The year 2020 brought tremendous changes. As a result of the global COVID-19 pandemic, everyone who could work from home did so. Non-digital processes in insurance companies such as check issuance, mailroom, and policy printing were exposed as no longer fit for purpose. An expected acceleration of digitalization in insurance over the decade has accelerated into full-scale revolutionary transformation. And this is only the beginning! The industry has come to realize that technology doesn’t support insurance in limited ways, it fully enables insurance in every way. The good news is that because of enterprise architecture, insurance companies are ready to take on the challenge of the 2020s.
Importance of Enterprise Architecture
Understanding the overall technology direction and ensuring alignment to business objectives has never been more important. Due to the pandemic, business objectives are starting to evolve quickly. Technology projects must be appropriate and consistent with achieving these objectives moving forward. Enterprise architecture cuts across core systems, data initiatives, and digital transformation. It informs how to create supporting infrastructure, secure business processes, and guarantee regulatory compliance. It has been involved with migration to the cloud, introduction of new integration approaches, operational efficiency efforts, and legacy modernizations.
Enterprise architecture has traditionally relied on relating key business and IT strategic drivers with reference documents to arbitrate decisions, establish a target strategic blueprint and roadmap to get there, link architecture governance to funding governance, create a template to capture all dimensions of an architecture review that highlight tradeoffs, and gain a commitment for future projects and investments.
Between 2017 and 2020, it has become important to develop a test-and-learn culture for architecture where a proposed solution, expected benefits, implementation complexity, and technical feasibility are evaluated. It is desirable to “fail fast,” that is, to prioritize work activities with the goal of discovering potential problems as early as possible in the process, minimizing schedule risk and cost. We now have the added challenge of architects working with distributed development teams, all from their homes.
Enterprise architects in today’s world are balancing strategic direction, which in many cases is undergoing dramatics change, with tactical considerations—doing the necessary up-front work for teams so that they are ready to adopt new enterprise architecture standards and still deliver on their timeline and budget commitments. In many cases, the pandemic has forced carriers to respond quickly in a tactical way.
New Approaches
Carriers have adopted new Agile approaches, including SCRUM and SAFe. With the adoption of Agile and the associated increases in team autonomy, it can be challenging, and even counterproductive, to adhere to traditional strict architecture governance practices. The architectural process has evolved to allow deviations from the enterprise-level blueprinting as needed where it makes sense. Architectural oversight is now less directive, more consultative, and more Agile, often occurring during each sprint rather than as an up-front, detailed design as is common in Waterfall methodology.
Microservices architecture is an approach that has emerged since 2016 to better leverage cloud environments with improved scalability and increased fault tolerance. Key features of microservices architecture, such as extreme decoupling, lightweight protocols, technology stack independence, and a lack of centralized deployment infrastructure, make the approach a major evolution in software architecture. Enterprise architecture blueprints and guidelines have been updated in the last few years to reflect this new approach.
Other cloud-related trends have also triggered investment and expansion in enterprise architecture. DevOps and container automation (Docker, Kubernetes), cloud-native “Platform-as-a-Service” (PaaS) solutions (Pivotal Cloud Foundry), and serverless computing platforms (AWS Lambda) have had a significant and lasting impact on enterprise and software architecture. We have seen the emergence of cloud data platforms like Amazon’s Redshift and Snowflake, allowing for virtualized petabyte-scaled data warehouses in the cloud, which have impacted data architecture designs.
Carriers are increasingly using APIs both internally to connect different systems through an enterprise integration platform and externally to move data in and out of their organization using traditional enterprise integration platforms, API gateways, and iPaaS (Integration-Platform-as-a-Service) solutions. This is allowing for real-time updating of information and new workflows enabled by the availability of third-party data. With the availability of pre-built marketplaces of services that emerged in 2019, API accelerators can be switched on just by paying an additional subscription fee. Enterprise architects can incorporate these capabilities into their blueprints, increasing transformation agility.
Open source continues to impact how enterprise architects evaluate their technology options. For example, Apache’s Kafka open source stream processing provides a real-time, high-throughput, low-latency platform to stream data feeds. RedHat’s Istio’s open source service mesh can control and document how different parts of an application’s microservices share data with each other through the establishment of an infrastructure layer built into an application.
Fund and Support Enterprise Architecture
Historically, it was difficult to fund the architecture function in many carriers. It was usually a central function that was not “owned” by any business unit. In some cases, solutions architects were hired by the business units themselves, but there was not a reporting relationship, either dotted or solid, to enterprise architecture. Additionally, enterprise architects were deemed as being in the ivory tower—expensive and not adding much value. As the pandemic has shown, good enterprise architecture becomes key to successful business agility and transformation.
Upcoming Special Interest Group
On July 2, my colleague Martin Higgins and I will host our Virtual Special Interest Group to cover the latest developments in architecture. Please register and join us and your peers in the conversation.
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