The combination of business intelligence (BI) and Software as a Service (SaaS) is generating interest among insurers looking for a fast, secure solution that generates a greater return on investment.

Insurers’ growing frustration with traditional “on-premises” software implementations is fueling greater interest in SaaS BI solutions. Despite new technological advances, the common perception of on-premise solutions is that they take longer, cost more and end up being more complicated than expected.

SaaS speeds time to value by removing many of the traditional steps of software implementation. Rather than designing and building a BI solution from the ground up, SaaS-delivered BI leverages an existing platform.

The time savings afforded by this solution is especially evident with insurance-specific SaaS BI applications where insurance business content is already inherent in the solution.

Lowering the Total Cost of Ownership

While the costs associated with the traditional software model (i.e., buying software, completing a complex implementation and absorbing the ongoing cost of labor to support and maintain the software) have improved slightly over time, SaaS BI solutions can significantly reduce the total cost of ownership.

The ability to share the technology investment and human resources across multiple clients allows SaaS applications to deliver high-quality service at lower prices.

“We concluded a build approach would be cost prohibitive looking at the ongoing maintenance and learning curve required,” says Joe Scollo, chief operating officer for American Safety Insurance.

SaaS requires no software purchase or infrastructure and offers rapid deployment and subscription pricing, resulting in an immediate and positive impact. SaaS subscription fees also include ongoing support, upgrades, access to a help desk and enhancements.

American Auto Guardian, Inc., an administrator of VSCs and other aftermarket products for auto dealers throughout the United States, selected iPartners, a provider of “on-demand” management information and analysis solutions, to serve its BI needs.

“Our business model is not to develop software internally due to the expensive start-up and maintenance costs,” says Jim Devers, American Auto Guardian’s chief operating officer. “Our philosophy is to find a business partner who has a proven track record and expertise and develop the software solution with them.”

Ensuring Effective Security

New technology inevitably leads to discussions about security. Insurers considering a SaaS-delivered solution should feel confident that the SaaS provider has a good solution fit, a track record of success and the appropriate measures in place to provide effective data security.

“Without data security, there is no SaaS. It is our No. 1 priority,” explains Tom DiMarco, vice president of operations for iPartners. “We have implemented security measures at every level of our solution and are open to sharing our strategy with our customers and prospects.”

Effective security requires attention to detail and should involve a multi-layered defense in the infrastructure, applications and communications. An insurer’s SaaS provider should invest in SAS 70 Type II audited hosting facilities, high-availability hardened networks with intrusion detection and prevention systems, frequent third-party penetration testing, encrypted redundant data storage, segregated customer databases, strict data access permissions and disaster recovery.

“We know our data is in good hands with iPartners, our SaaS provider,” says Rob Shoenfelt, chief information officer for Celina Insurance. “Security is one of its priorities and core to the ongoing success of its business.”

For automotive F&I providers and administrators, Information Technology is the third largest expense after people and administrative costs. A majority of that cost goes toward the upkeep and maintenance of the core administration system(s) responsible for products, rates, dealers, contracts, claims and earnings management. Given the central role that the administration system plays, and especially in circumstances where it has been internally developed by a few key individuals, it is perhaps not surprising that the system and its attendant functions are sometimes viewed as a competitive advantage.

To deliver a competitive advantage, an administrative system needs to provide at least one of the following:

• Support a product or solution that no one else can offer
• Enable support for a product at a lower effort and/or cost than others

When Legacy Loses Uniqueness

Unfortunately, while the internally developed system may have started out delivering on these requirements, it becomes increasingly more difficult and expensive for the development team to keep the uniqueness going. In fact, as more products and product permutations have hit the market, most teams have become consumed with keeping up with basic product requirements; maintaining the uniqueness that they originally delivered becomes secondary. In other words, that thing that set them apart at the start is lost in the effort to keep up with the competition.

F&I business priorities today require administrators to provide a complete portfolio of F&I products through a diverse set of sales channels with flexible and customizable accounting, commission and reinsurance programs. The greatest challenges to legacy systems are that they can only handle one or two products, can only support a few point-of-sale tools (e.g., menus) and have prohibitive modification costs for even simple changes. In addition, continuing to support in-house systems requires considerable overhead including salaries, benefits, building space, application licenses and liability. Moreover, continuing to maintain a custom administration system forces businesses to continually mitigate the key-man and technology obsolescence risks.

Emergence of SaaS

In recent years, many industries have taken advantage of the rapid commoditization of computing and have moved to outsourced or Software as a Service (SaaS) solutions for their technology needs. The debate is not one of if SaaS solutions are the right step, but of how and when to adopt such solutions. Adopting SaaS solutions allows providers to set service level standards for vendors, thereby enabling them to focus on managing factors that provide the true competitive edge: products, business processes, branding, data and partnerships. SaaS solution providers are usually focused on one thing: the software. They have more than one customer and can therefore maintain a much larger development team than any individual provider, so they are able to keep up with business demands and often also get “ahead of the curve” when it comes to connectivity and innovative solutions.

As such, when adopting a SaaS solution, providers must look for a system that will allow for management of a complete product portfolio, retain those business processes that give them a competitive advantage, allow open access to their data and build high-performance partnerships.

It is extremely tough to finance an internal development team that can commit to all of this and deliver it in a timely manner. By adopting the right SaaS solution, a provider will gain a competitive advantage through a system that can support all of its business needs now and into the future. In addition, it enables the team to focus on true business priorities as opposed to technology challenges.