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The insurance industry is in the midst of
profound change primarily driven by trends that are converging and creating
leaps in innovation and shifting traditional business models forcing them to
align with models relevant in today’s digital age. In this new era of On Demand economy, where Netflix,
Amazon, Uber rule the world, consumers now expect to get what they want when we
want it on their terms.  The challenges
brought about by this Digital disruption in the Insurance industry is forcing
companies to not just rethink their software architecture but also rethink the
whole approach to delivering value to the customer.

Firstly, the digital business model should
allow creation & shorter time to market of products and services; companies
need to become skilled at product innovation that meets changing customer
expectations. They also need to provide a seamless multichannel experience so
consumers can move effortlessly from one channel to another. Finally, businesses
need to use advanced analytics tools to gain insight into customer behavior
which can lead to improved customer experience and increase sales through more
effective cross selling.

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Most importantly, Companies need to cut
across organization barrier to deliver great End to End Customer experience across
multiple touch points which span multiple departments (e.g. new business, claims,
policy servicing, etc.) & in some cases involve suppliers external to the
company. This can only be achieved when we have the underlying workflows connecting
various systems designed to be responsive to the fast changing needs of this
digital economy

You must be wondering…. How does Conway’s
Law come into Picture??

Conway’s law is an adage named after
computer programmer Melvin Conway, who introduced the idea in 1967

A contract research organization of eight
people was hired to produce a COBOL and an ALGOL compiler. During the project,
he observed, “After some initial estimates of difficulty and time, five people
were assigned to the COBOL job and three to the ALGOL job. The resulting COBOL
compiler ran in five phases, the ALGOL compiler ran in three.” 1

These observations led to what is now
known as Conway’s Law, which states:

which design systems…are constrained to produce designs which are copies of the
communication structures of these organization.”

In other words, how we organize our teams
has a powerful effect on the software we produce, as well as our resulting
architectural and production outcomes.

Designs evolve to reflect the environments
in which they were developed. In tightly-coupled organizations, dedicated teams
employed by a single firm and located at a single site develop designs which
are tightly-coupled. By contrast, in loosely-coupled organizations, when a
large, distributed team of volunteers develops the design, the architecture
that evolves is more modular as a result of the limitations on communication
between developers.

Digital disruption: What it
means to current IT delivery model?

In the insurance industry, Legacy
applications pose multiple challenges in realizing the goals of the
digitalization. A legacy application would consist of a monolithic architecture
where a vast number of functionalities are wrapped under one roof. Though
monolithic architecture has its own benefits, it also poses a number of
challenges such as inability to deploy different components/ functionalities independently
thereby greatly affecting the speed to market, failure in one part/component
affecting the entire monolith, inability to scale different components /
functionality independently , etc.

Unlike enterprises that are born digital,
traditional Insurance companies don’t have the luxury of starting with a clean
slate; they must build an architecture designed for the digital enterprise on a
legacy foundation.  

 In a 2014, McKinsey introduced the concept
of “Two-speed IT architecture” solution which involves managing two separate,
coherent modes of IT delivery, one focused on stability and the other on
agility.  The high- speed IT can create
strategic advantage for the enterprise with Low-speed maintaining systems of
record “. They see Two-speed IT as re-inventing IT to support digitization as
part of an organizational transformation so as to deliver a strong digital
capability in the organization. Their approach is to incrementally re-invent IT
with Two-speed IT so as to focus the high-speed IT on high value areas for an
initial period. After which agile innovative IT approach is roll out to other
areas of IT.  

will involve implementation of enablers that can help realize these
organizational goals which are:

Services and a Cloud Architecture (IaaS and PaaS ): Enables  the use of public, or hybrid cloud through self-service
rapid provisioning of complete environments as well as rapid creation these
resources can be quickly deleted

Instant cross-channel deployment of functionality
via Microservices : New Microservices
defining only a small amount of functionality, should be deployable in an hour
rather than in several weeks. Such Microservices should also be available
across all channels.  

 DevOps and Automation: Continuous
Integration/Continuous Deployment (CI/CD) for faster more reliable deployments


How applying Conway’s Law can
help achieve Two –speed architecture?

To achieve the responsiveness and
agility businesses will need to modify their big ecosystems of software to
allow for small experimental changes in production with the ability to gauge what
the amortized change will be to the existing code base. In other words…How
teams & the   infrastructure can
respond to changes quickly??

The answer to this question can be found
in Conway’s Law which suggests that it is not just a development team problem
but an overall organizational problem

The right question should be…What is
the organizational structure one needs to be able to deliver the software quickly

Teams which are focused and have small code footprint react better to changes
& the nimbleness of team(s) has direct correlation to the team size and
relationship among development team and product owner. The better the communication
channel, the better a development team is able to model the design to the
problem domain. Most of the time when the team fails to deliver what was
promised  is due to flawed communication with
multiple layers of translation existing between the team & the business
stakeholders  or may be the process to
implement a change quickly are broken . Discreet teams owning discreet problem can
develop code base tailored to the subdomain rather than worrying about the
enterprise wide change. Cutting down the time to get something to production is
also very crucial as multiple layers in between pushes the development team
further away from context that is needed to make the right decision. We need to
ensure that teams are smaller (E.g. 2 pizza team size in Amazon) and closer to

Netflix is an example of such a company
where the organizational structure is created around the development culture. They
thought of the dev ecosystem they want and then built an organization communication
structure around it

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