The other SOA in insurance: service-oriented architecture is gaining business application success for the insurance industry.

Insurance executives may first think of the Society of Actuaries when they hear the term "SOA." However, there's another "SOA" in insurance--Service-Oriented Architecture. Much as actuaries are critical to the back and front-office functions within the insurance industry, the use of SOA could become just as critical.

The basic premise of SOA is not new in information technology. Defined as a standards-based foundation for creating, finding, using and sharing discrete pieces of business-driven applications, or "components," on an as-needed basis, SOA standards continue to be solidified within the insurance industry, with leadership from ACORD.

The concept of architectures has long been viewed with merit from an IT perspective. From a non-IT perspective, technology architectures, rightly or wrongly, have sometimes been viewed as an investment with no quantifiable rate of investment return.

Overcoming this challenge, SOAs are now building a successful track record for business application success in conjunction with web services and XML. Two very different forces have helped the insurance industry gain a position of technology leadership in the area of SOA.

One force has been regulatory/legislative, where initiatives such as Sarbanes-Oxley and HIPAA have placed a renewed focus on business processes and workflows across business units. With the insurance industry already process-oriented, the fact that insurance processes have probably been decomposed more in the past two years than in any other time frame has helped business units and IT better understand the dynamic interaction requirements between business and technology. As stated in a recent presentation by James McGovern and Jeff Ryan of Hartford Financial Services Group, "a successful SOA is always in a state of change." This adaptability in providing a flexible integration mechanism for dynamic business requirements is a major part of SOA's success within the insurance industry.

A second factor helping the insurance industry gain a position of SOA leadership has been the business benefit derived from enabling legacy system applications via SOA. More specifically, business partner integration simplified by SOA has helped insurance business systems become more flexible in adjusting to channel needs.

One example is the use of SOA in single-entry, multi-company interface solutions. As an externally focused early leader in the use of SOA, Hartford and its success in providing a SEMCI solution to independent agents is not new; there are agency case studies, written by actual agency owners, citing productivity increases of 25% from as far back as 1999.

With an abundance of heterogeneous systems and the vast amount of corporate data stored in legacy systems, no industry can afford to continually invest and re-invest in static technology. The dynamic nature of SOA has allowed Hartford to continue to move forward, expanding the benefits to the company from SOA by incorporating evolutionary enhancements such as Universal Description, Discovery and Integration. Think of UDDI as a combination map/dictionary, helping centralize which business application components exist, what they do and how to access them.

Why is UDDI important and how does it increase the value-add of SOA to the insurance industry? Because SEMCI is just one application of SOA and since the majority of insurance agencies are still in fairly early stages of using SEMCI, the application of SEMCI will continue to evolve as it becomes more embedded in agency workflow. SEMCI's integration with agency systems also will need to be flexible as agency systems evolve. UDDI therefore becomes paramount to not re-inventing the wheel each time an aspect of the insurance business changes.

SOA benefits extend beyond SEMCI to areas such as Corporate Performance Management--the integrated view into how a business is succeeding, or not. CPM will have continued dependency upon business process management tools. These tools will help provide the integration "glue" for SOA, which will then provide the technology to extract the necessary data from disparate internal and external systems, ultimately providing the data in a dynamic-enough fashion to fulfill CPM requirements.

While Hartford is not unique in its success with SOA (for example, Travelers has also been an early leader), its SOA focus can be tied back to its corporate culture from the chief executive officer on down. As cited by McGovern, IT is validated in doing the right thing for the business; "no grand strategies, no pontification ... just make it easiest to do business ... 2 SOA is a key tool in enabling this vision.

Gates Ouimette, a Best's Review columnist, is an account executive with USi. He can be reached at [e-mail].