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Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
Mantacore Whitepaper Part1 Standard System En
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Mantacore Whitepaper Part1 Standard System En

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In this white paper you’ll get information on what you should think about if you are in two minds whether to continue developing your own system or to switch to one of the …

In this white paper you’ll get information on what you should think about if you are in two minds whether to continue developing your own system or to switch to one of the
off-the-shelf software products currently available on the market.
Why should you choose a software product rather than build your own?
How can you still be unique, in relation to
the rest of the market?
What are the advantages of an off the-shelf system?

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  • 1. Part 1: Off-the-shelf system or build your own? Page 1 JULY 2009 WHITEPAPER: Prepare your policy administration system for the future - Part 1: Off- the-shelf or in-house?
  • 2. Part 1: Off-the-shelf system or build your own? Page 2 Introduction The market presents a number of challenges. Recognize this? • Difficult to achieve the demands of Solvency II • Time-consuming to launch new products • Many different systems • Need to be able to communicate with third parties • Inflexible IT-system and demanding manual processes In this white paper you’ll get information on what you should think about if you are in two minds whether to con- tinue developing your own system or to switch to one of the off-the-shelf software products currently available on the market. Why should you choose a software product rather than build your own? How can you still be unique, in relation to the rest of the market? What are the advantages of an off- the-shelf system? This is the first of three papers on the subject of software products for the insurance industry. The others look at: Part 2: What should an off-the-shelf system be able to handle? Part 3: How to implement an off-the-shelf system? For more information on when the next two parts will be av- ailable, please e-mail marketing@mantacore.se or visit: http://www.mantacore.se/english/whitepaper Content Introduction......................................................... 2 Content ............................................................... 2 History................................................................. 3 The time is ripe for standard systems..................... 4 Own-developed versus standard systems ............... 5 Unique needs ....................................................... 7 Different types of standard system ........................ 8 Challenges for standard systems ........................... 9 About Mantacore ............................................... 10 www.mantacore.se
  • 3. Part 1: Off-the-shelf system or build your own? Page 3 History From a historical point of view, the last 10-15 years have seen a number of different industries go through major changes and switch from their in-house systems to software products. In many industries, soft- Examples of industries where software products are now the ware products are al- norm: ready the norm. - Finance - Distribution (orders, stock, invoicing) - Production (Materials Planning Systems, production systems) - Sales Systems (CRM) IT has not developed in the same way within insurance as it has done in other industries. The 60s saw IT systems based on punch cards replaced by systems based on COBOL, PASCAL and even FORTRAN. It was at this point that the industry star- ted to be ’systemized’ – a major process which, at the time, was extremely complicated. Image: Punchcard The shift in focus is Gradually, a shift has occurred where most of the logic which towards front-end sys- was previously found in the old back-end systems has been tems instead of back-end moved into front-end systems, i.e. to systems where adminis- systems. trators and others handle the information. Today, many companies still use these systems. Also common is the use of different systems for different products, along with a large amount of manual processing. It is also not unheard of to use Excel as an insurance system. In the case of more advan- ced business insurances, a different Excel is used for each indi- vidual business. www.mantacore.se
  • 4. Part 1: Off-the-shelf system or build your own? Page 4 The time is ripe for off- Why is now the time for the insurance industry to switch to standard systems? There are a number of criteria which the-shelf systems need to be satisfied in order for an insurance company to change its strategy and go for a software product instead of an in-house development. Advances in technology The right technology is now Modern platform technology, the internet, SOA, web servi- in place for software pro- ces, xml and user-friendly interfaces are all now readily avai- ducts. lable to help shape the software products which the indu- stry needs. Major advances have also been made within the areas of development methods and software product pro- cesses. The market’s demands for rapid change It is vital to be able to quickly adapt systems when new bu- siness opportunities arise. The system must be capable of handling these rapid changes. Interaction outside of the company These days it is much more important that external contacts are able to communicate directly with the internal insuran- ce systems; this includes everyone from direct customers, claims adjusters, finance staff and financial authorities to the police and the fire service, etc. Globalisation The Solvency II regulations Insurance companies are no longer just active in their home promote the idea of system market. It is becoming all the more important to be able to support. handle new markets and this places completely different de- mands on the IT systems. The Solvency II regulations apply to the whole of the EU, which also makes it easier for soft- ware products to operate in many different markets. Focus on low transaction costs New customers should not Internal IT costs should not increase with every new custo- mean expensive IT costs mer that comes along. Margins have to be reduced and new every time. customers and markets reached without expensive IT pro- jects. Competence and experience The system providers that have specialised in the insurance industry have, over the past 10-15 years, gathered the neces- sary knowledge and expertise to be able to successfully im- plement the software products that they offer. www.mantacore.se
  • 5. Part 1: Off-the-shelf system or build your own? Page 5 In-house versus stan- Historically speaking, we have seen many industries switch from in-house systems to off-the-shelf systems and the time dard systems is now ripe for the insurance industry to do the same. Be- fore going further, we first need to understand the differen- ces between building your own systems and off-the-shelf sys- tems. We have looked closely at a couple of areas: - Product Development versus IT departments - Do unique needs require in-house development? - Different types of off-the-shelf systems - Challenges for off-the-shelf systems System provider versus internal IT The core business is diffe- An insurance company’s core business is the selling/arrang- rent for insurance compa- ing of insurances or risk-handling; a software company’s nies and system providers core business is products and solutions. This implies that a system provider is entirely focussed on producing and delive- ring IT products. Key areas could be: Technical education Technology surveillance Certification Development Methods Partnership Product processes Test/QA Support Product organization User-friendliness/De- sign The product provider have great potential to deliver high quality products on time and at low cost. For an insurance company to be able to do the same requires investment and cutting-edge knowledge in these areas. Important to make use The internal IT staff that one has access to should be used as of internal IT staff in the effectively as possible. What is the best way to use IT? most effective manner. - Concentrate on fulfilling ’unique customer needs’ - Act as liaison with product providers and external consul- tants regarding your company’s requirements - Provide integration with external systems - Act as a link between the business side and IT. Internal IT departments Another problem associated with in-house systems being se- are often forced to think riously expensive and taking too long to launch when new short-term and not to in- business opportunities come along is that internal IT de- vest resources in long-term partments find it difficult to say no to certain development solutions. trends. Or that you is often forced into ”quick and dirty” so- lutions in order to facilitate the quick launching of something www.mantacore.se
  • 6. Part 1: Off-the-shelf system or build your own? Page 6 new. A software supplier must look at the bigger picture and produce solutions that neither compromise existing functio- nality nor make it more difficult to develop further solutions in the future. Shared costs with software products Only a certain percentage Major parts of any insurance or similar system are devoted of an policy administration to areas such as database-handling, transaction-handling, system consists of unique logging, security, authorization, graphic interface-handling, solutions. webservices, error handling, etc. As far as insurance compa- nies are concerned, it is entirely likely that the way in which insurances and products are handled is not unique from company to company. Add to the mix regulations such as Solvency II and this argument is strengthened still further. If you purchase a standard system, you are effectively sharing the cost of this with many other companies. Unique needs Regulations Insurance logic Logging Authorization Database-handling Error-handling Long-term development Problems occur if one One problem with in-house systems is that they are often builds a system just for im- built just with immediate needs in mind. It is difficult to mediate needs and does justify investment in possible future requirements. The pro- not think long-term. blem is that if you do not take future needs into account at the time, then it can cost much more to add these on after- wards. A software supplier has to provide solutions for many different customers’ needs and in so doing will invest a great deal of time and money in research and analysis of the futu- re. As a customer, you share some of your needs with other customers and, in so doing, you also share the cost. www.mantacore.se
  • 7. Part 1: Off-the-shelf system or build your own? Page 7 Unique needs One argument for in-house development is often the desi- re to be unique. An insurance company must have solutions Unique needs should be that allow them to do things that their competitors cannot. manageable through ad- This places high demands on software products for custom justments that are not af- made functionality or to modify existing functions on a mo- fected by upgrades. dular basis. It is extremely important that a software pro- duct is capable of handling all of this in an intelligent man- ner so that new upgrades or hotfixes do not interfere with these customer modifications. Tailoring to customer require- ments can involve different types of re-configuration or even completely new development. With these types of opportunities, the internal IT depart- ment can concentrate on the aspects which make their com- pany unique and differentiate it from their competitors. Analyse and evaluate the The fact that an insurance company has individual needs is existing processes in order certainly true if that company is on the cutting edge and has to maximise the benefits of business advantages that its competitors do not have. This a software products. does not necessarily mean however that its current proces- ses are the most effective available. A common mistake when you look at software products is that you try to map exis- ting processes directly across onto the standard system. You should attach great importance to first analysing the pro- cesses themselves in order to see if they are in fact the most effective available. Those that make the difference from the competitors’ are those which make the company unique and it is these that should be adjusted within the software pro- duct. Not everything is suitable Some processes that work with an in-house system may for off-the-shelf systems. not suit a standard system (customer care, advanced finan- ce functions, support). There are other software products within these areas which deal with these aspects in a much better way. It is however important to be able to effectively integrate with external systems. www.mantacore.se
  • 8. Part 1: Off-the-shelf system or build your own? Page 8 Different types of off- When you talk about off-the-shelf systems, there are of course many different types of systems. the-shelf system General systems General platforms do not This type of system is often built on a ’general’ base plat- always solve industry-spe- form which can be used by many different types of indu- cific requirements in the stries (insurance, banking, etc). Onto this base platform is most effective manner. added industry-specific solutions. The problem is that these platforms do not fit the processes and information structu- res relevant to any one specific industry. This means that, when attempting to solve specific problems and processes, it is not possible to do this in the most effective way. This leads to frequent ’work-arounds’ in order to solve specific problems. On the whole, these ’general’ models require a great deal of configuration in order to make them industry- specific. Niche systems Niche systems are ba- Niche systems are designed for specific industries or specific sed on extensive industry parts of a specific industry (i.e. pensions or property & ca- knowledge. sualty). The advantage with this type of system is that they are based entirely around processes that are specific to the insurance industry. This can often mean that the product provider is extremely knowledgeable about the insurance industry, has worked with insurance companies over many years and is aware of the challenges which lie ahead. With these systems it is important that one has made provi- sion for being able to communicate effectively with external systems and to be able to handle exports and imports. One problem can be that it is difficult to tailor the system to the requirements of the ’unique’ parts of the business. Hybrid systems Hybrids require extensive A hybrid system is often built around a programming inter- implementation. face which has been specially developed for the insurance industry. The customers’ specific processes and graphic in- terfaces are then added on top of this interface. This type of system is a cross between a standard system and an own-developed system. Hybrid product providers are often large consulting compa- nies. These systems nearly always require the customer to use the consulting company’s resources in order to imple- ment the required solutions. www.mantacore.se
  • 9. Part 1: Off-the-shelf system or build your own? Page 9 Challenges for soft- You never get exactly what you want Exact processes and requirements cannot be implemented ware products 100% in an off-the-shelf system. Please note that you should review the processes to see which are really the most effec- tive. It might also be that new business opportunities, out- weighs existing requirements that cannot be reproduced 100% in a software product. Cost You may have to pay for modules/functions that you do not need or use, if the software product cannot be tailored so that you only pay for what you use. Flexibility The difference between ad- Naturally, software products need to be really flexible in or- vanced configuration and der to handle many different customers’ needs. The danger is development can be razor that, if a software product is built so flexible that it could po- thin. tentially handle all imaginable scenarios then it often beco- mes extremely difficult to configure. It often requires experts from the product provider or dedicated internal resources. The difference between configuration and pure program- ming can be razor thin. An off-the-shelf system should have a good balance of configuration possibilities and code adjust- ments. Reliable supplier Good finances and long- An insurance system is business critical and it is important term relationships indicate to have a reliable supplier. Small companies can go bankrupt a reliable supplier. and then what happens with further developments, source code, etc.? As a customer, you should analyse the supplier and see if the company is financially stable and if they have credible and long-term relationships with their customers. Demand for instance, that they deposit source codes via the Swedish Chamber of Commerce. www.mantacore.se
  • 10. Part 1: Off-the-shelf system or build your own? Page 10 About Mantacore Mantacore AB is an IT company which supplies products and services to the insurance industry with particular focus on property & casualty insurance. We supply the web-based off-the-shelf system Mantacore CS, which handles customers, products and business pro- cesses associated with insurance companies, captives and global brokers. The product has been developed using the latest Microsoft technologies. This is the first of three papers on the subject of software products for the insurance industry. The others look at: Part 2: What should an off-the-shelf system be able to handle? Part 3: How to implement an off-the-shelf system? For more information on when the next two parts will be av- ailable, please e-mail marketing@mantacore.se or visit: http://www.mantacore.se/english/whitepaper Homepage: www.mantacore.se Mantacore AB Linnégatan 89E SE-115 23 Stockholm Phone: +46 8-505 242 00 www.mantacore.se

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