Applications Provider Boosts Sales, Reduces IT Requirements for Insurer | Article

insurance salespersonIn 2003, the life-insurance division of The Phoenix Companies needed to replace its obsolete contact management system (CMS), its fourth in 10 years.

“We always bought software, and the results were dubious at best. None were scalable. All became obsolete very quickly, which began to negatively impact our sales and customer relationships,” says John Caine, Director of Life Insurance Technology Strategy at Phoenix, a Hartford, Connecticut-based provider of products including life insurance, annuities, mutual funds and other investment management products and services.

But the firm had also reached a critical crossroads as Phoenix was shifting its entire business model from business-to-consumer to business-to-business in order to serve affluent, high-net-worth individuals, small and midsized businesses, and institutions. Caine knew that a change was in order if his firm were to restore its credibility when it came to managing its business relationships in this new arena.

Luckily, Phoenix had begun outsourcing its IT infrastructure to EDS and much of its proprietary software development to an Indian provider. Caine recognized that, “we needed to move from the business of managing servers to managing relationships. Outsourcing this process was the answer.”

Turning to an On-Demand Solution

Since Phoenix outsourced its IT, Caine realized they needed a service provider with an on-demand model to make Phoenix’s various contact management programs work together smoothly. In addition, outsourcing would allow the insurer to avoid capital investment and reduce internal maintenance costs.

Phoenix had to avoid large IT consulting and system fees necessary to modify or replace a system in its fast-paced business. Requirements for the new CRM solution included flexibility, low-cost modification capabilities, and minimal user training requirements. It also included simple connectivity options to enable better integration of all facets of his CMS within the entire (and geographically distributed) framework of his outsourced IT platform. A hosted on-demand solution would provide the connectivity, flexibility, and lower the total costs of ownership.

These needs led Caine to San Francisco, California-based Inc’s., on-demand Web-based Customer Relationship Management (CRM) AppExchange platform, which allows its customers to customize, create, deploy, and manage many business-critical applications residing on that platform on demand.

“Companies spend thousands of dollars per employee per year on in-house applications,” says George Hu,’s Vice President of Strategy and Marketing. “What they really want is an outsourced, enterprise-wide platform that pulls all their applications together, thereby integrating various business processes.”

“This solution is fairly revolutionary because and other similar firms are convincing businesses they’re better off storing some of their most valuable and mission-critical data on a provider’s servers, rather than keeping that data in house,” according to Tony Lock, Research Director at The Sageza Group.

How Phoenix Benefited from the Solution

Selecting the hosted on-demand path turned out to be a wise plan. Strategically, in 2005, Phoenix increased life insurance sales by more than 33 percent, with unprecedented tracking of all aspects of the sales cycle as a result of this outsourcing initiative. Phoenix can now reliably predict how increased investment in various activities will impact revenue. “The AppExchange platform allows us to customize our sales force apps to meet specific needs in a way that was impossible with our previous CRM software,” says Caine.

“The CIOs we talk to say that they spend 70-80 cents of every IT dollar on maintaining applications,” says Hu. “The on-demand model removes that burden.”

The on-demand solution costs Phoenix less than one-fourth of what was budgeted for the project.

Hu notes that’s outsourced offerings are scaled for mid-sized customers such as Phoenix to help them benefit from a newfound ability to share information across an entire user base.

The Salesforce platform accessible in an outsourced on-demand model, aligns with Phoenix’s overall outsourcing and Service-Oriented-Architecture (SOA) strategies, according to Caine. He was amazed at the ability of his provider to ramp up service. “It took less than two months,” he beams. “This was a new experience and just as quickly helped us retrieve some of our credibility with our national sales force that previous software ownership experiences had caused.”

Now, tasks such as contact management, calendar management, and the like are all integrated. Service-related bottlenecks have virtually disappeared, making the entire customer- and sales-servicing enterprises much more efficient, especially as more software-driven tasks are written for AppExchange to manage. “This is such a dynamic tool. Every time we migrate more things to this platform we learn even more about its flexibility and stability.”

Some of Phoenix’s software tools now plugged into AppExchange’s platform include multiple recruitment management, event management, and governance programs, including some security processes.

Tactically, communication between field and inside sales staff also dramatically improved because Salesforce captures all activities, reducing inefficient phone and e-mail status updates and other action items while boosting productivity. Projects now take 75 percent fewer resources to accomplish.

But the prominent benefit to Caine is estimating maintenance to costs of ownership, which previously was an unknown. “With AppExchange costs are consistent,” he says.

Phoenix is now integrating other tasks into its overall outsourcing strategy, including mail and distribution functions, sales literature fulfillment, and the printing of contracts and support materials.

“The previous management software products we bought quickly became worthless,” Caine continues. “Why own a diminishing commodity when service providers fulfill the same thing better, for less?” Caine asks.

Lessons From The Outsourcing Journal:

  • Insurers that outsource development and management of IT platforms to customize, create, deploy, and manage business critical applications find themselves able to better concentrate on core values and tasks while not managing processes.
  • Many that outsource these process-management platforms find that not only do they pay less than they would if they purchased the software but the monthly maintenance expenditure is consistent and easy to project.
  • Outsourcing IT, especially when servers are at multiple physical locations, allows buyers to quickly manage their diversely-located data. In addition, outsourcing this function typically costs less.

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