-Oriented Architecture: Hope or Hype for the Insurance Market,” is available to qualified members of the press for review. Those interested in purchasing a copy of any TowerGroup report or subscribing to a TowerGroup research service may call +1.781.292.5200 or email [email protected]
Gorman will be in attendance at the upcoming ACORD/LOMA conference in Orlando, FL, and is available for in-person press interviews at the event, or by phone either before or after the conference.
About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world’s leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base. Visit www.towergroup.com for more information.