For more than two years, Applied and its partner, IVANS, have beat the drum for Transformation Station as the right type of approach to agency/carrier interface and the perennial goals of SEMCI. In the meantime, I've been a vocal critic, suggesting that at least for now, it makes sense to get immediate help for agents by picking the low-hanging fruit offered by Hybrid Interface, the connection between agency management systems and carrier Web sites.
Recently, Doug Johnston, Applied EVP and Transformation Station booster, graciously agreed to an interview on the topic over which we've had some disagreements. Though neither of us changed the other's mind because of the interview, I came away with a better understanding of the Applied view and its rationale. And I found out a bit more about how Applied intends to pursue both Transformation Station and Hybrid Interface in parallel for the benefit of its agency customers. Here's a replay.
JA: Doug, I appreciate your making yourself available and being willing to talk about approaches to interface, a topic on which we've sometimes found ourselves taking different positions. Thanks. How are things going with Transformation Station and the “Light ‘Em Up Campaign” to support inquiry and other real-time transactions you initiated last October?
DJ: Actually, I've just been looking at our network traffic stats and see that we've hit a new record for our before-9:00 a.m. transaction count. Overall, we are seeing a 30% to 40% month-to-month increase in agency generated real-time transactions. This is due to several factors: first, more and more companies are making real-time transactions available to their agencies; and second, more agencies are realizing the benefits of servicing their customer in real-time,
Interestingly, while we're seeing an overall increase in traffic, we are also seeing some regular and sporadic slow times. The three days after the beginning of the Iraq war were very slow and Fridays after 3:00 p.m. are slow. Mid-month and month-end always show more activity than other times.
Occasionally we see a temporary, but dramatic, up tick in activity, such as when an agency is rolling a book of business from one carrier to another. Some carriers have made writing business with them so easy through Transformation Station that some of their agents have chosen to move a great deal of business their direction — and it's good business as well.
JA: Last fall you announced you would “light up” 7500 agencies for eight carriers. How has that gone? Are all the agents using the service?
DJ: The agent adoption of the real-time transactions has been pretty good, with 1,700 of the 7,500 enabled agencies using the service on a regular basis. We've recently begun an education campaign to let the rest know that the service is ready for them to start to use.
You'll love this: we're distributing a paper, not electronic newsletter, called “Eye on Interface” to 10,000 agencies each month, but intend to make it electronic eventually. We're doing FAX blast and mass e-mail and we've got an educational CD that helps agents understand the benefits and operational aspects of Transformation Station.
It takes time, as you know, to get the word out, but we're making headway. I guess that when you compare this to the introduction of other technologies into the agent community, such as download, our progress to date is pretty impressive.
JA: Let's talk a bit about Transformation Station versus what
I've called Hybrid Interface. I've recommended that the industry,
especially vendors for the benefit of their agents, be expedient and create
links between management systems and carrier Web sites instead of waiting
for carriers to be willing or able to implement what's perhaps a more
elegant or longer term solution of the kind that Transformation Station represents.
What's the Applied position?
DJ: We are focused on providing real-time communication between agencies and their carriers. For the past several years we have been focusing on the ACORD XML-based Web services approach of Transformation Station, and we continue to believe that is a solid approach. However, we also understand that there are a lot of carriers that are not ready, or do not have the resources to implement XML-based Web services. So, we're in the process of rolling out what we call Web Bridge, a connection between our TAM and Vision management systems and cooperating carrier Web sites. The Web Bridge technology is a complementary alternative to the related ACORD XML-based inquiry transactions within Transformation Station.
From the insurance company perspective, Web Bridge differs from Transformation Station in that Web Bridge utilizes company-specific scripts designed to directly access and navigate each company's Web site, without routing through Transformation Station.
This choice of services effectively provides the company with an option of using the managed Web services of Transformation Station, or using the direct access services of Web Bridge. In any case, given the diversity among carriers, scripting is likely to have legs for some time.
JA: So will Transformation Station and Web Bridge operate in parallel? What will it look like to the Applied agent?
DJ: The agent won't know the difference. From the agency's perspective, there is no difference in the use and execution of Web Bridge and Transformation Station transactions, as both utilize the same real-time components and workflows within The Agency Manager and Vision.
JA: Who pays? What's the business model?
DJ: We ask participating carriers to pay a small fee up front and then each time they make changes to their Web site that require us to change our scripts to connect with their Web sites. If carriers are very volatile with the changes to their sites, we may ask them to pay time and material charges for our effort to keep up with their changes. There won't be any transaction charges to the carriers as there have been with Transformation Station.
This is probably a good time to point out that IVANS has announced they are changing the Transformation Station and mailboxing (upload and download) billing to a flat fee with unlimited volume, which is a departure from the transaction and file size fee model they had been using. IVANS has analyzed the volume and sees that they can make this change.
With the new IVANS flat rate fee for unlimited upload, download, and real-time, carriers can focus on increasing the quality of their agency communication. For example, without a transaction charge, it can make economic sense for carriers to send policy image PDF files down to their agents embedded within the download. We think we can expand interface traffic significantly and do our agencies and carrier partners a great deal of good with this new Transformation Station billing model.
JA: Doug, you've been intimately involved with WARP and Transformation Station for years. Now you're beginning to work with carrier Web site scripting-based connections via Web Bridge. You can perhaps see advantages and disadvantages for both. Help me understand where the issues lie from your perspective.
DJ: I think that Web Bridge and other agency-to-carrier Web site solutions have a solid place in the industry. To that extent, even Transformation Station does bridging into carrier Websites, such as the rating bridge into the Encompass Web site.
The obvious advantage is that if the carrier has made agency functionality available within their Web site, then we can easily get to it with a product like Web Bridge.
The disadvantage is that Web Bridge will only work if the carrier is actually providing the data or functionality the agency is looking for on its Web site. If the carrier hasn't implemented claims inquiry, for instance, we're not going to be able to offer that function via Web Bridge to that company's agents.
Of course, that's also true with Transformation Station. If the carrier doesn't have it or won't do it, we can't offer it. But I think it's important to point this out because some agents may have unrealistic expectations for scripting.
A second potential problem is Web site availability. If the Web site is not available, or rejects the scripting, then it isn't going to work.
JA: But don't carriers have a self-interest in making their agency portals reliable and generally available. If there are some problems now, my guess is they're likely to fade over time.
DJ: Yes, they do, and you are correct in that agency portals will continue to get better. At the same time, I also believe that carriers will leverage the emerging world of managed Web services, both in agency system to Web site interfaces, as well as in agency system to carrier system interfaces. In the end, interfaces into agency portals and interfaces into managed Web services will both continue to grow. From an agency's perspective, it may not even know which solution each carrier provides.
There's a related issue that's important to mention. Because the carrier doesn't control and can't really monitor the scripted transactions into its Web site the way it can in a managed Web services type of arrangement, the carrier will be blind to agency problems and frustrations.
I guess this gets back to the advantages and disadvantages of managed Web services of Transformation Station versus the direct access services of Web Bridge. Remember, the advantage of the direct access approach of Web Bridge is that it uses the existing carrier Web site services without the interaction of the company. The disadvantage is that if the transaction fails, or the Web site returns an error, the carrier does not know that the agent just had a bad experience.
Conversely, the disadvantage of the Web services approach of Transformation Station, is that the carrier needs to build out its Web services for the transactions. However, the advantage is that the carrier becomes an active party to each transaction, and has more control over the quality of the agency experience.
Another issue is complexity. Some carrier sites simply may be too complex to script into. One carrier we talked to recently was considering allowing scripting, but decided not to because even just one of its Web pages could be presented in 400 different ways and there's no way a script could be created or maintained with complex pages like that. It would just be too complicated. In a case like this, a managed XML interface might be the simpler solution.
JA: That does sound complicated and maybe some sites won't work, but my guess is that will be an exception. Most carriers just don't want to create and maintain a Web page with 400 different formats. If the scripting process can't cope, probably neither can the carrier technical staff.
DJ: I agree that may be a bit extreme, but the point I'm trying to make is to show how the scripting approach is based on the features, functions, and designs of each individual carriers Web site, and is less managed compared to the standardized messaging of ACORD XML.
JA: In my view it's clear that when the choice is between scripting and nothing, it makes sense to try scripting. Transformation Station requires active carrier cooperation and work, and some, perhaps many, carriers are never going to lift a finger. Technically, scripting doesn't require anything of the carrier that has an agency portal, though the need to cover costs and good industry citizenship lead vendors to seek permission and some level of cooperation. But the carrier doesn't have to pay much or do much.
DJ: Oh, you are absolutely correct. I think we will see a lot of interfaces based on the scripting approach, as it provides definite advantages and value to both the carrier and the agency — especially in the area of inquiry transactions. Although, I believe that we will also see a rapid growth in ACORD XML-based Web services for complex insurance transactions, such as policy rating, policy issuance, policy endorsements, and claim processing.
JA: Doug thanks for taking the time and thanks for providing some insight. By the way, Rick Morgan tells me he's having a good time at Applied.
DJ: You're welcome. And yes, we're appreciating having Rick around. He's bringing in a new perspective in some areas. The other day Rick came into my office and asked for a Transformation Station mug. I don't know whether that was because he thinks the mugs are great or because he has developed a new appreciation for Transformation Station.
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The Web Bridge technology is a complementary alternative to the related ACORD XML-based inquiry transactions within Transformation Station.
I think that Web Bridge and other agency-to-carrier Web site solutions have a solid place in the industry.