The Infinitely Agile Cloud
The cloud's potential is limited only by the imagination. Insurance provider Seven Corners, for instance, has harnessed the flexibility of the cloud to generate entirely new streams of revenue. "This year we rolled out an application called 'Access' that is so configurable you could run any kind of insurance services through it, whether you're insuring parrots, cars, people, trucks or whatever," said CIO George Reed.
06/18/12 5:00 AM PT
Seven Corners, a travel insurance provider in Indiana, has created and implemented an agile and revenue-generating approach to cloud services.
Seven Corners went beyond the typical efficiency and cost conservation benefits of cloud to build innovative business services that generate whole new revenue streams. A VMware-enabled cloud infrastructure allowed Seven Corners to rapidly reengineer its IT capabilities and spawn a new vision for its agility and future growth.
Here to share his story of an SMB's journey to cloud-based business development is George Reed, CIO of Seven Corners Inc., based in Carmel, Ind. The interview is conducted by Dana Gardner, principal analyst at Interarbor Solutions.
Listen to the podcast (31:27 minutes).
Here are some excerpts:
Dana Gardner: I often hear that culture will trump strategy. It sounds as if in your organization -- maybe because you're an SMB and you can get the full buy-in of your leadership -- you actually were able to make culture into the strategy?
George Reed: Absolutely! By changing the culture and getting the departments out there to ask, "Is this stuff you're doing going to help me with this problem?" "Well, yes, it will," and then you deliver on that promise.
When you make a promise and you deliver on it, on or ahead of schedule and under budget, people begin to believe, they're willing to participate and actively suggest other possible uses with technology that maybe you didn't think of. So you end up with a great technology-business relationship, which had the immediate result for the owners who were out looking to buy an insurance services application or rent one.
They said, "We're a very entrepreneurial company with so many different lines of business that there is nothing out there that would really work for us. We believe in your IT. Build us one." This year we rolled out an application called "Access" that is so configurable you could run any kind of insurance services through it, whether you're insuring parrots, cars, people, trucks, or whatever.
Gardner: Let's learn some more about that. One of the nice things about early successes is that you get that buy-in and the cultural adoption, but you've also set expectations for ongoing success. I suppose it's important to keep the ball rolling and to show more demonstrable benefits.
So when it came to not only repaving those cow paths, making them more efficient, cutting cost, delivering that six-month return on investment, what did you enable? What did you then move forward to to actually create new business development and therefore new revenue?
Reed: By continuing to lower IT cost, when we virtualized the desktops using VMware's View, and then VMware's Horizon, which makes it device-independent, it's easier for everybody to work. That had appreciable productivity improvements out in the departments.
At the same time, my apps development group began designing and building an application called "AXIS." What this came out of was that when we went to insurance conventions, talked to carriers and asked, "What are the top 10 reasons you want to fire your third-party administrator today?"
Technology was always part of those top 10 answers. So we devised and developed an application that would eliminate those as problems. The result is that this year, since February, we have four insurance carriers that were working with either their own stuff or third-party administrator, big COBOL mainframe monsters that are just so spaghetti-coded and heavy you can never really get out of it.
They see what our tool is doing and they ask these questions. "What are the specs for me to be able to connect to it?" "Well, you have to have an Internet connection and something smarter than a coffee cup." "That's it?" "Yeah, that's it." "Well, what's the price for us to implement your solution?" "None. "It's already implemented. You just import your business."
The jaws drop around the table. "How will I be able to see my data?" "You'll all get in and look at it." "You mean I don't ask for a report?" "You can, but it's easier if you just log and look at your report."
They're flocking in. The biggest challenge is keeping up with the pace of the growing business and that goes back to planning for the future. I planned a storage solution and a compute solution. I can just keep adding blades and adding trays of storage without any outage at all.
Gardner: Pay as you go?
Reed: Yes, and the neat thing is that that the process of closing transactions will run about $7 million in revenue a year. It will cost about $1.5 million to service that revenue. Not a bad profit base for an SMB. And it's because we're going to come in at 45 percent less than their existing service provider, and we're going to provide services that are 100 times better.
Gardner: Before we learn more about that approach and process, perhaps you could explain for our listener's benefit what Seven Corners is, how large you are, what you do, and just describe what you are doing as a business.
Reed: Seven Corners started in 1993 as Specialty Risk International, and as we began to grow around the globe with customers in every time zone there is, the company changed its name to "Seven Corners."
It started out providing specialty travel insurance, trip cancellation insurance, then began providing third-party administrator, general insurance services, and emergency assistance services around the globe. We have about 800 programs in five major product lines to span hundreds of thousands of members.
The company itself is about 170-175 people. We've been enjoying double-digit growth every year. As a matter of fact, I believe that at the end of February they hit the double-digit growth goal for 2012. So we're going to exceed that as the year goes on. You are going to see the technology has driven some of that growth.
Gardner: Who do you consider your primary customers? Is it travel agencies, or do you go direct to the travelers themselves, or a mixture?
Reed: About 50 percent of the business is online. You go to the website to fill out a form to figure out what you need. You buy it right then and there, collect your virtual ID card, and you're on your way.
We have customers that are high-tech companies who are sending their people all over the world. They'll buy, at the corporate level, trip cancellation, trip assistance, and trip major medical insurance.
Then there are universities and other affinity groups. They have students traveling abroad. We have companies sending people to work in the United States. Then we are doing benefit management and travel assistance for numerous government agencies, U.S. Department of State, Bureau of Prisons, AmeriCorps and the Peace Corps as well.
Gardner: So if I understand correctly, George, you're saying that you went from being a broker of services, finding insurance carrier services, and then packaging and delivering them to end users, to now actually packaging insurance as a service. You're packaging the ability to conduct business online and packaging that, in addition, to the value-added services for insurance. Does that capture what's happened?
Reed: It does, and providing immediate access to what any stakeholder in that insurance lifecycle needs improves the quality of the end product. It lowers the cost of the healthcare.
We're starting to get into the state Medicaid benefits management as well. We're saying, "You're spending too much." The first slide in the proposal is always, "You're spending too much on Medicaid healthcare. We're going to help you cut it down and we are going to do it right now." You get attention when you just walk in bold as brass and say that.
With a solid, virtual, private-cloud solution, the cost of delivering technology services is just very low per member service. In insurance, there are only so many ways to improve profit. One is to grow business. We all know that. But two is to reduce the time and price of processing a claim, reduce the time and price to implement new business and collect the premium.
We've built an infrastructure and now an application platform that does those things. In the old system, the time to process a claim around here was about 30 minutes going through a complex travel medical claim with tons of lines. Now it's about 15 seconds.