14 | 13-19 June 2013 | InsuranceTimes subscriber edition 14 | 13-19 June 2013 | InsuranceTimes subscriber edition

● The waterfall development methodology traditionally followed by software designers does not allow fl exibility on last-minute technical or requirement changes

● Software provider Guidewire champions the Agile system, which shifts the emphasis to daily and weekly reassessments

● LV= is one of many insurers to have adopted the Agile methodology for its businessBy Jessica Reid

Spotlighton software development processes

It may not have been the biggest technology company initial public off ering of 2012 – that title goes to Facebook at $16bn (£10bn) – but when Guidewire

Software fl oated on the New York Stock Exchange in January, it cer-tainly made its mark. The company priced 8.85 million shares at $13 each, and by the end of the trading day the value of the stock had risen 33% to close at $17.12 a share.

For co-founder and chief execu-tive Marcus Ryu, the fl otation had been a long time coming. Ryu set up the business, which develops soft-ware for large insurance companies, in 2001, after identifying a gap in the market for software design in the property and casualty sector.

But Ryu did not jump in and start writing software straightaway. It was just after the tech crash and the US atrocities of September 11, so he proceeded with caution to discover what insurers really needed.

He found that the insurance industry was, and still is, mostly concerned about three issues: grow-ing revenues, customer retention and lowering costs. With this knowl-edge and Ryu’s management con-sulting and software expertise, the company was ready to begin.

Like all software providers, Guidewire faced the challenge of developing products and systems in a rapidly changing technological environment. Increasingly, clients were demanding the latest anti-fraud solutions, real-time reporting structures and core systems.

Waterfall versus AgileSoftware developers typically take one of two approaches to a new project: a traditional waterfall strategy or an Agile methodology.

The waterfall model is a lineal design process, in which progress fl ows steadily down through the phases of conception, design, con-struction, testing, implementation and then maintenance.

This means that development teams have only one chance to per-fect each aspect of a project before it is handed down to the next phase.

Guidewire initially followed the waterfall approach, before one of its customers introduced it to the

In association with

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DEVELOPMENT CYCLE METHODOLOGIES COMPARED SOURCE: DERAILLEUR CONSULTING

Agile methodology. Since then, the company hasn’t looked back.

Agile gives the project delivery team, as well as the client, opportu-nities to assess the direction of the project throughout its development lifecycle. This is achieved through regular cadences of work – known as sprints or iterations – where the team stops and re-evaluates the direction of a project every two weeks.

Initially, Agile was just an internal methodology at Guidewire, but in 2004 insurer Liberty Mutual asked the company to help it implement the approach in its business.

Since then, Guidewire has used Agile to implement its products for most of its 141 customers globally, 100 of which are currently live, and all its projects have been successful.

“It’s diffi cult for some companies to get their head around, but Agile allows you to see the demonstrable value much more quickly, realise return on investment and keep the project under much better control,” says Guidewire product marketing manager Mark Mullin.

“In traditional waterfall delivery, you would do a big project at the beginning to defi ne all of the require-ments, and then the business people would go away for months and wait for the IT people to deliver it,” he says. “The problem is that what

they’ll deliver might not be what the business wanted, because it was never communicated properly.”

With Agile, communication is part of the daily strategy. All mem-bers of the development team meet every day to discuss what has hap-pened since the day before and what they plan to do today. “Rather than waiting months, the client sees something every two weeks – it’s much more interactive,” says Mullin.

LV= changeoverOne UK insurer to use Agile is LV=, which implements it as part of Guidewire’s ClaimCenter web-based claims system.

LV= business analyst Paul Dono-hoe says: “For us, the waterfall approach wasn’t working well. We were delivering things late, we were delivering the wrong things some-times, and the business benefi ts really weren’t coming out.

“In a [waterfall-based] project it can be weeks or months before the business people see how the IT people have interpreted their needs. With Agile, it’s hours or days.”

And in an industry where innova-tion is a constant challenge and claims-handling speeds are under rising pressure, perhaps other insur-ers should consider following Ryu’s lead and get in shape using Agile.

‘For us, the waterfall approach wasn’t working well. We were delivering things late, we were delivering the wrong things sometimes’Paul Donohoe, LV=

InsuranceTimes | 13-19 June 2013 | 15EXPERT VIEW

THE AGILE WAY FORWARDEvery time I get on the squash court

with my son, it is painfully clear

how agile I am not. Agility comes

naturally to the young, and not just

in sports. We have all watched in

awe as our children pick up a new

techie toy, never look at the manual,

and intuitively just fi gure it out.

Being able to do this is in our

nature as well. We have suppressed

it owing to years of schooling that

have convinced us to be thorough

up front before using or doing

anything new. Read the manual; be sure we know where

we are going before we go there.

Which works better? In software development, thorough

and up front was the fashion for years. At Guidewire, we

did our development in the early years this way. Then, one

of our customers introduced us to the Agile Methodology.

Insurance software is very complex, and implementing

it is really, really hard. Business needs change ever more

quickly. We know that to try and defi ne all the functionality

and scope of a project up front is fraught with dangers and

risks. We cannot defi ne everything a team of developers

will need at the beginning of the process, hand it over and

ensure that what comes out the other end will be usable.

Chucking it over the wall – well, that doesn’t work.

The fact is that requirements will develop through the

project lifecycle – and Agile allows the team to adjust for

this. By design, Agile enables the team on a project to react

to changes in direction and evolving requirements. The

business becomes inexorably embedded in the process

in a way that other delivery methodologies do not achieve.

The team becomes a focused group of key individuals

from all stakeholder areas – the developer(s), the team

manager, the business analyst, and the insurance subject

matter expert. By co-locating this team in a pod of four

to six individuals, the approach embeds the ethic of

consultation and collaboration.

The cycle is simple, yet effective. By breaking the

project into discrete chunks of about two weeks’ work,

functioning software is delivered very quickly. Requirements

can be validated and evolved in each of these two-

week increments. The need for the team to demonstrate

achievement over short delivery sprints ensures a level of

focus and evidences the value of a development far more

quickly. The business sees and understands what is being

delivered, and adjustments can be made much earlier in

the cycle, which guarantees that what is delivered both

works and is relevant.

Which works best? We believe in Agile so strongly that

it is used across our business, and not just for software

development and implementations. The opinion about

Agile of one of our customers – Suncorp in Australia – has

evolved from initial scepticism of the methodology to the

point at which Agile is used throughout its business too.

And it has developed training for other companies on Agile.

Agile delivers. It

has proved itself to

be an important pillar

of our track record

of success.

MARK MULLINPRODUCT MARKETING MANAGER, GUIDEWIRE

Where the risk lies

Waterfall v agile

V

Waterfall Agile

Time

Waterfall

AgileTime

TTiim

W

AgTTiim

Agile development uses an iterative approach to reduce risk and create products that are ‘launchable’ throughout development

Deliverableproduct

Chance of failure

Project run rate

Conception Conception

Initiation

Analysis

Design

Construction

Testing

Deployment

Initiation

Analysis

Design

Construction

Testing

Deployment

We believe in Agile so strongly that it is used across our business

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