Build versus Buy – Are we really still talking about it?

When I joined the insurance industry, almost embarrassingly, back in 1972, there was virtually no technology; well not strictly true, there was my old trusty Odhner Pinwheel Calculator which I used as an actuarial clerk to calculate life policy surrender and conversion values. Of course, we did have a computer that required a huge room to accommodate it. More vivid, however, was the memory that the whole of our 200,000 policy, main file was held on punched cards. These were marched around the office in metal trays on a big trolley, such that staff from various departments could take turns to have access to them. You could pull out a card and examine the punched holes in it and, hey presto, you could tell that last month’s premium had really been paid! Such sophistication.

Compare the manufacturing industry, when even 200 years ago, the world had already seen its first truly “standardised part” assembly process. Not the Model T Ford, which came over a hundred years later, but military rifle manufacture, whereby custom building of each nut screw and bolt for each individual rifle finally gave way to pre-built components, assembled together en masse.

Since then, industrial mass production manufacturing techniques have become the norm, without exception but for the luxury goods market. Contrast that against progress in insurance technology development whereby, as recently as the late 1970’s, there was still very little pre built, componentised insurance processing code. At that time I spent a few years as a COBOL programmer, automating premium processing within my own company. The only standard subroutines then available just took the labour out of validating date fields everything else had to be hand crafted.

Here and now in the late noughties, finally, we can say we have arrived. There is, at last, a wide variety of best of breed componentised insurance processing function commercially available in the market. In that 30 year period, insurance specialist software companies have invested hundreds of millions in developing truly configurable insurance processing components which now work in a standard computing environment – SOA, XML, .net etc.

So why, oh why do I still hear accounts of Insurance Companies thinking they are different and thinking they are better placed to build their own?

Taking into account good business strategy and core competencies, it just doesn’t make sound business sense now. Insurance companies are good at writing Insurance and software development should arguably be left to the technology sector.

OK, confession required, in the early 80’s I did move over to the dark side, and have worked in the insurance software vendor market ever since, so I would say that, wouldn’t I?

“Insurance companies are good at writing Insurance and software development should arguably be left to the technology sector.

Jim Woods

But as I contemplate my retirement, commuting now from my old French Farmhouse in the Poitou Charentes region, to the UK, European and South African insurance markets, I feel satisfied that our industry is more than well-served by commercially available technology. Decisions to build in-house are generally political rarely adding to the future prosperity of those businesses. Who would ever dare to handcraft a rifle from custom built components and raw materials these days? I suppose as a hobby, it might make an interesting project.......... now, where did I put my hacksaw?

Biography:

Jim Woods was appointed to the role of business development manager at Duck Creek in October 2007.

Jim is an insurance and financial services sales and consulting professional with a track record of success in helping companies with front and back office applications. Having joined the insurance industry in 1972, Jim has watched the sector closely for many years and this experience helped him to pioneer the growth of the UK and European business unit of PMSC during the mid to late 1990s. Prior to joining Duck Creek, Jim also worked with FINEOS CRM and Claims solutions and ISO Bodily Injury software.

Jim is an expat and resident in the Poitou-Charentes region of France, where he was recently elected municipal councillor in his commune. His interests include recreational cycling, longbow field archery, the local leisure football team, for which he still turns out from time to time, and any opportunity he gets for fair-weather yacht sailing.

Over recent years he has learned many new skills associated with renovating a 15th century farmhouse. Jim is married and now a grandfather three times over.