Behind the curtain of insurance software M&A

RO: We were approached by Standard Register, a big printing company that was looking for a strategic growth platform in Insurance and electronic documents.  They gave us great offer and allowed us to remain independent.

Things changed after six months. I was mandated to restructure and merge a struggling part of their business into mine.  The real hit came when the parent realized they hadn't tuned around their huge revenue decline and forced cutbacks everywhere, especially in R&D.  I lasted a year, after which the products languished, customers scaled back and the company ultimately ended up part of Oracle.

GG: What can an insurer learn from this?

RO: Staying independent does not mean it's business as usual; you must keep a close eye on ongoing investments in R&D; and verify the acquirer's real commitment to the insurance industry

GG: With Camilion you were a pioneer in product configuration, built applications for policy administration and partnered with SAP for the insurance suite.  How was this acquisition different?

RO: By partnering with SAP, I understood their culture, reach and limitations.  I was already a critical part of the SAP Super Suite, the market was moving to buy these suites and most importantly, SAP was making a big bet on Insurance.  Being an integrated part of SAP made sense.

GG: I heard you changed the lobby signs within a week.  How did this cold turkey approach affect the team?

RO: The integration took nine months.  SAP knew they could overwhelm a small company and that Camilion was SAP's first vertical acquisition so it was critical to integration team and the board that it be successful. 

We were equal partners.  Camilion was the same size as SAP's Insurance team and I was given the mandate and resources to bring to market an end-to-end insurance suite in the cloud.  Attrition was very low and there was commitment from me and management to stay. 

GG: We often see vendors getting distracted during integration – what issues did you face?

RO: Within a year, our revenue more than quadrupled and key staff were being required around the globe; there were architectural debates between customer and product teams; and the US sales leadership changed four times.  The commitment was there but the speed of progress was slower than I wanted.  I had to be an advocate for customers instead of just making the decisions.  

GG: What calls to action would you offer carriers?

RO:  

1. Protect yourself in your license agreement: Most best-in-breed vendors will be acquired – build contractual protection for ongoing product support: 10 years hence with  the same or greater level of investment.
2. Get connected to the new leaders ASAP: You need to have a relationship with the people sponsoring the acquisition and deciding on investments.  Consider offering to support early publicity efforts in exchange for a future benefit or a quid pro quo.
3. Look closely at the cultures.  Don't be fooled – the business will be integrated over time.  If you see cultural mismatches or early attrition consider scaling back your commitment. 
4. Leverage the honeymoon period: Early in an acquisition – all eyes are on the performance of the business case.  Simultaneously, there are investment dollars available.  Combine the two: make a deal for more business in exchange for commitment on things you want to see in the product or implementation. 

Gary Givler is a Vice President and Manager of a major mid-west P&C insurance carrier and has spent 40 years working as both a functional lead and corporate change agent.