tem understands the carrier’s business requirements and system
acceptance criteria, and current systems architecture as well. In
conjunction with their business users (usually referred to as subject
matter experts, or SMEs) internal business analysts are expert at
the rules and workflows governing the business behavior of the
application systems to be replaced. Similarly, the programmers who
wrote or installed, the current legacy systems are best able to assist
with the needed integrations which are required as part of a major
replacement project. In-house staff may, of course, perform other
roles including program and project management, configuration,
and quality assurance—depending on the department’s capabilities—bandwidth, and pocketbook.
Third-party IT services vendors come, literally, in all shapes
and sizes—from single individuals to companies with tens or even
hundreds of thousands of employees. Best known are the System
Integrators (SIs). These are large, international companies with
the expertise and bandwidth to completely take over and run the
largest projects on behalf of their clients. Often the client team and
the vendor staff work for the SI in these situations.
Large SIs are found commonly in major insurance carriers,
with large and complex ongoing needs or multiyear projects. The
large SIs have several key strengths—most have extensive libraries
of reusable intellectual property in the areas of methodologies,
plans, requirements gathering, project governance and the like.
They have large pools of resources, often with specialist training in
vendor systems, or in specific skillsets with associated certifications.
Large SIs deploy teams on a pyramid basis, that is, one of two senior managers at the top with a lot of young and often inexperienced
“arms and legs” at the bottom. Most have multiple offshore development or delivery centers in locations such as India, China and
the Philippines, which allow them to move work, “follow the sun”
and offer reasonably attractive blended rates. Many have centers of
excellence in specific disciplines, for example in quality assurance. In
recent years the large SIs have followed software vendor partners into
the tier two and three insurance space. The issue for smaller carriers
is first price—although SIs offer reasonably blended rates they are
not well suited nor are they particularly interested in smaller projects,
which tend to be the case with smaller carriers.
SIs deploy team in groups of ten, not in ones and twos, and they
prefer to deploy 20 or 30 resources at a time. Also, with SIs, it’s pretty much their way or the highway. To their credit, they know what
works and how to execute, but flexibility is not their strongest suit.
There can also be cultural issues between smaller carriers and large
SIs with the latter often tagged by the former for being arrogant.
For those carriers that decide the “all or nothing” SI approach
is not for them there are various third-party staffing options. First,
most carriers have a group of local go-to IT staff augmentation
firms. These resources are usually used to fill generic programming
and QA roles which, at least initially, require minimal specialized
vendor skills or knowledge. The main advantage of these groups is
cost—lower consulting rates and no travel expenses. These groups,
however, as is the nature of staff augmentation, do not bring management, methodologies or governance.
An interesting variation on the local option is the rise in recent
years of onshore firms that import and deploy foreign resources
(predominantly Indian). These resources usually have a bachelor’s
if not a graduate degree in Information Technology. They are
brought over to the U.S. by companies that secure a work visa for
them and then control their professional lives until the resource
either secures permanent residency, at which point they are free to
sell their services in the open market, or they return to India. These
resources are wholly dependent on the company that “owns” their
work visa and therefore have no bargaining leverage. They tend to
be low-paid (by U.S. standards) and relocate from project site to
project site as required. These people are essentially well educated,
high-class migrant workers. Of course, for those who make it to
permanent residency, the journey is more than worthwhile. The
value proposition for the hiring carrier is similar to that of hiring
local resources—price. Except often these resources are better
educated and qualified.
This latter group represents the last stage of the market’s
response to massive resource requirements generated by the in-dustry-wide legacy replacement wave. Early in the cycle resources,
especially of specific vendor skillsets, were hard to find and expensive. As the market responded to these growing opportunities
large numbers of IT consultants, from large consulting firms, were
trained and deployed often within partner programs.
The third major phase, which we are now in, is the commoditi-zation of skillsets as less expensive resources gain critical product and
domain knowledge and flood the market. Given that many of these
resources have no bargaining power and work for relatively low pay,
the inevitable result is an improved buyer’s market, at least in terms of
cost. The issue for carriers with this last group is the need to manage
and quality-control their work. The companies that place these resources are not, generally speaking, “partners.” They are body-shops
that ship resources with less regard for fit and quality than the alternatives. Their view tends to be if a resource fails they simply replace
them with another one. Any placement is a good placement.
Of course, and as stated above, many of these people are
well-credentialed professionals, but due to the nature of the com-
panies that represent them they may find themselves over-sold or
inappropriately deployed. The upshot for the carrier is to select and
manage this class of resources carefully. At the commoditized end
of the market the rule is very much “buyer beware.”
So, and in summary, carriers have more varied options for
sourcing projects than at any time in the past, which is a good
thing. The trick for the carrier hiring and deployment managers is
to recognize the resources they are being presented with and select
and manage them accordingly. ITA
George Grieve is a popular writer and speaker on the
subject of insurance technology solutions. He is the author
of the book “Shop Talk” and is CEO of the consulting firm
CastleBay Consulting. The views and opinions in this column are those of the author and do not necessarily reflect
the views of the Insurance Technology Association.
