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Allstate Flattens Silos In Claims Processing, Tech VP Abbattista Says

The insurance company is halfway through modernizing claims processing as a business process and linking it to its customer information management and other systems.

Charles Babcock

May 1, 2008

4 Min Read

Allstate, the United States' largest publicly held insurance company, had built up a morass of custom code since the 1960s, most of it for its nine mainframes, before undertaking its next-gen modernization effort three years ago.

"We had a special general ledger, a special HR system. Everything was special," said Anthony Abbattista, VP of technology solutions, describing the situation as he saw it when he arrived at Allstate five years ago.

In addition to its in-house applications, "we never met a software company we didn't like," meaning Allstate had similar products from many vendors. "We had more products partially installed than any company should," he said in an interview Wednesday as he attended the Tibco User Conference in San Francisco.

Abbattista, who says his title means "chief technology officer on steroids," set about simplifying the tangle. He sought fewer but more meaningful vendor relationships. He wanted influence over what the vendor did next as well as the opportunity to buy its existing products.

"Our whole strategy is to do business with people when and where they want to do it. We're moving from batch processing to real time," he said during an opening day address to about 1,000 attendees at the Tibco User Conference.

He imposed company-wide standards and required submission of a good rationale before anyone departed from the standard. He stops just short of saying there were no good rationales.

Instead of claims processing and other key business processes organized by mainframe -- that is, each mainframe covered a certain geographic territory, thus splintering claims processing as a company-wide business process -- Allstate installed claims processing as a single application. It rebuilt its claims processing system in part by integrating features of common insurance applications. But mainly, it achieved its next gen functionality through custom development.

Allstate is halfway through modernizing claims processing as a business process and linking it to its customer information management and other systems in its infrastructure. To do so, it installed Tibco's Enterprise Message Service, a multiprotocol messaging system. Allstate also uses Tibco's ActiveMatrix BusinessWorks, a service creation and orchestration product for Java, .Net, and legacy systems. It uses the products to create its own enterprise service bus, a way of calling out services from different parts of its software infrastructure, Abbattista said.

Without the enterprise service bus, an Illinois resident who had a car accident in California presented a labor-intensive problem to Allstate. The mainframe with the customer's Illinois ID information had to be linked to the mainframe that did California claims processing. There were previously nine mainframe systems that were tied together by several dozen people who wrote custom middleware.

Allstate's 3-year-old next-generation effort to modernize its claims processing has since leveled these silos, using the enterprise service bus to interface claims processing to other systems in a structured manner, Abbattista said.

Another way of reducing the expense of transfer between systems in his infrastructure is to simply minimize the number of vendors who've gotten a foot in the door. "We're on a tear to do business with fewer vendors," he said. Those that make the short list include IBM, Oracle, Microsoft, SAP AG, and Symantec, as well as Tibco, with some of Hewlett-Packard's systems management software.

The Oracle database is widely used throughout Allstate, along with DB2 on the mainframe. Oracle usage is increasing; Allstate has streamlined some processes around Oracle Content DB, a content management system based on Oracle 11g. IBM's DB2 usage is on the decline, he said.

Abbattista said he pointed out to Tibco that it had dozens of adapters for point-to-point connections between applications. "We have all these adapters; why can't we have a brain?" By that, he meant software intelligence to observe traffic over adapters and notice if traffic is backing up in queues or responses are slower than those normally observed. "Why not fix things before they're broken," he said.

"We brought the concept of managed file transfer to Tibco. It was willing to listen and make changes. It has the eagerness of a startup," he said. Tibco is adding such capabilities into its product line through what it calls managed file transfer.

Allstate has 70,000 employees, manages $156 billion in assets, and insures homes and automobiles for 13 million households in North America.

About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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