At your service: service-oriented architecture is a tool for the adaptive enterprise.

Insurers today face two key challenges--protecting their businesses and growing their businesses' profitability. Flexibility and agility are critical to successfully meeting these challenges. Information technology plays a major role in supporting these two key objectives.

Service-oriented architecture enables this flexibility and agility through improved speed to market, enabling insurers to rapidly modify technology and data infrastructures to support ongoing, dynamic changes in the business and ensuring the adaptability of the enterprise. Benefits include standardization, improved data quality, faster product launch, rapid systems development, reduced IT expense and improved customer service.

SOA addresses the reusability of both business processes and data. It breaks business processes into smaller functions called services, which either access or produce data. The same business rule, like an earned premium calculation, need not be programmed into multiple systems but is stored once and is accessible by multiple programs. Ongoing development costs are reduced because rules are reusable.

One application of a service in an SOA is a Web service. Insurers have embraced the Internet for virtually all new front-end processing systems and servicing, as well as agency and customer portals. But these new systems must feed back-end legacy systems for reporting and finance. Behind the scenes, programmers are still coding interfaces from and to these old legacy systems--often hundreds of them. Using various types of adapters, SOA provides alternatives to manually code these interfaces faster, at lower cost and with higher quality.

Implementing an SOA is a journey and requires a plan and a road map. A good place to start is with an assessment of current inventory interfaces and their maturity level. Next, set goals for your future interface needs, priorities and the time frame. Lastly, identify the gaps and develop action plans to replace or develop new interfaces.

Both business and IT need to be engaged in this process. Business users may have provided the business requirements before, but they were in documents or had been translated into calculations or business rules across multiple systems and now are not accessible to new applications. SOA promotes reuses of business rules and processes, which are stored once and accessible to multiple applications. Similarly, so is metadata--information about your data.

Insurers should employ a universal framework for SOA, a framework that's technology--and vendor-agnostic and will work with any technology or application. The components should include:

* a service manager that configures and runs various adapters, which in tuna create services;

* a service transformation engine that generates rules-based transformation tools to handle both XML and nonXML data formats (such asACORD and HIPAA);

* a service designer that creates business process flows and allows users to create their own new services from existing services;

* a graphical adapter toolkit that allows users to access and browse metadata in existing applications and enables re-use for new applications and services; and

* application programming interfaces that enable application developers to deploy various services and adapters.

Recently, combinations of these components have been integrated and called an Enterprise Service Bus, which creates, publishes and manages services.

Information management demands a data warehouse because it ensures reusability of the data. The data is stored once in an enterprise repository and is available across the organization, providing a single version of the truth. But true reusability requires standards. Most insurers use ACORD standards. ACORD has recognized the need for a broader industry standard framework beyond data and electronic data interchange messaging and is stepping up to the plate with the development of a framework that also includes business process models, work flow and a data dictionary.

Vendors have jumped on the standards bandwagon, which makes integrating purchased applications easier. IBM is contributing to these standards by sharing its Insurance Application Architecture enterprise data model and related intellectual property. Likewise, other vendors also have contributed data, business process and message standards including the Life Data Model by Microsoft; Life Reinsurance standards from EDIFACT; and Reinsurance and Large Commercial Insurance, property and casualty standards from WISE.

Insurers will be working on SOA as a major initiative for the next few years. Business and IT alignment are critical to ensure a company's competitive agility. Standards, data governance and data quality will continue to play key roles, especially as insurers continue to build enterprise business intelligence systems to support their ongoing profitability and enterprise risk-management needs.

Contributor Patricia Saporito is the insurance industry manager for Information Builders Inc. She can be reached at [e-mail]