Silos are a good thing if you run a farm or a missile launch site. If you're in the insurance industry, however, they can be a curse. Information on the same customer or prospect may be spread across six different systems and, even worse, identified differently under different field names.
Jinesh Radadia, partner and practice leader for information management at EMC Business Consulting, recently shared his perspectives with me on the evils of information silos, and how they can be overcome.
“Most insurers generally have complex data architecture landscape due to legacy business and IT decisions and application silos,” he says. “This environment has become increasingly complicated, and poses significant challenges for insurers to remain profitable.”
So what can be done about all these silos? Radadia urges the creation of a central, shared repository of “the best version of the truth”—a master data file. However, despite what you may hear, moving to such a single repository is more than a simple task order for the IT department or the database administrator, he cautions. “Master data is created and locked in multiple silos—applications, data warehouses, data marts, external sources and channels,” Radadia points out. “Companies lack a core IT foundation for reliable master data management.”
Insurance company IT departments need to work closely with the business management side to develop technologies and approaches that provide for greater visibility into customer information. “To succeed today, insurance companies must take a far more holistic view and have a deeper understanding of consumers,” Radadia urges. “This requires a new type of integrated, 360-degree customer view and a more sophisticated decision making platform.
Ultimately, the effort involved in a transformation is worth it. Radadia says a key benefit of having a common MDM repository is enhanced customer support and increased customer loyalty. “Focusing on customer insight driven support and retention efforts can easily increase profitability per customer, rather than acquiring new customers,” he says. “By consolidating data across internal applications, MDM creates one reliable source of truth of customer data.”
There are better marketing capabilities as well. “Creating a unified and accurate customer view drives business actions that relate specifically to customer segments including offers, life event marketing, discounts and availability of information for the customer. Additional benefits include reduced rate of plan lapse, and reduced customer attrition.”
This article can also be found at http://www.insurancenetworking.com.