Big Iron's back: after flirting with newer, distributed technology systems, insurers are taking a fresh look at the ones they originally brought to the dance. They're seeing new promise, and serious savings, in an old familiar technology—their mainframes

Risk & Insurance, Oct 1, 2005 by Michael Fitzpatrick

Even in laid-back Hawaii, agents don't want to wait until tomorrow for a reply from an insurer. They want it today. So when Hawaii's largest property/casualty insurer sought to meet the demand for a response time measured in minutes instead of days, it looked to its technology.

Instead of buying a whole new system, however, the Honolulu-based company found the answer it needed in that old workhorse of the business world, the mainframe.

"In order for us to give better customer service, and to serve both our in-house and out-of-the-company end users, we found that we had a need to give a more immediate response," says Jim Blankenship, assistant vice president of applications at First Insurance Co. of Hawaii. After carefully weighing its options, the company found that it could meet the need for speed not by replacing its computer systems, but by updating its mainframe.

"When we made the changes on the mainframe applications, that had a significant effect on the end users. They went from having to do things in a batch, gradually squeaking it by, to being able to do it right away," Blankenship says.

Derided just a few years back as the dinosaur of the computer age, mainframe computers--often called Big Iron--are staging a comeback.

"The mainframe is far from dead. It's experiencing a renaissance," says Philip F. Proudfoot, solution development manager for IBM sales and distribution.

Over the past four years, mainframes have captured 16 points of market share in the high-end server computer category, according to IBM, which in July launched its newest version of the mainframe, the z9 series.

EVOLVE OR RIP AND REPLACE

Corporations that are heavily dependent on data, such as insurers and banks, see not only stability in their mainframe systems, but increased performance, cost savings and better security.

In addition, staying with mainframe technology allows insurers--that moved aggressively to take up the technology soon after IBM introduced the first S/360 mainframe in 1964--to make the most of the investments they have made over those years.

"For many years they've been looking to preserve the investment in those original systems. They've been looking for ways to transform them into more modern technologies, with more flexible support for the business," Proudfoot says.

With new capabilities to integrate mainframe systems with today's Web-enabled world, companies don't face the choice of having to totally replace their systems, says John Napoli, global director of financial service solutions for BEA Systems Inc., a leading vendor of business infrastructure software known as middleware.

"There's no business case to pull out a mainframe unless it's an unsupported or antiquated system. The days of 'rip-and-replace' are outdated," says Napoli. "At this point it's all about leveraging what you have."

With the widespread growth of PC-based client-server systems and the explosion of the Internet, insurers added new, so-called distributed technology systems that were thought to spell the end of the mainframe.

Instead of replacing the mainframe, however, many insurers have moved to link those distributed systems into their mainframe to get the best of both worlds--the stability that comes with a mainframe and the Web access that agents and consumers expect today.

"The mainframe is a tried-and-true technology," says Keven Busque, chief information officer for personal lines for The Hartford. "What we're doing with the mainframe is we're exposing it to our Web environment.

"Our Web environment will run distribution channels, whether it's dealing with agents or insureds. It's all Web-enabled, and it integrates with the mainframe," Busque says.

That's the kind of approach that technology consulting and outsourcing firm Computer Sciences Corp. calls an "extend, enhance and evolve" strategy.

"Basically, what you're doing is you're moving your users into the future without that big rip-and-replace every time you want to add function to the system. Users are seeing the systems change gradually over time," says Wayne McDaniel, CSC's director of property/ casualty outsourcing.

A BULLETPROOF BOX

Besides just trying to make the most of existing investments, insurers also point to the mainframe's dependability, security and sheer number-crunching power.

"They're dependable. They're reliable. They're scalable. And they have tremendous power," McDaniel says. "There's a tremendous amount of function in these mainframes, and companies have spent a lot of time and money putting in all the functions and features that they want to make themselves unique in the marketplace."

A key concern at The Hartford is ensuring that they have a reliable, robust system that can accommodate the company's double-digit growth, Busque says, and they know the mainframe will meet their performance standards and keep security at a high level.

"Its availability is extremely high. It doesn't crash. It's fairly bulletproof," Busque says. "Security on the mainframe is much more mature than distributed platforms."