Agency Software Is No CommodityYet
When John Sculley, the former president and CEO of Apple Computer, spoke at ACORD's annual conference earlier this year, he talked about how software will become as much of a commodity as the personal computer.
Mr. Sculley predicted that we will live in a world of plug-and-play applications that will allow people to focus more on their business and less on upgrading and swapping out systems.
Will this happen? I have no doubt. But while we are moving in that direction with the help of XML (extensible markup language) and other standards, you still need to pay attention to the vendors you choose to do business with.
There was a time when you might have purchased a single system from an agency system vendor, and perhaps added rating software developed by a third party.
Today, you might be working with many more vendors that provide all kinds of software applications that support various parts of your business. Some might be approved third-party add-ons to your primary system, while others might be stand-alone or Internet applications.
The good news is that your choices are growing. The bad news is that your choices are growing.
Obsolescence goes hand-in-hand with technology. As fast as systems are installed, a faster, cheaper solution becomes available.
Unless a business is prepared to follow all of the technology changes that are regularly required to maintain 24/7 operations, you need to acquire technology solutions that are change-friendly.
That also means technology providers must be in the business of developing solutions that are "current" with respect to what you need to run your business.
It is seldom possible to develop a one-shot solution that has legs for a long period of time. Think about that Web site you developed a few years ago.
In addition, while the Internet has brought us many new innovative software products, sifting through the often confusing marketing information makes the task difficult.
No, software is not a commodity–not yet, anyway. You can get into trouble quickly if you make the wrong purchase decision. You need a technology provider committed in your market to ensure that they are committed to you.
Technology providers who have demonstrated a commitment to support and continuously improve what they sell are the only ones you should consider.
ACORD membership is not a guarantee that they are committed, but not participating in ACORD is an eyebrow-raiser for sure. Some member insurers often do not let vendors in the door unless they are involved in ACORD.
Some vendors are here today and gone tomorrow. Some might be perfectly capable of building your agency Web site, for example, but not able to maintain it. I have heard of Web site builders who fail to address defects to the extent where Web sites become inoperable.
Application software providers (ASPs) offer some promise, but they can also be a challenge. While they simplify the process of buying, installing and maintaining software, there is a certain amount of lock-in that prevails in the buyer-seller relationship. It might not be easy to pull the proverbial (and now virtual) plug.
While some agents are reluctant to give up control of their computing environment, I believe that these mindsets will change over time. After all, you can never really control something you dont entirely understand. As Web hosting and broadband technologies evolve, control issues also need to change.
It is clear that physical control over technology is not necessarily cost effective today. And having hands-on control of customer files is not always better than allowing someone else to do it for you–with safeguards in place, of course.
In the physical world, being able to see, touch, and maintain control is equated with possession. In the digital world, possession can actually be a disadvantage because of the infrastructure requirements to maintain integrity of intangible property on the Internet.
Security involves firewall configuration, authentication, file back-ups or redundancies, encryption, intrusion detection systems, and ongoing hardware and software maintenance that go beyond the scope of non-technology business.
ASP offerings will continue to grow and morph into a plethora of Web services that will be integrated on the client side to support your business.
We are building on the edge of tomorrow and everything is new. So you are even more likely to encounter problems that were not anticipated.
And since you are most likely dealing with a variety of software applications that need to inter-operate with each other, you need to discuss integration issues with your vendors.
While recent technology has simplified the user interface, the complexity of what goes on behind the scenes has increased. If something goes wrong, it is not always simple to repair.
Agencies have become more technologically sophisticated through the years, but solutions are becoming more complex to manage. Plug-and-play capability and Web services are still evolving.
So, plan your next move carefully, do your homework on the vendors, and get advice from others. Some day, this all wont be such a big deal. But today, it still is.
Gregory A. Maciag is president and chief executive officer of ACORD, the non-profit insurance standards association based in Pearl River, N.Y., with offices in Belgium and the United Kingdom.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 18, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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