Making Offshore a Winning IT Strategy

Featuring: Rich Rumple, Vice President of Product Development for CCC Information Services. By Jon Huntress , Editor, BrainStorm Group's - BrainStorm Bulletin.

Rich Rumple is Vice President of Product Development for CCC Information Services in the Workflow and Connectivity systems group. He plays a leadership role in the development of process automation, B2B connectivity and reporting applications.

In Chicago, Rich began his presentation with an explanation of what CCC does. Whether we know it or not, we have all been touched by their services. They supply the automotive claims and collision repair industries with the software, communication systems, Internet and wireless-enabled technologies that help us get our cars fixed after an accident. This is a $100 billion industry. CCC has a suite of products that are completely integrated, configurable for user preferences, and has a mix-and-match toolset for more sophisticated customers.

CCC supports 10 million transactions a day. This translates into $1.5 billion a month, and has the key abilities to be scalable, reliable and secure. It re-uses components with smooth integration of system elements and incorporates both buy and build. CCC has an agile IT organization that responds to market needs, builds and deploy apps rapidly, and quickly resolves user issues. The objective is to deliver high quality within predictable schedules and be cost effective.

Rich said that until a few years ago, his general philosophy was not to use outside consultants. He said, "Now I am a changed man."

In the late 90s and early 2000, CCC started three new businesses: a claims outsourcing, an international venture, and a new dot.com. This created a lot of debt, and the stock fell. CCC shut down all three businesses in 2001. The company has maneuvered a nice turnaround, has no debt, and the stock is back up. CCC has four major product lines:

• Pathways - collision estimating
  
• Valuescope Claims Services - vehicle evaluation and total loss
  
• ClaimScope Navigator - analytic
  
• Autoverse - claims processing - to settle claims faster

CCC uses outsourcing resources for all four product lines, but the main emphasis is on the newer lines of ClaimScope and Autoverse. CCC products have to be completely integrated and easily configurable by user preference. This integration is essential because their customers are all insurance companies, and each has their own way of doing business. Rich listed three drivers to meet business needs: architecture, organization, and process. CCC's offshore partner is Cognizant.

Rich showed a roadmap of how CCC did its outsourcing. In the beginning, CCC was after skill-based recruitment that was typically employed for low-complexity solutions. The second generation was for remote production with support for high business impact but low-complexity applications along with year 2000 remediation. The third generation included support for high-complexity applications with increased adoption of the offshore model. And the fourth generation is a true partnership with their offshore provider with seamless integration and value-added service offerings doing high-complexity, high-impact applications. Rich finally feels secure enough with offshore services to actually start new initiatives at the fourth generation.

Recounting his first trip to India, Rich illustrated the importance of letting the provider know your cultural issues. In India, he explained CCC to a group the same way would have done in the US, assuming they had a basic understanding of US culture. He found out later that nobody understood a word he said.

Some advantages of offshore include:

• Staff scalability
  
• A skilled and high-quality resource pool
  
• A broad range of technology skill and expertise
  
• Crashed development cycle
  
• Cost effectiveness
  
• 24x7 support and monitoring

Scalability works in both directions. In 2001 during the financial crunch, CCC was able to scale down rapidly without letting go of any employees.

Rich went into detail on the AutoVerse system for physical damage claims. The Web-based, open solution grew out of the failed dot.com venture. It exchanges claims information using a central location to dispatch, receive, review, and conclude the physical damage process. It is also the blueprint for all CCC Web-centric solutions. CCC expects exponential growth in projected users and 12 significant releases a year. CCC now can generate a spec during the day, have it developed overnight by their outsourcer, and have it back on their desktop first thing in the morning.

Rich said that today, it takes 30 days to settle a claim. In the example he gave, the actual repair cost was $2200 and took 18 hours of work, yet the total cost is much higher because of the claims process overhead, which he described in detail.

After an accident, the car goes to a yard. You call the insurance company; a claims adjuster triages the claim, and more calls are made. An appraiser sees the car; an estimate is written, and a repair shop is chosen. The car is towed to the shop and another repair estimate is made. Then the two estimates need to be reconciled. The parts are ordered and the car is torn down and repaired. If further internal damage is found, further negotiation is needed.

Because of all the other steps involved in this process, another $1700 in costs is added to the repair. So, a $2,200 repair costs almost $4,000. Ancillary costs are 40%. CCC is trying to reduce these costs by cutting the process in half, so it takes only 15 days to fix a car. The potential payoff is huge. One insurance company estimated that every day saved from the claims cycle would save them $60 million a year. Think what cutting ten to fifteen days would do.

What CCC has learned during their outsourcing experience is:

• Have an over-arching strategy with long-term goals-know where you want to go and where you want to be
  
• Start small and grow into the relationship-the savings are in the long term
  
• Establish a robust engagement model from the outset-it is important that you understand what your relationship is going to be and how it will operate
  
• Make sure your partner understands your business-(Rich said that some of the vendor employees understand the business better than some CCC employees)
  
• Use strong, proven methodologies and processes to govern the day-to-day operations
  
• Have leadership in relations and communication

Rich finished his presentation by reminding the audience that the most important thing is to remember that they aren't just picking a vendor; they are picking a partner. "You must learn to trust your partner," Rich concluded.

To hear Rich's talk and view his slides, log onto BrainStorm University.