C05 Using SOA to Modernize Critical Systems Tuesday, November 11th, 4:00 5:15

1. C05 – Using SOA to Modernize Critical SystemsTuesday, November 11th, 4:00 – 5:15

2. Jennifer Overhulse-King, Principal Owner – St. Nick Media Services Jennifer Overhulse-King is a writer, as well as a marketing and public relations expert, with an extensive journalism background and specific insurance industry expertise. She has over 15 years of writing and editing experience and has been published in print and web publications such as: The Stars & Stripes, The Louisville Business Courier, The Kentucky Post, The Dixie News, The Encyclopedia of Sculpture, Suite 101, Book Magazine, Insurance & Technology, Tech Decisions, Best’s Review, National Underwriter, Insurance Networking News, AT&T’s Networking Exchange, IASA’s Interpreter and the Journal of Insurance Operations. Jennifer is a member of the Insurance Marketing Communications Association (IMCA), the Insurance Accounting & Systems Association (IASA) and is editor of IASA’s Interpreter. CO5: Using SOA to Modernize Critical Systems

3. Housekeeping items Turn off cell phones, beepers, pagers, etc. Please fill out the survey Moderated Q&A at the end of the session – save your questions Topic introduction – Using SOA to Modernize Critical Systems Many insurance companies reaching critical mass Technology implementations can mean watershed or tears shed With that in mind… CO5: Using SOA to Modernize Critical Systems Good afternoon, we appreciate you hanging on until the last time slot of the day for us. Maybe they saved the best for last. I’m sure you have all been reading the papers and you know that times are tough, the auto industry is seeking a bailout, the markets continue to fluctuate, and no one can expect the insurance industry to remain untouched. Unfortunately, this economic crisis hits just as many insurance companies are reaching critical mass with core administration systems. The systems running many insurance companies are old, they have been built onto, built over and built around for years, and it’s just not enough anymore. In order for insurance companies to stay profitable, they can’t rely on organic growth and “business as usual.” Technology is often talked about as the silver bullet that can fix all that ails, and in some cases that’s true. However, any technology implementation can go from a watershed moment that transforms the company to a tears shed moment that derails strategic goals if the needs of the company and solutions chosen are not carefully analyzed. Today, you will hear about Arrowhead Insurance Group’s struggle to modernize key systems using SOA, and then Andy Scurto of ISCS will drill down further into what SOA and Web Services can do for your company and what’s coming next in terms of this technology. Good afternoon, we appreciate you hanging on until the last time slot of the day for us. Maybe they saved the best for last. I’m sure you have all been reading the papers and you know that times are tough, the auto industry is seeking a bailout, the markets continue to fluctuate, and no one can expect the insurance industry to remain untouched. Unfortunately, this economic crisis hits just as many insurance companies are reaching critical mass with core administration systems. The systems running many insurance companies are old, they have been built onto, built over and built around for years, and it’s just not enough anymore. In order for insurance companies to stay profitable, they can’t rely on organic growth and “business as usual.” Technology is often talked about as the silver bullet that can fix all that ails, and in some cases that’s true. However, any technology implementation can go from a watershed moment that transforms the company to a tears shed moment that derails strategic goals if the needs of the company and solutions chosen are not carefully analyzed. Today, you will hear about Arrowhead Insurance Group’s struggle to modernize key systems using SOA, and then Andy Scurto of ISCS will drill down further into what SOA and Web Services can do for your company and what’s coming next in terms of this technology.

4. Moderator: Jennifer Overhulse-King, Principal Owner – St. Nick Media Services Today’s Speakers: Adam Nordost, Director of Professional Services – Commercial Lines – Arrowhead General Insurance Agency, Inc. Andy Scurto, President – ISCS, Inc. CO5: Using SOA to Modernize Critical Systems

5. Adam Nordost, Director of Professional Services – Commercial Lines – Arrowhead General Insurance Agency, Inc. Adam Nordost is the Director of Professional Services – Commercial Lines for Arrowhead Insurance Group, one of the largest general agencies in the U.S. and an independent program manager with annual premium writings in excess of $900M providing an extensive range of insurance products nationwide in a turn-key fashion. Since joining Arrowhead in 2002, he has worked with multiple business divisions, technology vendors, and over fifteen carrier partners to implement highly customized policy admin, rating and billing systems for eleven lines of business in thirty states. Currently, Nordost oversees all information systems (IS) initiatives for Arrowhead’s Commercial Divisions starting with Arrowhead Exchange, Arrowhead’s point-of-sale platform to agents and brokers, through the entire life cycle of a policy ending with data feeds to carriers and agencies. He holds a BBA in MIS from Texas A&M University CO5: Using SOA to Modernize Critical Systems

6. Role of Technology at AGIA Viewed as a key ingredient to revenue generation and not simply a cost center. Faster time to market and ability to distribute to a broad base of producers cited as key success factors. Technology investment leads to differentiation in the marketplace. Heavy emphasis put on “ease-of-doing-business.” Examples include: online quoting/binding, e-payments, online endorsements and policy inquiry services for agents and insureds. Critical in creating operational efficiencies through standardized web-based workflows, e-document delivery and automated processes. CO5: Using SOA to Modernize Critical Systems

7. AGIA’s Growing Pains Fast growth of new divisions led to technology and operational silos Softening market conditions put pressure on premium growth and increased focus on cost controls. Resources strained as more and more projects queue themselves up. Core services were not externalized and hence had limited reuse leading to redundant services in organization. CO5: Using SOA to Modernize Critical Systems

8. Time for a Game Plan Overhaul governance model to ensure a better alignment of IT and business needs/expectations. There needed to be a greater emphasis on solutions with broader application throughout the organization. Buildup our toolbox with a combination of in-house solutions and vendor products. Externalize core services through an SOA architecture to facilitate greater reuse within the organization. Coincide platform consolidation (retiring non-strategic applications) with operational consolidation efforts. CO5: Using SOA to Modernize Critical Systems

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12. Realized Benefits of Rating as a Service Opened up a new distribution channel for AGIA products. Net impact was significant and the number of “e-aggregator” partners continues to grow. Eliminated discrepancies between various internal and vendor systems used for online quoting, binding, policy issuance and endorsements caused by small differences (rounding, manual errors, etc.) in rating programs. Faster time to market for programs by: Eliminating redundant development of rate changes and new rate implementations Allowing parallel development of systems and rating due to new separation of duties CO5: Using SOA to Modernize Critical Systems

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14. Additional and Ongoing SOA Benefits at AGIA Faster time to market (upwards of 50%) for programs by eliminating redundant services within the organization Adoption of an enterprise print solution allows for shared form libraries across divisions and platforms. Integration of Active Directory into internal applications centralizes access management, improves password security and reduces the number of logins/passwords an employee must remember. CO5: Using SOA to Modernize Critical Systems

15. If you have questions specifically regarding this portion of the presentation, please contact: Adam Nordost Director of Professional Services – Commercial Lines Arrowhead General Insurance Agency, Inc. 701 B Street, Ste 2100 San Diego, CA Phone: (619) 881-8414 Email: anordost@arrowheadgrp.com And now, our next speaker, Andy Scurto of ISCS, Inc. CO5: Using SOA to Modernize Critical Systems

16. Andy Scurto, President – ISCS, Inc. Andy Scurto is ISCS’s President, Founder and Chief Technical Officer and has been with the company since its beginning in 1994. He is the principal designer of ISCS's insurance processing solutions, and the firm's primary advisor to insurance organizations on operations improvements, MGA programs, data processing and communications. Scurto has over 20 years' experience in IT and development, which includes 18 years working specifically with insurance industry systems. He received his B.S. in Computer Engineering from San Jose State University. CO5: Using SOA to Modernize Critical Systems

17. What Is SOA? SOA – Service Oriented Architecture (sometimes used synonymously with Web-Services) Wikipedia Defines: Architectural style for creating and using business processes, packaged as services, throughout their lifecycle. The IT infrastructure to allow different applications to exchange data and participate in business processes. New technology wrapped around an old idea Standardized methodology for modules (services) to speak Application software version of “plug-and-play” CO5: Using SOA to Modernize Critical Systems

18. What is a “Service?” A “black-box” module which performs a business function with a well defined set of inputs and outputs Performs a business process based on one input and returns through one output – no interservice interaction Well defined results – can define/build unit tests No user interface interaction – must validate and perform independently with no assumptions. Same results regardless of how called CO5: Using SOA to Modernize Critical Systems

19. SOA Versus Web-Services: While SOA services are easily exposed as a web-service, web services are not a SOA Web-services: Exposing useful business processes in a standard way to the web SOA: An architectural design promoting module (service) plug-and-play and reuse SOA: Easily exposed as a web-service because of service design (defined inputs/outputs and no user interface) CO5: Using SOA to Modernize Critical Systems

20. Why Web Services Is Just Not Enough Exposing business processes for reuse great for 3rd party interaction Generally, a new front end to an old methodology and technology Does not improve internal architecture Adds another layer to already existing complicated structures CO5: Using SOA to Modernize Critical Systems

21. Why a True SOA is Better Ensures all services are ready for reuse and sharing Promotes best practices independent service development (“black box”) Separates the user interface and the business services Promotes the use of plug-and-play Enables the system for easier integration of 3rd party services Enables integration of disparate technologies CO5: Using SOA to Modernize Critical Systems

22. What is SOA Not Not a silver bullet solving all interface problems All interfaces are small conversions Must still perform data mapping (XML) Solves the How not the What CO5: Using SOA to Modernize Critical Systems

23. Why is SOA Important? Increased ability for re-use, plug-and-play Increased ability for automated testing Separates user interface from business processes Well defined communications Well defined security Strong Internet support Much Easier B2B Communication CO5: Using SOA to Modernize Critical Systems

24. How Can SOA Save My Company Money? Component reuse – smaller more concise code base Separate user interface from processes – can have multiple user interfaces, new technology Reduction of system issues – easier to test Integration of 3rd party components – Less code to develop Integration across unlike platforms – leverage old technology while introducing new CO5: Using SOA to Modernize Critical Systems

25. Examples: Rating engine service – (Arrowhead) Quoting service Eligibility service (rules) Billing status inquiry service Policy status inquiry service All available for system / web / 3rd parties CO5: Using SOA to Modernize Critical Systems

26. Implementing SOA Start by converting commonly used business functions into individual services: Number issuance Rating Policy search Address verification (3rd party?) Continue with combining services forming service chains to perform complete processes: Quoting Issuance Finally, develop new user interfaces to utilize the common service chains to form a system. CO5: Using SOA to Modernize Critical Systems

27. How Do I Ensure Success? Business services not technical services Adopt an accepted framework / standard (SOAP) Implement a test harness (JUnit) Adopt a common dictionary / model Ensure well defined inputs and outputs for all services Ensure no cross service execution Expect a huge paradigm shift CO5: Using SOA to Modernize Critical Systems

28. Summary SOA and Web-Services are not the same SOA is more powerful and an architectural style SOA is not a silver bullet – defines how not what SOA ensures better code reuse and plug-and-play SOA separates the user interface and the business processes SOA enhances integration capability SOA can save money, make applications more robust and “future-proof” systems CO5: Using SOA to Modernize Critical Systems

29. What’s Next for SOA? CO5: Using SOA to Modernize Critical Systems

30. What is Cloud Computing? SOA on Steroids (Services at a hardware level) Wikipedia Defines: A new label for (…) the use of shared computing resources. - The gigantic data center in the sky! Often referred to as HaaS (Hardware as a Service) Hardware, software and services on a pay as use basis CO5: Using SOA to Modernize Critical Systems

31. Why is Cloud Computing Important? Solves issues of: Disaster Recovery Scalability Equipment/Software Obsolencence Cost of Idle Equipment Power Consumption / Cooling / Space Required Expertise Allows smaller companies to provide enterprise services and components (low startup costs) More innovative Many services available – more competition Many Open Source or Free services available CO5: Using SOA to Modernize Critical Systems

32. Where is Cloud Computing Used? SaaS providers Internet service company startups Small companies needing quick expansion Companies concerntrating on business wanting to outsource infrastructure Examples: SmugMug.com (400 Terabytes, 750 instances) MileMeter, Inc. (Texas Auto Insurance) CO5: Using SOA to Modernize Critical Systems

33. Current Computing Clouds: Amazon Web Services Microsoft Force.com IBM – Blue Cloud Google Many Others CO5: Using SOA to Modernize Critical Systems

34. Current Cloud Computing Services Gmail / Yahoo Mail / Hotmail Salesforce.com Quicken Online Google Docs (Microsoft office competition) SmugMug Adobe – Photoshop Express Many More!!! CO5: Using SOA to Modernize Critical Systems

35. What Do Clouds Provide? Infinitely scalable technical infrastructure Completely managed, backed up, etc. Disaster Recovery Application building tools (some – Force, Google) Amazon S3 – Simple Storage Service EC – Elastic Compute SimpleDB – Relational DB Others: SimpleQueue, FlexiblePayments, Mechanical Turk, Alexa Force SalesForce.com AppExchange Force.com Sites CO5: Using SOA to Modernize Critical Systems

36. Today’s Practical Insurance Uses Partial/Complete Data Center Replacement - (Primary and/or Backup) Point Business Services (SaaS Options) Rating Output generation Data Services Electronic Payments Data Reporting CO5: Using SOA to Modernize Critical Systems

37. Tomorrow’s Potential Insurance Uses Completely hosted systems Completely out-sourced Business Solutions Billing Stat Reporting BPO Services: Printing Loss Notice Processing Claims Adjustment Complete solutions from combining many SaaS offerings CO5: Using SOA to Modernize Critical Systems

38. Summary Cloud computing is the future New technology on an old concept Entrepreneur magazine -> top 10 business influences You hear a lot about it Need to understand it and start to use it – April Insurance & Technology: 35% or more of CEO’s admit to not knowing what SOA or Web 2.0 is! Look into how it can save money CO5: Using SOA to Modernize Critical Systems

39. If you have questions specifically regarding this portion of the presentation, please contact: Andy Scurto President ISCS, Inc. 100 Great Oaks Blvd. Suite 100 San Jose, CA 95119 Phone: 408-362-3000 ex: 101 Email: andy.scurto@iscs.com And now, back to our moderator, Jennifer King, for the Q&A portion of our program. CO5: Using SOA to Modernize Critical Systems

40. Q&A with Today’s Presenters Moderator: Jennifer Overhulse-King, Principal Owner – St. Nick Media Services Speaker: Adam Nordost, Director of Professional Services – Commercial Lines – Arrowhead General Insurance Agency, Inc Andy Scurto, President – ISCS, Inc. CO5: Using SOA to Modernize Critical Systems

41. Thank you for your time. If you have questions or comments, or if you would like a copy of this presentation sent to you via email, please contact: Jennifer Overhulse-King, Principal Owner St. Nick Media Services 15695 Glencoe-Verona Road Verona, KY 41092 (859) 803-6597 Email: jen@stnickmedia.com CO5: Using SOA to Modernize Critical Systems