“experiences are as distinct from services as services are from goods.”
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Flexible Futures Integration and Migration To Achieve Value Chain Results Kevin S. Kelly, Managing Director – U.S. Insurance Industry, Microsoft Corporation. “Experiences are as distinct from services as services are from goods.”. - PowerPoint PPT PresentationTRANSCRIPT
Flexible FuturesIntegration and Migration
To Achieve Value Chain Results
Kevin S. Kelly,Managing Director – U.S. Insurance Industry,
Microsoft Corporation
“Experiences are as distinct from servicesas services are from goods.”Joseph Pine & James Gilmore, The Experience Economy:Work Is Theatre & Every Business a Stage
experience
experience
experience
enhancement
improvement
innovation
customer employee operations
experience
customer employee operations
experience
• Choice of methods for interaction• Choice of products and services• Speed of delivery• Accuracy in detail• Competitive pricing• Brand-based value-adds
customer employee operations
experience
• Enhanced productivity• Confidence in applications• Intuitive interfaces• Fewer keystrokes to destinations• Reasonable workflow• Appearance of competence to customer• Ability to achieve “customer hero” status
customer employee operations
experience
• Return on non-discretionary investments• Effective operations risk management• Efficiency - Once and done• Quality, aggregated & timely reporting• Agile business process change without
rebuilding whole organization
Industry Challenges
•Customer satisfaction and retention•Growth and quality of business•Human-intensive, paper-bound workflows
•Poor distribution channel integration •Regulatory compliance pressures •High legacy system costsexperience Frustration!
Policy Administration Systems
•High-Cost of Maintenance/Development
•Business Demands Now Exceed Capacity to Deliver Regularly
•Workflow Desires Meet Temporal Roadblocks … A Dictatorial Platform
•Innovation and Differentiation Are Preventedexperience Frustration!
customer employee operations
experience
“For specialty lines, our phone quotes reduced from 800 per month to essentially 0 and our policies written from 400 to essentially 900.“
- Unitrin“We lowered our ratio of support staff to underwriters from two staff members per underwriter to .5 to .75 members per underwriter.”
- Transamerica Reinsurance“This application has allowed Farmers to be much more responsive to our customer needs. We’ve been able to reduce our rental car payment process between 30 and 40 percent.”
- Farmers Insurance
customer employee operations
experience
“Based on our Test Drive experience, this architecture fully supports our future product needs and transforms our product development process from a system driven to a business driven process. This new platform will help us to improve our speed to market capability and reduce our costs enabling us to remain competitive. As an added bonus we will be able to convert our existing annuity products onto this same platform which will result in cost and operational efficiencies.”
- Merrill Lynch
customer employee operations
experience
• November 2002– Total plans written -
1769 (8 plans per Advisorper annum)
– Advisor Penetration - 79%
– Close ratio - 40%
• Year to Date Q1 2004– Total plans written -
2349 (47 plans per Advisor per annum)
– Advisor Penetration - 99%
– Close ratio – 62%
HSBC Bank USA - Financial Planning Services
Point-of-Sale & Service
Underwriting
Policy Administrati
on
Claims Processing
Reinsurance
Product Dev &
Configuration
customer employee operations
business process management
The Microsoft Insurance Value Chain
service oriented architecture+
experience
16
What Is The Insurance Value Chain?
A Business and Technical approach for delivering:
enhanced, improved and innovative
for our insurance customers
experiences
17
Effective Organizations
Effective Organizations
OperationalExcellence
OperationalExcellence
SuccessfulRelationshipsSuccessful
RelationshipsCustomer
Employee
Operations
A Results-Oriented Approach …
18
Self-Service ExperiencesSelf-Service ExperiencesSelf-Service ExperiencesSelf-Service Experiences
Assisted Service Assisted Service ExperiencesExperiences
Assisted Service Assisted Service ExperiencesExperiences
Tracking, BPM / Workflow, ComplianceTracking, BPM / Workflow, ComplianceTracking, BPM / Workflow, ComplianceTracking, BPM / Workflow, Compliance
InquiryInquiryInquiryInquiry CollaborationCollaborationCollaborationCollaboration
Search and Delivery ExperiencesSearch and Delivery ExperiencesSearch and Delivery ExperiencesSearch and Delivery Experiences
AnalysisAnalysisAnalysisAnalysis
OperationsOperationsOperationsOperations
Employee Employee Employee Employee
CustomerCustomerCustomerCustomer
Business and Technical Systems ExperiencesBusiness and Technical Systems ExperiencesBusiness and Technical Systems ExperiencesBusiness and Technical Systems Experiences
DevelopmentDevelopmentAdministrationAdministration Risk Mgmt.Risk Mgmt.
TransactionsTransactions ReportingReporting R.O.I.R.O.I.
Develo
pm
en
t / Inte
gra
tion
Tools
Develo
pm
en
t / Inte
gra
tion
Tools
Develo
pm
en
t / Inte
gra
tion
Tools
Develo
pm
en
t / Inte
gra
tion
Tools
… Through Connected Experiences
19
20
“experiences” to be expected …•Workflow unimagined, becomes possible•Applications can be “orchestrated” and
“composed” into logical “processes” that support the functions of the humans who need to use them
•IP Assets (yours and those of third-parties) can be summoned and “knit-together” to be utilized in unique and highly customized ways
•Productivity can be assumed and increased … not threatened or reduced
•Costs can be managed and reduced•Outcomes can become more predictable
21
How Are We Executing?
22
We are taking the industry from a segregated set of “siloed” … non-interoperating business processes …
… to a streamlined set of integrated applications, workflows and platforms …
… all while reducing the overall costs of deploying, modifying and maintaining those processes.
How Are We Executing?
• Sourcing Microsoft applications that are best-of-breed examples of insurance business processing, ranging from point-of-sales-and-service through re-insurance.
• Providing those partners with a “framework” for integrating their applications, based on Microsoft .NET Web Services and industry standards for Forms andEDI transactions.
• Pairing and Pre-integrating those applications, in an effort to reduce millions of dollars of post-purchase integration pain on the part of ourinsurance customers.
How Are We Executing?
• Sourcing Microsoft applications that are best-of-breed examples of insurance business processing, ranging from point-of-sales-and-service through re-insurance.
• Providing those partners with a “framework” for integrating their applications, based on Microsoft .NET Web Services and industry standards for Forms andEDI transactions.
• Pairing and Pre-integrating those applications, in an effort to reduce millions of dollars of post-purchase integration pain on the part of ourinsurance customers.
How Are We Executing?
Insurance Value ChainApplication Areas
Accounting
Agency SystemsGeneral Ledger
Distribution and Service Channels
Financial Management Systems
Support Systems
Reporting and Analysis Outside Networks
Call Centers
Internet
Financial Reporting
Regulatory Reporting
MIS
Compliance
Asset/Liability Mgmt
Appraisers
Insurance Bureaus
Reinsurers
Compensation Mgmt
Product Development
Actuarial
Fraud Detection
CRM
Core Insurance
Underwriting
Policy Administration
Claims/Benefits
Underwriting
Policy Administration
Claims/Benefits
Product 1
Product 2
Investment Acctng
Billing & Collections
Claims Adjusters
Wireless
Attach & Integrate
Lift & Shift
Replace & Innovate
Attach and Integrate:Enhance and Extend Features and Functions
•Risk Mitigation on Code, Code Skills and Platforms
•“Nibble around the edges”•Drill into existing platforms to provide access
to data and business logic from new user interfaces and new systems.
•Integrate existing assets with newly developed or purchased assets
•Trying to workflow-enable legacy systems•Provide capability of accessing IVC partner
applications, tools and/or services
Lift & Shift:Improvement of Platform and Economic Operations•Risk Mitigation on Code and Code Skills•“Lift” legacy application code off of the mainframe
and place it in a COBOL.NET run-time environment•“Shift” underlying hardware and operating system
with Intel Platform and Windows 2003 Server•Preserve existing code and coding skills•Alter the economics and performance of the
underlying platform by changing Hardware and Software Licensing models
•Provide capability of accessing IVC partner applications, tools and/or services
Replace & Innovate:Becoming Agile and Dynamic … It’s time!
•Risk Mitigation on business-demand lapses and competitive advantage
•Bring data and Business Logic over to new systems
•Take full advantage of new applications and innovation
•Most flexible
• Sourcing Microsoft applications that are best-of-breed examples of insurance business processing, ranging from point-of-sales-and-service through re-insurance.
• Providing those partners with a “framework” for integrating their applications, based on Microsoft .NET Web Services and industry standards for Forms andEDI transactions.
• Pairing and Pre-integrating those applications, in an effort to reduce millions of dollars of post-purchase integration pain on the part of ourinsurance customers.
How Are We Executing?
DevicesDevicesInformationInformation
PeoplePeople SystemsSystems
.NETSoftware to connect information, people, systems and devices
NetworkingNetworking
DataDataManagementManagement
UNIX SystemsUNIX Systems
XMLXML
Web Web ServicesServices
Industry Industry StandardsStandards
LanguagesLanguagesApplicationsApplications
IdentityIdentity
Legacy Legacy HostsHosts
Interoperability
A Global Workflow PlatformIntegrating people and processes
Web Web servicesservices
People and People and processesprocesses
Direct Direct connectionconnection
ss
BusinessBusinessNetworksNetworks
PersonalPersonalNetworksNetworks SocialSocial
NetworksNetworks
Value ChainValue ChainNetworksNetworks
CustomerCustomerRelationshipRelationship
NetworksNetworks
ScientificScientificNetworksNetworks
Connected NetworksWiring-up people and processes through software
•Advanced Web services•Workflow and Process control •Empowers the Business-side•Real-time or Real-enough-Time•“Reuse” made real!
•Advanced Web services•Workflow and Process control •Empowers the Business-side•Real-time or Real-enough-Time•“Reuse” made real!
Connected SystemsSOA (Service Oriented Architecture)
• Align IT assets & business vision• Infrastructure to enhance information flow
through customers, employees and operations• Leverage and adapt existing investments• Build systems that reflect the dynamic nature
of business– “Future-proof” systems (through loose coupling)– Simplified cross platform integration– Secure, Transacted and Reliable business
• .NET creates them by default & helps incorporate existing applications
Connected SystemsSOA (Service Oriented Architecture)
Microsoft Working with All Financial Services Standards
X9NACHAECCHO
Competitive Information
• How is .NET stacking up against JAVA for developer preference?
• How is the Intel platform stacking up against Mainframe performance?
• How does the Intel platform stack up against Mainframe pricing?
• What do price/performance futures look?
“Which one platform will be used for the majority of
your development work in 2004?”
Source: Forrester, May 2004
Professional Developers (US)
Mainframe Performance vs. 32-bit Intel CPUs
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1980 1985 1990 1995 2000 2005
Intel
MF
0
1
10
100
1,000
10,000
1980 1985 1990 1995 2000 2005
Intel
MF
Sources: Intel MIPs – IntelMF MIPS – Gartner Group
Alsop’s Prediction
MIPS Performance per CPU Same data, logarithmic axis
“I PREDICT THAT THE LAST MAINFRAME WILL BE UNPLUGGED ON MARCH 15, 1996.”
Stewart Alsop, InfoWorld, March 1991
Typical System Comparison
Unisys ES7000 IBM z990 15 way
16 Way System $200,0005 $4,482,0001
16 CPU OS License $ Included $1,177,000 / yr2
32 Gig RAM $ Included $320,0003
1.2 Terabyte Disk $ Included $78,0004
1 Gartner Research – Mike Chuba2 Gartner Research – John Philps, http://www.zjournal.com/PDF/Phelps Article.pdf 3 IBM price reduction press release Aug, 20034 $65 per gigabyte for IBM ESS 1.2 terabyte systems, which is the benchmark case5 Unisys pricing from Unisys sales desk – 16 x 2GHz, 32 GIG RAM, Data Center, 1.2 TB RAID
10x
12x
15x
19x
23x
28x
2.5x 2.3x 2.1x 2.0x 1.8x 1.7x1x 1x 1x 1x 1x 1x
0x
5x
10x
15x
20x
25x
30x
2004 2005 2006 2007 2008 2009
Mainframe
Large SMP Intel
Single Intel
Hardware Price/Performance: The Gap Will Widen
Ratios include server infrastructure hardware costs required to deliver standard data center operations (e.g., application development, testing, quality assurance, agility, high availability), but exclude software and personnel costs.
Source: Meta Group
• Sourcing Microsoft applications that are best-of-breed examples of insurance business processing, ranging from point-of-sales-and-service through re-insurance.
• Providing those partners with a “framework” for integrating their applications, based on Microsoft .NET Web Services and industry standards for Forms andEDI transactions.
• Pairing and Pre-integrating those applications, in an effort to reduce millions of dollars of post-purchase integration pain on the part of ourinsurance customers.
How Are We Executing?
Company ACompany A
Remote Office/Consumers
MobileEmployees
Company BCompany B
Customers Partners Suppliers
Remote Office/Consumers
MobileEmployees
We Are Fulfilling a Technical Imperative
CustomerIntimacy
“Understanding”
Operational
Efficiency
“Consistency”
ValueChain
“Throughput”
Core BusinessPractices“Sense & Act”
EmployeeInnovation
“Leadership”
And Delivering Business Results
Solid financial performance
Best partner ecosystem
Unparalleled investments
Vision and roadmap for the future
Business and industry leadership
The Next Wave: Microsoft Vision, Leadership and Results
The Microsoft Insurance Value Chain
The best way to
Kevin KellyManaging Director – U.S. Insurance Industry, Microsoft [email protected]://www.microsoft.com/insurance
Questions?