Cloud Powered Services Delivers Revenue Growth and Business Agility for SMB Travel Insurance Provider Seven Corners
Cloud Powered Services Delivers Revenue Growth andBusiness Agility for SMB Travel Insurance Provider SevenCornersTranscript of a sponsored BrieﬁngsDirect podcast on the beneﬁts achieved from a private cloudinfrastructure.Listen to the podcast. Find it on iTunes/iPod. Sponsor: VMwareDana Gardner: Hi. This is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’relistening to BriefingsDirect. Today, we present a sponsored podcast discussion on how small-to-medium sized business (SMB) Seven Corners, a travel insurance provider in Indiana, has created and implemented an agile and revenue-generating approach to cloud services. Let’s see how Seven Corners went beyond the typical efﬁciency and cost conservation beneﬁts of cloud to build innovative business services thatgenerate whole new revenue streams. Stay with us to learn more about how a VMware-enabledcloud infrastructure allowed Seven Corners to rapidly reengineer its IT capabilities and spawn anew vision for its agility in future growth. [Disclosure: VMware is a sponsor of BrieﬁngsDirectpodcasts.]Here to share their story on an SMBs journey to cloud-based business development is GeorgeReed, CIO of Seven Corners Inc., based in Carmel, Indiana. Welcome to BrieﬁngsDirect,George.George Reed: Thanks, Dana, glad to be here.Gardner: When you began this journey to transform how Seven Corners does IT, did you have a guiding principle of vision? Was there a stake in the ground that you could steer toward? Reed: I did. I was brought in speciﬁcally to be an innovative changeagent to take them from where they were to where they wanted to get as a business. They justweren’t there at the time. My vision was come in, stop the bleeding, pick off the low hangingfruit to step up to the next level, and then build a strategic road map that would not only meet butexceed the needs of the business and reach out 5-10 years beyond.Gardner: How long ago did you join Seven Corners?Reed: I joined Seven Corners in June of 2010.
Gardner: So a fairly short amount of time.Reed: Correct, but youre going to ﬁnd, as we have this discussion, that a lot of things haveoccurred in a remarkably short amount of time.Gardner: Is there anything speciﬁcally about an SMB that you think enabled such agility? Iknow it’s very difﬁcult in large companies to make such a change in short order. Do you have acertain advantage being smaller?Authority to moveReed: You do. If youre in a privately held SMB, your goal is to identify a problem or an opportunity, categorize what it would cost to resolve it or achieve it, and show the return on investment (ROI). If you communicate that in a passionate, effective way with the ownership and the executive group, you come out of the room with authority to move forward. That’s exactly what I did. Gardner: Before we learn more about that approach and process, perhaps you could explain for our listener’s beneﬁt what Seven Corners is, how large you are, what you do, and just describe what you are doing as a business.Reed: Seven Corners started in 1993 as Specialty Risk International, and as we began to growaround the globe with customers in every time zone there is, the company changed its name toSeven Corners.It started out providing specialty travel insurance, trip cancellation insurance, then beganproviding third-party administrator, general insurance services, and emergency assistanceservices around the globe. We have about 800 programs in ﬁve major product lines to spanhundreds of thousands of members.The company itself is about 170-175 people. Weve been enjoying double-digit growth everyyear. As a matter of fact, I believe that at the end of February they hit the double-digit growthgoal for 2012. So were going to exceed that as the year goes on. You are going to see thetechnology has driven some of that growth.Gardner: Who do you consider your primary customers? Is it travel agencies, or do you godirect to the travelers themselves, or a mixture?Reed: About 50 percent of the business is online. You go to the website to ﬁll out a form toﬁgure out what you need. You buy it right then and there, collect your virtual ID card, and youreon your way.We have customers that are high-tech companies who are sending their people all over the world.Theyll buy, at the corporate level, trip cancellation, trip assistance, and trip major medicalinsurance.
Then, there are universities and other afﬁnity groups. They have students traveling abroad. Wehave companies sending people to work in the United States. Then, we are doing beneﬁtmanagement and travel assistance for numerous government agencies, US Department of State,Bureau of Prisons, AmeriCorps, and the Peace Corps as well.Gardner: And on one side of your business equation, of course, you have these consumers andcustomers, but you also must have quite a variety of partners, other insurance carriers, forexample, medical insurance providers, and so forth. So you need to match and broker servicesamong and between all these?Multiple carriersReed: Correct. We have multiple carriers and do some of the advances around Seven Corners.We’ve got about four more carriers starting to move business our way. So you have to meet all oftheir needs, reporting needs, timeliness of service, and support their customers. At the same time,weve got all the individuals and groups that were doing business with and we are doing it acrossﬁve different revenue-producing lines of business.Gardner: Lets move back to what it is that youve done, maybe at a high level, an architecturelevel. As you had that vision about what you needed and as you gathered requirements in order tosatisfy these business needs, what did you look for and what did you start to put in place?Reed: The ﬁrst thing I did is assess what was going on in the server room. On my ﬁrst day,walking in there and looking around, I saw a bunch of oversized Dell desktops that were buffedup to be servers. There were about 140 of those in there.I was thinking, "This is 2000-2003 technology. Im here in 2010. This isnt going to work." It wasan archaic system that was headed to failure, and that was one of the reasons they knew they hadto change. They could no longer sustain either the applications or the hardware itself.What I wanted to do was put in an infrastructure that would completely replace what was there.The company had grown to the point where there was so much transactional volume, so manythousands of people hitting the member portals. The cloud started to speak to me. I needed to beserving member portals out on a private cloud. I needed to be reaching out to the 15,000 medicalproviders around the world that were talking with to get their claims without them sending paperor emails.I looked at an integrating partner locally in the Midwest. Its called Netech. I said, "Here is myproblem. I know that within four months my major servers that are backing up or providing ourinsurance applications are going to fail. You cant even get parts on eBay for them anymore. Ineed you to come back to me in a week with a recommendation on how you understand myproblem, what you recommend I do about it, and what its going to cost, wheels-on, out thedoor."Gardner: Just to be clear, did you have a certain level of virtualization already in place at thispoint?
Reed: No, there was nothing virtual in the building. It was all physical. Netech went away andcame back a week later, after looking at the needs and asking a ton of questions, as any goodpartner would do. They said, "Heres what we think you need to do. You need something thatsexpandable easily for your compute side. We recommend Cisco UCS. Here is a plan for that."You need storage that can provide secure multitenancy, because youve got a lot of differentcarriers that dont want their information shared. They want to know that its very secured. Werecommend NetApp’s FlexPod solution for that."And for your virtualization, hub and going to the cloud, were seeing the best results withVMwares product."Then, we started with VMware Enterprise, and when it became available, upgraded to vSphere5.0.Up and runningThey came in with a price, so I knew exactly what it would cost to implement, and they said,they could do it in three months. I went to the owners and said, "Youre losing $100,000 revenuea month because of this situation in your server room. Youll pay for this entire project in sixmonths." They said, "Well, get it done." And so we launched. In about two and a half months wewere up and running. Our partnership with Netech has had a dramatic impact on speed-to-production for each phase of our virtualization.Gardner: When you looked at creating a private-cloud fabric to support your application, werethese including your internal back-ofﬁce types of apps? Did you have ERP and communicationsinfrastructure and apps that you needed to support? Clearly, you talked about portals and beingable to create Web services and integrate across the business processes, all the above. Did youwant to put everything in this cloud or did you segment?Reed: I wanted to get off the old analog phone system that was there and go to a Cisco UniﬁedCommunications Manager, which is a perfect thing to drop into a virtual environment. I wantedto get everybody on the voice-over-IP (VOIP) phones. I wanted to get my call center trulymanaging 24×7×365, no matter where they were sitting.I wanted to get users, both customer users, partner users and then the people from Seven Cornersto get to where it didnt matter what they were connecting to the Internet with. They couldconnect to my system and see their data and it would never leave my server, which is one of thebeauties of a private cloud, because the data never leaves a secure environment.Gardner: Did you get a vision to bring all of your apps into this or did you want to segment, sortof was this a crawl-walk-run approach to bringing your apps into this cloud or was this more of atransformation, even shock therapy, to kind of do it all at once to get it done?Reed: The server virtualization was a shock therapy, because the infrastructure was veryoutdated, and any piece of it failing is a failure. It doesn’t matter which one it was.
So we took a 144 servers virtual and took all the storage into the NetApp controller, achieving animmediate 50 percent de-duplication rate. And the efﬁciency in spinning up servers for adevelopment group to support them, was such that we were cutting ton of manpower that wasrequired to spin those up. Instead of 4-5 days to set up a server for them to work on a newapplication, its 4-5 minutes.Gardner: So you were fairly smart in thinking, "I’ve got to ﬁnd success stories and implementthose and thats going to then feed the goodwill and the investment to move across the board."Reed: Exactly. In the ﬁrst three days here, inside IT and out in the business, I said, "I need a listby Friday, please, of the top ﬁve things we need to keep doing, stop doing, or start doing."I got great input and then I picked the pain points. Thats what I call the low-hanging fruit. Weknocked those out the ﬁrst month, just general technology support. That got everybody thinking,"Hey, IT can deliver." Originally they had a nickname for the department --"The Island of Dr.No." No, we cant do this, no, we cant do that.Getting championsWe said, "Lets ﬁnd a way to say yes, or at least offer a different solution." When we killedsome of those early problems, we ended up getting champions out of opposition. It became veryeasy to get the company to do business differently and to put up with the testing, user acceptanceprocess, and training to use different technology services.Gardner: Sometimes, I hear that culture will trump strategy. It sounds as if in your organization,maybe because youre an SMB and you can get the full buy-in of your leadership, you actuallywere able to make culture into the strategy?Reed: Absolutely. By changing the culture and getting the departments out there to ask, "Is thisstuff youre doing going to help me with this problem?" "Well, yes it will," and then you deliveron that promise.When you make a promise and you deliver on it, on or ahead of schedule and under budgetpeople begin to believe, theyre willing to participate and actively suggest other possible useswith technology that maybe you didnt think of. So you end up with a great technology-businessrelationship, which had the immediate result for the owners who were out looking to buy aninsurance services application or rent one.They said, "Were a very entrepreneurial company with so many different lines of business thatthere is nothing out there that would really work for us. We believe in you IT. Build us one." Thisyear we rolled out an application called Access that is so conﬁgurable you could run any kind ofinsurance services through it, whether youre insuring parrots, cars, people, trucks, or whatever.Gardner: Lets learn some more about that. One of the nice things about early successes is thatyou get that buy-in and the cultural adoption, but youve also set expectations for ongoingsuccess. I suppose its important to keep the ball rolling and to show more demonstrable beneﬁts.
So when it came to not only repaving those cowpaths, making them more efﬁcient, cutting cost,delivering that six-month return on investment, what did you enable? What did you then moveforward to to actually create new business development and therefore new revenue?Reed: By continuing to lower IT cost, when we virtualized the desktops using VMwares View,and then VMwares Horizon which makes it device-independent, it’s easier for everybody towork. That had appreciable productivity improvements out in the departments.At the same time, my apps development group began designing and building an applicationcalled AXIS. What this came out of was that when we went to insurance conventions, talked tocarriers and asked, "What are the top ten reasons you want to ﬁre your third-party administratortoday?"Technology was always part of those top ten answers. So we devised and developed anapplication that would eliminate those as problems.; The result is that this year, since February,we have four insurance carriers that were working with either their own stuff or third-partyadministrator, big COBOL mainframe monsters that are just so spaghetti-coded and heavy youcan never really get out of it.Already implementedThey see what our tool is doing and they ask these questions. "What are the specs for me to beable to connect to it?" "Well, you have to have an Internet connection and something smarterthan a coffee cup." "That’s it?" "Yeah, that’s it." "Well, what’s the price for us to implement yoursolution?" "None. "It’s already implemented. You just import your business."The jaws drop around the table. "How will I be able to see my data?" "You’ll all get in and lookat it." "You mean I don’t ask for a report?" "You can, but it’s easier if you just log and look atyour report."Theyre ﬂocking in. The biggest challenge is keeping up with the pace of the growing businessand that goes back to planning for the future. I planned a storage solution and a computesolution. I can just keep adding blades and adding trays of storage without any outage at all.Gardner: Pay as you go.Reed: And the neat thing is that that the process of closing transactions will run about sevenmillion in revenue a year. It will cost about a million and a half to service that revenue. Not a badproﬁt base for an SMB. And it’s because were going to come in at 45 percent less than theirexisting service provider and were going to provide services that are 100 times better.Gardner: So if I understand correctly, George, youre saying that you went from being a brokerof services, ﬁnding insurance carrier services, and then packaging and delivering them to endusers, to now actually packaging insurance as a service. Youre packaging the ability to conductbusiness online and packaging that, in addition, to the value-added services for insurance. Doesthat capture what’s happened?
Reed: It does, and providing immediate access to what any stakeholder in that insurancelifecycle needs improves the quality of the end product. It lowers the cost of the healthcare.Were starting to get into the state Medicaid beneﬁts management as well. Were saying, "Yourespending too much." The ﬁrst slide in the proposal is always, "Youre spending too much onMedicaid healthcare. Were going to help you cut it down and we are going to do it right now."You get attention, when you just walk in bold as brass and say that.With a solid, virtual, private-cloud solution, the cost of delivering technology services is justvery low per member service. In insurance, there are only so many ways to improve proﬁt. Oneis to grow business. We all know that. But, two is to reduce the time and price of processing aclaim, reduce the time and price to implement new business and collect the premium.We’ve built an infrastructure and now an application platform that does those things. In the oldsystem, the time to process a claim around here was about 30 minutes going through a complextravel medical claim with tons of lines. Now it’s about 15 seconds.Gardner: This is really fascinating. It strikes me that you’ve sort of deﬁned the future ofbusiness. Being an early adopter of technologies that make you agile and efﬁcient means thatyoure not only passing along the ability to be productive in your traditional business, but you’vemoved into an adjacency that allows you to then take away from your partners and customers theprocesses that they can’t do as well and embed those into the services that you provide.When, of course, you can charge back to them at a rate that was lower for them in the ﬁrst place.You can really grow your deﬁnition of being a business within your market.Think bigReed: That’s correct, and you can do this in any industry. There is a talk that I’ve given acouple of times at Butler University about how you can never stop being small, until you thinkbig. You have to say, "What would it take for me to do that? Everything is on the table. Whatwould it take?"My boss does that to me and my direct reports as well. "What would it take for us to accomplishthis thing by this time? Don’t worry about what it is. Just tell me what it would take. Let’s see, ifwe can’t do it." That’s the philosophy that this company was built on.By the end of the year, were not only going to be doing all that kind of service for carriers, butwe are going to stand up an instance of AXIS to be software as a service and every small third-party administrator (TPA) in the country is going to have an opportunity to buy seats at thisservicing application that is easily conﬁgurable to whatever their business rules are.Gardner: I think what distinguishes you, or characterizes you, is being able to do this becauseyou’ve been bold in your IT investments and adoption of modernization. Yet also as an SMB,you can be agile and ﬂeet, get the buy-in, and make the decision.
Then, youre also in a brokering role. Youre between a group of businesses, the carriers, andcustomers, so that youre in a hub role within your business and that gives you this opportunity.Those are some interesting takeaways, but let’s focus a little bit on the technology, George.What’s the platform that you put in place? What are the actual VMware products that youreusing? And is there a developing virtual pattern of beneﬁts? That is to say, is there a wholegreater than the sum of the parts at some point in this?Reed: There deﬁnitely is. Were running on vSphere 5.0 and have put in a vCenter ConﬁgurationManager and Operations Manager. Were doing our virtual desktops using the power of ThinAppand VMware Horizon.Of course, were a beta user for VMware View. We were just doing a pilot project on that, but thespeed was so much better than their actual desktops that the whole company said. "To heck withthe pilot. Roll it out." So we ended up rolling it out fairly quickly and aggressively.Then to make the cloud come to being we got the vCloud Director and vShield in. Were doing alot of business with the government, and with government agencies we have to be FederalInformation Security Management Act (FISMA) compliant which makes HIPAA compliancelook kind of easy.We’ve got SAS 70 compliance we have to do. By putting in these kinds of technology platforms,we conﬁgure it from day one and were compliant with all the controls that are supposed to be inplace.The other technology that the VMware is living on is the Cisco UCS, and it’s all being stored onNetApp FlexPod with data replication. In a few months, it will be live mirror for both computeand the data.Disaster recoveryGardner: How about disaster recovery (DR)? Have you been able to develop some moreautomated approaches to that as a result of this cloud activity? Is there a sense of reduced riskwhich, of course, for insurance broker and services provider would be very important?Reed: Absolutely. Its the ﬁrst question I get asked every time a due diligence comes in. Thisyear, I’ve had to get pretty good at due diligences from carriers and big healthcare networks.That’s another area we’ve started branching and taking over.Site Recovery Manager (SRM) is your friend, because it makes it so easy to say, "We went downat the Carmel location. Well, we’ve got a live mirror and duplicate compute sitting down at thelifeline. Pull that SRM, direct production to there, rebuild the Carmel site and then SRM willturn it back on in no time at all."The most time down we could possibly have right now is about a minute-and-a-half, and it’sgoing to be down to seconds, once the live mirror is there.
Gardner: So these folks come to you and say, "Youre showing us a price and performance levelthat you can do these services better than we can." But it also sounds like you can be compliant,face all the various regulations, and develop a sense of no risk.Reed: Correct. I designed the approach based on the things that always made me raise myeyebrow and say, "Yeah, cloud computing." We looked at a lot of the huge cloud serviceproviders. If you read the ﬁne print of the licensing agreements, they don’t actually take fullresponsibility for the security of their infrastructure and/or your data.Some of them don’t even agree that they have to give your data back if you stop working withthem. That makes big companies that aren’t tech savvy really leery. "Do I really want all of mypatients or all of my insured information sitting out there?" We also see things about informationbreaches everyday in the news.That’s why I went after something that I could put in the Department of Defense facility and nothave a problem. I know theres no chance that Im going to have a challenge, a data breach, or adata loss. That is the ﬁrst question on every due diligence questionnaire, data recovery andcontinuity of operations.Gardner: Now, you’ve mentioned the use of View, is that the View 5, the latest version?Reed: It is. It is.Gardner: What percentage of your desktops, your users are virtualized on a full desktopexperience?Reed: We’ve got 99.9 percent. We have one user, a remote user out in Arizona, and we justhaven’t gotten to her yet, but we’re just about to lose her desktop.Mobile devicesGardner: And how does that now set you up for perhaps moving towards the use of mobiledevices? Clearly, youve got some of those interface issues resolved by going fully virtual. Isthere a path to allowing choice, even bring your own device (BYOD) types of choice by yourusers going to new classes of devices?Reed: We’re working on the BYOD program now. A lot of the department heads have beenissued devices through our secure wireless in the building. A couple of them have iPads and acouple of them have Android OSs. Several of us with the new Cisco phone systems have theCisco tablet thats your actual VoIP phone station and your thin client.To get ready to go to a meeting, I get off the phone, pull the tablet out of the docking station, andinto the meeting. I have my desktop right there. Ive never logged off. When I need to go homefor the night, I take it home, and log in through my wireless. I have my Voice over IP handset,and Im calling from my desk phone from anywhere in the world.
So were already doing what I would call a pilot program to prove it out to everybody and getthem used to it. Right now, our sales guys love the fact that they just pull that thing out of thedocking station and go off to show a client what our software and services really are.Gardner: It really shows how the technology enables the business and then the business agilityenables the business development. It becomes quite an impressive adoption pattern thats reallygoing to a virtuous adoption pattern I suppose.Reed: The key is that with the BYOD setup, we put a Cisco IronPort secure wireless in thebuilding. Once you’re in our network, thats very secured and controlled. Then, we tell anybodywho brings in their own device, "Here’s what you have to do. These are the steps and encryptionlevels that you have to do to use your own device on our system."People in the pilot program are going through that and their device is being signed off on. Itcomes all the way up to my desk to approve it at this point. Im sure that down the road, it’ll bejust the company security ofﬁcer signing off on it.But those people are now connecting from wherever with their own device and they have aresponsibility to support the device. If their device goes down, they can still log in to their virtualdesktop from anywhere through View 5.Gardner: We all know how empowering it is when you can have it your way, remain withincompliance and security parameters, and also delivering on the business processes andrequirements that your company sets out for you. It’s a really nice combination.Reed: For people with smartphones and tablets, when they’re connecting through VMwareHorizon, they get other beneﬁts. If you have to get a new phone, all you do is let Seven Cornersknow.Virtual ID cardsThey withdraw Horizon and everything attendant to it from the smart device remotely withoutimpacting anything else on it. You take your smartphone down to Verizon, get a new phone, havethe stuff that belongs to you transferred over to the new phone come, and that will reinstall.Were going to be writing Android and iPad applications for our AXIS solution, which will thenmean is a traveler doing a backpack tour on the Great Wall of China falls off, breaks his leg, andgets carried off to the medical provider that’s in our network -- after he calls our 24×7 assistancecenter -- we’ll use virtual ID cards that could be scanned by the tablet computers.Were going to send those out to every one of our providers, and they can conﬁrm eligibility rightthere, give the treatment, submit the claim, watch it auto-adjudicate in our system, and see thepayment launched. This makes providers want to work with us, because they know that they aregoing to get paid and they watch it happen.
Gardner: Thats a really impressive story, George, and youve been able to do this in just acouple of years. It’s really astonishing. Before we close out, could you provide some advice toother SMBs that have heard your story and can see the light bulbs for their own beneﬁts goingoff in their heads? Do you have any advice in hindsight from your experience that you wouldshare with them in terms of getting started?Reed: The key is that you can’t get to where you’re going if you don’t set the vision of what youwant to be able to do. To do that, you have to assess where you’re at and what the problems are.Phase your solutions that you’re going to recommend to solve big problems early and get buy-in.And when you’ve got executive buy-in, you have department heads and users buying in, it’s easyto get a lot of stuff done very quickly, because people aren’t resisting the change.Gardner: We’ve been talking about how travel insurance provider Seven Corners has createdand implemented an agile and revenue-generating approach to cloud services. We’ve seen how asan SMB, Seven Corners has used a VMware-centric infrastructure to rapidly reengineer its ITcapabilities and build innovative business services that are generating whole new revenues.So thanks to our guest. Weve been joined here today by George Reed. He is the CIO of SevenCorners. Thanks so much, George.Reed: Thanks for having me on.Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks to you also,our audience, for joining and come back next time.Listen to the podcast. Find it on iTunes/iPod. Sponsor: VMwareTranscript of a sponsored BriefingsDirect podcast on the benefits achieved from a private cloudinfrastructure. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.You may also be interested in: • Case Study: Strategic Approach to Disaster Recovery and Data Lifecycle Management Pays Off for Australias SAI Global • Virtualization Simpliﬁes Disaster Recovery for Insurance Broker Myron Steves While Delivering Efﬁciency and Agility Gains Too • SAP Runs VMware to Provision Virtual Machines to Support Complex Training Courses • Case Study: How SEGA Europe Uses VMware to Standardize Cloud Environment for Globally Distributed Game Development • Germanys Largest Travel Agency Starts a Virtual Journey to Get Branch Ofﬁce IT Under Control • Virtualized Desktops Spur Use of Bring You Own Device in Schools, Allowing Always- On Access to Education Resources