This afternoon, the BPM/SOA Community of Practice announced that Van Ameyde International is the overall winner in the 2010 Business Agility and Process Optimization case study contest.
The Van Ameyde Group specializes in international claims and risk management for major international insurance companies, captives and brokers, government agencies, and corporate and industrial clients including the energy sector, the shipping industry, ports and terminals.
Highlights from the winning case study follow.
Van Ameyde represents clients throughout Europe, providing back-office services, financial management of claim portfolios including recovery, and handling the entire claims process. Today, Van Ameyde operates directly in 16 European countries and manages the claims handling processes for approximately 350 insurance companies.
Process Optimization: In 2008 Van Ameyde recognized the need to optimize their claims handling process in order to grow the business. The objective was to obtain full control over all claims resolution processes in order to provide customers with the best service and transparency levels in the market.
New Claims Processing System: To accomplish their goal the business embarked on a new claims handling system called ECHO - European Claims Handling Optimization.
ECHO Key Objectives:
Business Agility: The business, lead by the CEO, specified the project was to leverage a business process focus for the delivery of the ECHO application supported by a service oriented architecture, in order to enable continuous modification and alignment with the business, allowing for future changes to be easily implemented supporting the company’s planned growth.
Cost Reduction: Optimize IT costs by building a unified web-based business application to replace 10 different independent systems that were being used by each company's branch to handle claims.
Information Access: Make information available to all employees across Europe and to create a virtual European claims organization.
Flexibility: Provide employees with standard business processes and the flexibility to support local legal, language and fiscal requirements; as well as client specific processes.
Speed: Reduce the time-to-market for establishing new clients to days.
Return on Investment (ROI)
Optimization and Growth: Upon go live the business saw immediate business optimization results in the company’s claims processing business. Additionally, as a differentiator, the ECHO system quickly became a powerful sales and market expansion tool.
The business impact was immediately evident with a 30% reduction in the time required to resolve a claim. In addition, due to the new system’s well-defined processes, the company has streamlined its ability to open new branches to less than one week, a three to four-fold improvement over the old system.
Flexibility: ECHO allows for the offering of customized claims processing for new customers – something that was not possible with the old system.
The ECHO system supports 16 different countries and their unique claims handling requirements, all delivered from one core system. The application is delivered in 12 different languages and six currencies.
The ECHO system provides the critical flexibility needed to keep up with company growth and regulatory change in operating countries.
Time-to-Market: With ECHO in place, Van Ameyde works on six-week release cycles (every two sprints) and is able to deliver a new complex requirement in 20 days or less.
ROI Based Prioritization: Every new major feature request (i.e. those that are estimated at over 16 hours or that spawn different systems,) is put through a cost/profit analysis, where the amount of time that the new feature will save in the overall claims handling process (whether by automating or reengineering a process or feature) is estimated. This estimate is matched to the number of running processes and the time it currently takes to do that operation. This technique is highly accurate since the profit analysis and change simulation is based on real, running processes.
Timeline: The European Claims Handling Optimization (ECHO) project was initiated and funded by the Van Ameyde business. The original project was launched in 2006 with the first production system delivered in 2008. The first implementation was a ‘big bang’ due to the complex integration requirements with SAP and other core applications.
Size: The application has over 5000 function points with approximately 430 web pages, over 900 database tables and 18 core business processes comprising over 760 different business activities and more than 540 business rules.
The application utilizes over 120 different SAP interfaces plus numerous web services from other supporting applications. A recent count showed over 835,000 running process instances with more than 6,550,000 activities in flight.
The application was developed by a team of nine individuals on the IT side (including management) and 15 from the business, representing both the core team and international business reps from major VA companies.
Organization: The team was comprised of two groups, the delivery team and the business owners. The interaction between the delivery team and business owners was managed by a key IT role called the Engagement Manager (EM), who is responsible for working with the business to gather requirements and set priorities. The EM also works directly with the delivery team that was responsible for feature estimates, architectural decisions and production of the working system.
Steering: As part of the BPM effort the team is focused on continuous process improvement. Two committees assist with setting priorities. One is comprised of key users and business managers. The other, led by the Van Ameyde CEO, is comprised of individual country managers.
Business Analysis: The initial analysis of the project included three external SMEs in European claims handling. These experts helped drive the initial process discovery that now supports the core of the system. One of these experts is still on the project but a knowledge transfer process allows new members to rotate into the project easily.
Software Factory: To support the overall development process the delivery team is organized in a Software Factory model to assure the correct management of the SOA infrastructure and the delivery of needed functionality for core components, reusable services and local features.
Tiered Support: A local team provides first and second line support for running process instances and redirects pending issues to a remote production support team.
The team employed Agile methods and model-driven development to deliver and maintain the ECHO application. Working in three-week sprints they managed to overcome the challenge of not being able to fully define all requirements upfront. The team delivers new functionality into the production environment every two sprints.
The initial delivery in 2008 was accomplished using separate BPM and application development tools. While this proved to be effective the business and delivery teams suffered from constantly having to keep the two different models in sync, which led to Van Ameyde requesting an integrated business process and application development capability in the development environment. Now, both business processes and application elements are defined using the same development platform.
In addition, Van Ameyde leverages a BAM (Business Activity Monitoring) module to monitor process activity and identify areas for improvement. As a result, the business process and application development life-cycles are fully aligned and evolve at the same speed.
- It is very important for the process definition, design and change to have the same life-cycle as the supporting application.
- An Agile approach to defining and delivering the process, coupled with supporting application and underlying services proved very effective. Van Ameyde’s success depended on having a development platform that supported a high degree of change with minimal risk.
- Need to design the process in a very iterative ‘agile’ manner. Often referred to this as “design by doing” vs. “doing by design.” This was paramount as the team was continually refactoring core processes and supporting services to meet the changing business needs.
- Underestimated the actual performance needs of the system in terms of number of claims to be processed, which caused some refactoring of the underlying data model, services and core components. The claim numbers were driven by an unexpected increase in business. The learning point is that you must recognize that change will happen and be prepared to react quickly.
To learn more about the contest and winners, please visit the contest website.