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What Do Farmers
Insurance, The Hartford and Conseco Have in Common?
They all go offshore
to develop IT. Given the state of the economy where homegrown IT talent
is expensive and scarce, companies are looking elsewhere to fill technology
needs.
They confirm that
offshore talent pools are huge and the talent is great. Coupled with one
of the first vendor developed client-server based system makes us the
best solution for smaller insurers. With over a combined 150 years of
extensive insurance industry experience and technology knowledge, we are
the only company that uses these same resources to provide solutions for
the smaller insurer.
This is an example
of a "case study" that could be helpful when choosing your partner
for the design a policy processing system.
Let's see how an insurance software company (ABC) stretches $400,000 to
1.6 million dollars for (XYZ) Insurance Company in true resources to custom-build
a system. What are you really getting for that cost?
Of that number, (ABC) will need $150,000 to pay for 3 people here in the
United States to work full-time for 6 months to cover payroll costs and
business overhead. Additionally, they will reserve $50,000 for communication
expenses and travel between the teams in the United States and overseas.
The net from that is $200,000 that will be spent on overseas development.
This amount that is being spent overseas has the ratio of 8 to 1 in terms
of purchasing power of equivalent or better IT resources that are available
here in the United States for similar development team. That $200,000
is the equivalent to 1.6 million being spent here in the United States.
Of this $200,000, ABC could reserve $100,000 for project management, profit
and backup for any unforeseen needs to guarantee the success of the project.
In order to deliver the project for (XYZ) in depth and scope, we believe
8 man*year resources is required.
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Traditional Mainframe Proficient Vendor
in USA
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Traditional Mainframe Proficient Vendor
in USA
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ABC with Mix resource
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Budget
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$800K budget
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$100K budget
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$100K budget for oversea team equivalent
$800K in USA
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Bigger team
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Building a team of 16 senior members,
at a cost of $100K/Year per person in USA, working full-time
for 6 month�s
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Building a team of 2 senior members,
at a cost of $100K/Year per person in USA, working full-time
for 6 month�s
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Building a team of 16 senior members,
at equivalent cost of $100K/Year per person in USA,
working full-time for 6 month�s
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Better people
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Building a team of 8 top talent members,
at a cost of $200K/Year per person in USA, working full-time
for 6 month�s
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Building a team of 1 top talent members,
at a cost of $200K/Year per person in USA, working full-time
for 6 month�s
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Building a team of 8 top talent members,
at equivalent cost of $200K/Year per person in USA,
working full-time for 6 month�s
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Results
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Resource enough, Cost too much: fail
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Under resource: fail
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Resource enough, Cost very effective:
success
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Conclusion
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Traditional Mainframe Proficient Vendor
can succeed the project safely at least with $800K - $1.2M. Otherwise
it is risky: they will lose money or they have to cut corners or
charge (XYZ) later with huge enhancement and support costs.
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ABC can succeed the project safely with
$400K
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So,
although ABC is cutting the cost's it is not at the expense of resources
being allocated towards a given project. Also, through the customized
building approach ABC can address many more feature requests that won't
come back as high billable changes later.
Here openFLEX is the ABC Company who can provide the benefit outlined
above to you!
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