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Service-oriented architecture bridges the business, IT gap


With their businesses typically supporting multiple products increasingly delivered over a variety of distribution channels--in addition to often having multiple information technology systems in place to support various aspects of the business--many insurers are desperate for a way to break down those IT silos and achieve business efficiency.

The answer, according to many IT experts, is service-oriented architecture. With an approach based on deploying enterprise software applications that share logic and data across both legacy and newer IT systems, SOA provides a way for companies to share data across the enterprise, increase business information and make better use of that information.

But the challenge is that SOA is more process than product, and requires a change of mindset it's to be implemented successfully.

"Your entire outlook or your way of thinking has to be different," said Vijay Chavan, head of worldwide insurance at Mumbai, India-based Mastek Ltd. To successfully implement SOA, Mr. Chavan said, a company must take a holistic, top-down approach rather than viewing individual business processes in compartmentalized fashion.

"Your entire design approach has to be a lot more solid," Mr. Chavan said. "You have to put in a lot more thinking upfront."

But the investment offers definite dividends, SOA proponents say.

"The way we're seeing it from a business perspective is that SOA is a potentially significant way of achieving scale for insurers," said Keith Macbeath, director of insurance solutions at Blue Bell, Pa.-based Unisys Corp.

One potential benefit is that SOA offers companies a way to have a single "product factory" serve various distribution channels, Mr. Macbeath said.

"That's a significant win in itself because one of the things that CEOs are targeting is reducing the portion of their IT budget that's spent on maintenance and busywork and freeing up more of it to be spent on innovation," Mr. Macbeath said.

"The other dimension of (SOA) is it really allows you to maximize straight-through processing," Mr. Macbeath said. SOA does so through its top-down view of the business, he said. "Rather than looking at applications first, you can say, 'My business process needs to be this."'

Overall, Mr. Macbeath said, SOA "gives you a good segue between the business view of the world and the IT view of the world, which has hitherto been lacking."

Still, a case must be made to sell SOA at some companies, Mr. Macbeath conceded.

"At the end of the day, this is an investment to be made, and companies in many cases find it difficult to justify that," he said. The solution, he suggested, is to find a business vehicle at the company that will justify the investment, such as reducing claims leakage or facilitating multichannel product distribution.

"You can also approach it from a specific functional area," such as achieving a single client database, Mr. Macbeath said.

"I think that's one of the other attractions of SOA--you can come at it from a number of directions," he said. "You don't have to do it all at once."