For property and casualty insurers looking to replace or renewcore information technology systems in this challenging economy,best-of-breed solutions offer a compelling alternative toone-size-fits-all suites.

According to conventional wisdom, an end-to-end solution from asingle vendor offering a prepackaged suite of products is moreeconomical and allows more seamless integration, especially forsmall to midsize insurers. However, this conventional wisdom may beholding your company back.

Consumers today are looking for companies that differentiatethemselves on more than price alone. Can you offer faster, moreefficient claims-handling than competitors? Can you tailor newproducts to emerging market segments quicker than the insurer downthe block? Can your technology choices and implementationstrategies help you stand out?

The difficulties presented by the current economy make now anideal time to challenge the typical assumptions made abouttechnology choices and implementation strategies.

Regardless of company size, lines of business, distributionchannels and even capabilities of in-house IT staff, best-of-breedsolutions–picking the best systems that are available for eachfunction–can increase speed-to-market and address specific painpoints without requiring a costly, multiyear systemreplacement.

End-to-end core systems promise a “one-stop-shop” for every needfrom billing, claims and policy administration to productdevelopment, rating and producer portals. In reality, theconvenience of a fully integrated suite can mean significanttrade-offs in functionality.

The likelihood any single vendor has core competency across allfacets of an insurer's business is slim. Integrated suites tend tobe good at one thing and merely average at others.

This is not surprising, given the evolution of most suites. Manybegan life as best-of-breed solutions. Over time, some vendorscobbled together full-fledged suites by acquiring systems fromother vendors, or bolting on additional functionality after thefact. This approach often results in an unnecessary overlap offunctionality and unfortunate gaps in integration.

Additionally, since the user interface was likely developed forone component of the suite, it may not be well suited to handlingfunctions driven by other components.

Hindsight may be 20-20, but that won't help you recover budgetdollars when it becomes evident after implementation that thesuite's performance is subpar in a critical area. Single vendorlock-in and the time, cost and risk required to rip and replace theentire suite means many insurers must simply live with thedeficiencies for many years to come.

Make certain when buying today's integrated suite that youaren't creating tomorrow's legacy system.

When choosing between an end-to-end suite and a best-of-breedstrategy, speed-to-market is a major consideration. A suite maytake three-to-five years to fully implement. Market conditions andcompany-specific requirements can change dramatically over thattime.

In contrast, a best-of-breed solution takes less time to deploy,enabling insurers to achieve a more rapid return on investment.

Because a suite touches all facets of an insurer's operations,the risk of business disruption and implementation delays is muchgreater. With a best-of-breed strategy, it is easier to preciselytarget pain points, such as improving claims efficiency, optimizingunderwriting, or automating product development.

By identifying high-value areas where efficiency andcompetitiveness can be increased, insurers can rapidly deploybest-of-breed solutions to help achieve quick wins that createcompetitive advantage.

A best-of-breed strategy allows insurers to minimize riskthrough a phased approach to core system replacement. Insurers canimplement a best-of-breed solution for one line of business andprove its value before rolling it out to other lines.

This approach also protects an insurer's capital investments byproviding the flexibility to replace key system components based onchanging business needs.

The key to a successful best-of-breed strategy is partneringwith the right solution provider. Insurers need vendors who liveand breathe open standards such as J2EE, .NET, Web Services, openAPIs and service-oriented architecture.

By choosing a solution built on a flexible, open architecturewith multiple integration options, insurers can avoid the costlymistake of purchasing a legacy solution masquerading asbest-of-breed but actually wrapped within a thin veil of Webservices or a slapped-on Web interface.

Insurers should also seek a vendor that demonstrates acommitment to the insurer's flexibility and self-sufficiencythrough configurable business rules and tools and, in particular,the ability to quickly and easily configure products.

Insurers investing in the same packaged suites as competitorswill have difficulty differentiating themselves in a crowdedmarket. Visionary companies investing in a best-of-breed strategywill be much better positioned to succeed in the long term.

Keith Inouye is senior vice president and chiefoperating officer of BlueWave Technology (www.bluewavetechnology.com).Gwen Lannaman is vice president of Marketing atCamilion Solutions Inc. (www.camilion.com).