Provinzial NordWest Puts Product Innovation at the Center of the Business
- Reduce the time and cost of developing and launching new and upgraded products
- VP/MS, CSC’s product definition and modeling tool that allows creation of independent, re-usable product models for multi-channels and regions deployment
- Shortened time to market for products
- Increased agility with effectively managed costs
Merger Provides Impetus To Review Business Processes
Provinzial NordWest is Germany's second biggest public insurer. It serves three million customers with nearly 10 million policies. It sees product management and innovation as business critical to market leadership.
Provinzial NordWest more than doubled its business through its public insurance merger in 2005 between Westfälische Provinzial and Provinzial Nord. The two insurers operate in Hamburg, Schleswig-Holstein, Westphalia, and Mecklenburg-Western Pomerania – regions of the country representing 18% of the German population and where they each had average market shares of 20% in different lines of business.
The merger provided the impetus for a review of business processes across the new group. Leveraging proven product management good practice was high on the agenda.
As a result Provinzial NordWest is building a central IT landscape for all commercial lines of business to imbed in all the group's units the same operating standards that delivered outstanding business success in the pre-merger company. Product speed to market and market responsiveness, cost-savings, and organizational agility will be common across the group.
CSC has had a 15-year relationship with Provinzial NordWest and is key to achieving that goal. It supplies and advises on VP/MS, the definition and modeling tool at the heart of Provinzial NordWest's product operations, and a proven performer at Westfälische Provinzial and the Provinzial Nord sister company. CSC is on the technology team, helping design and test a new infrastructure to work with systems and processes in all the group's companies, and modeling products. Its consultancy, software and services are based on a wealth of unique insurance and product innovation expertise. The transfer of this unique expertise to Provinzial NordWest allows them to use the software on their own in the long term and thus maximizing the group's investment in VP/MS.
"VP/MS is central to our general insurance operations," says Thomas Niemöller, Board Member of Westfälische Provinzial at Provinzial NordWest. "VP/MS has helped us gain new customer segments and offer new products to the market in all the main non-life lines of business in the regions in which we operate. Now CSC is working hand-in-glove to create a single IT landscape with a well-defined, structured and repeatable product development process with clear roles and responsibilities, so we can replicate that success right across the group in future. We are confident that our approach will work – our successful long term relationship with CSC is based on trust and excellent business delivery."
Fast and Efficient
Provinzial NordWest has learned tough lessons in the past. Like many competitors, Westfälische Provinzial and Provinzial Nord were troubled by the time and cost of developing and launching new and upgraded products onto the consumer market – often delayed by a complexity of systems and diversity of data.
They both chose CSC's product definition and modeling tool to address the issues. VP/MS was the only tool on the market that could be used on multiple platforms for all sales channels. Both have used VP/MS to represent their complete private lines of business for a number of years and use it over different sales channels (banks, brokers and tied agents). It also supported back office functions, and gave each company the flexibility to design its own product structure. The impact on business performance was dramatic.
"We transformed product management at both companies in the last 10 years," says Thomas Niemöller. "Most important, because VP/MS is our single source of product information, we now develop and launch products that respond fast to urgent market needs, and significantly cut launch costs.
"VP/MS has made us much more competitive and highly flexible. We can activate premium changes in special insurance segments in five days for end-of-year business – a peak time for customers to change insurers. VP/MS distribution capability allows us to offer different products within different channels at different prices.
"We also have better productivity, much of it because VP/MS enables good collaboration between business departments, product development and IT, which is all well documented and can be tracked. Any issues between departments can be detected early and rework activated before too many problems arise. As for IT productivity and efficiency, the centrally stored, structured product information in VP/MS aids application infrastructure changes and gives us architectural flexibility."
Provinzial NordWest's use of VP/MS has become more sophisticated over time, with new services introduced to the business: ZÜRS, a floods damage calculation, for example. It also increasingly contributes to risk management compliance. VP/MS has supported more and more sales channels, including online channels, helping deliver a faster time-to-market and supporting Provinzial NordWest's multi-channel strategy.
The two largest players in the group, Westfälische Provinzial and Provinzial Nord, are both highly successful VP/MS users. The next step towards product synergy across the organization is to create a single system and set of processes, which will then be rolled out.
"Standardizing workflow across the organization leads to a kind of industrial 'product factory'," says Thomas Schacht, Chief Department Manager for Application Development & IT Business Analysts General Insurance. "It's an efficient and market driven centralized approach, providing a single product information source to multiple systems. We aim to avoid the kind of redundant development, premium discrepancies and error situations that are typical for an insurance company when they don't use a system like VP/MS.
"Once we have established a repeatable process, we expect to get all the crucial VP/MS led benefits of product innovation, speed, efficiency and cost savings for the whole group. We aim to have organizational agility across all departments involved in our approach.
"Building a single product infrastructure is a challenge. VP/MS is the fixed central component of the future system, enabling us to go for a simpler and faster migration from our legacy systems into the new system."
Although Provinzial NordWest – like many German insurers – prefers to manage its technology in house, the group recognized the critical role CSC could play in design and build of its product-driven administration system. CSC's expert knowledge of its own modeling product tool was the most important factor, but its integration, legacy systems management and product innovation experience adds to a unique full service package.
"As the owner of VP/MS, CSC provides the best VP/MS expertise in terms of resources and consulting," says Barbara Federsel, Department Manager for Application Development & IT Business Analysts General Insurance. "So they were the first people to contact for this massive project. What also underpins their role is that we have a long-term relationship with them, based on the reliability and competence of their people, products and services."
"We are working with CSC because it is the right business strategy for us," says Thomas Niemöller. "They have the skills we need to help us make the most of our investment in VP/MS, and leverage a highly successful product management approach to support our business plans in future. The relationship with CSC is very important in achieving both those aims."