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Building for the Future

Alignment, accountability and execution become the watchwords for the reinvented Applied Systems

By Nancy Doucette


Four years ago this month, Applied Systems Chairman and CEO James P. Kellner began rebuilding the then 21-year-old company where he had cut his insurance technology teeth. When he and his financial partners purchased Applied Systems on September 21, 2004, Kellner realized a dream that was 19 years in the making: He finally had the capability to take this good insurance technology company and make it great.

The first expression of the new Applied Systems is a completely new technology. According to Kellner, “It’s the automated system for the future of insurance agents and brokers—a system that is perfect for the needs of those professionals because they helped build it.”

In its 25th year, “Applied Systems is bubbling with enthusiasm and confident about what the company is achieving,” Kellner says. He adds that early indications are that agents and brokers are delighted with the company’s direction. But it took four years of soul-searching, tough decisions, and sometimes painful changes for Applied Systems to arrive where it is today—on what Kellner describes as “the threshold of a dazzling future for the company and its customers.”

Within months of acquiring the company, Kellner set about rebuilding Applied Systems from the ground up. With his eyes on the future, he recalls, he resolutely believed that if the company was going to provide automation for insurance agents and brokers to rely on for years to come, it could not rest on the successes of its first two decades. He notes that while the company had a loyal and growing customer base and a history of innovative accomplishments, it was now time to take a hard look at every aspect of the company.

“It was incredibly disruptive for a company that is perceived—and rightly so—as being highly successful at what it does in the marketplace,” Kellner says matter-of-factly. “It was a tough pill to swallow to have me come along and tell everyone that everything we were doing would be scrutinized and probably changed.”

Job One was to put the foundation in place on which the new Applied Systems would be built. Kellner says the bedrock of that foundation consists of three words: alignment, accountability and execution. “Everything we look at doing is considered in the context of those three areas before we put any energies behind it,” he explains.

Early on he says there was a lot of focus on internal operations, especially products and staff responsibilities.

At the time of the ownership change, Kellner notes that Applied was no longer doing an annual update for TAM, Vision or DORIS, the company’s core agency management systems. “Features of the Month” had replaced the annual updates to TAM and Vision. He says that while the Features of the Month did some “great things,” the short cycles limited what Applied could build.

“You can’t build anything really big in a month and get it out to 10,000 customers,” he acknowledges. “So we were inhibiting our ability to actually grow and mature product-wise.”

But before Applied could move forward, Kellner says the vendor had to fix the past. Because of the short development cycles for the Features of the Month, testing wasn’t as thorough as it should have been. As a result, customers were getting products with bugs.

He says another problem was that Vision was built but “not finished,” illustrated by the company’s inability to deliver Vision to the Canadian marketplace, where TAM is a mainstay. Initially intended to be a product for TAM users to migrate to as their technology needs became more sophisticated, Vision proved unwieldy. Eventually, Applied succeeded in making Vision a stable, reliable system but it never became the solution that most agents and brokers needed, Kellner says.

As a first step toward correcting these problems, Applied began telling customers they could trust three things about its products, people and services: alignment, accountability and execution. “We spelled out what our developers would work on,” Kellner says. “Number one was product defects. That’s hard for a software company to say—that your #1 priority is defects! You should never have that as your #1 priority. But we had to make the products stable.” By late 2004, updates addressing defects began arriving every 60 days.

As part of Applied’s reinvention of itself, it became more disciplined about delivering releases for its TAM, Vision and DORIS products. Annually, the company now targets all general releases for August so that Applied can launch an update just ahead of the Applied Systems Client Network (ASCnet) annual education conference, TENCon.

“Our ‘hungriest’ customers come to TENCon; they’re the heat seekers,” Kellner explains. “Those heat seekers also include the leadership of the 69 ASCnet chapters who attend,” he continues. “So they can all get introduced to the new features at the leadership level, then deliver that education en masse to the agency employees in their chapters—those who participate in ongoing education about their automation system.”

Staff accountability

As of September 21, 2004, TAM had a product manager, Vision had a product manager, and the auxiliary products (InScope, fax@vantage) had a product manager. “A person—not a department,” Kellner emphasizes. “A person was accountable. Imagine all the inputs from customers—what customers wanted to have done to those products—going through those solitary individuals. That Feature of the Month was all that those individuals could get out.”

Kellner notes that the first overhaul was in product management. “We created the Products group,” he says. “Using the Good to Great idea of getting the right people in the right seats on the bus, we wanted to get the right people working on the products. We tested everybody—personality testing and aptitude testing. It helped us see what we had in terms of talent, skills and personalities so we would know what we needed to add in terms of new hires. We ‘cherry picked’ our entire organization and built the Products group.”

Kellner reports that the Products group today consists of more than 100 people—quite a jump from the three product managers just four years ago. “The Products group manages all aspects of our products,” he continues, “so they have the analysis, the customer feedback loop, and the tracking of all the inputs that come from customers, support techs, and ASCnet chapters.”

Being able to “speak insurance” certainly helps the Products group do its job. To help in that effort, Applied hosts INS 21, INS 22 and INS 23, the Program in General Insurance, developed by the Insurance Institute of America. “I’m proud to say we have one of the highest testing rates, one of the highest pass rates, and the highest volume of employees going through the curriculum,” Kellner says. “We received an award from the American Institute for CPCU and the Insurance Institute of America for our pass rate. Nationally, about 76.8% pass the exam. Here at Applied, 94.7% of our participants pass.

“Our instructor, Kathie Cox, is a director in our Products group,” he says. “She was honored by the Institutes as an Outstanding Course Leader. Those taking the classes don’t get time off from work to do it. They want to do it.”

He adds that other departments are also pursuing the INS certificates. “It’s spread beyond the Products group,” he says. “Support and Training are taking the courses now. It’s a cultural commitment that benefits our customers. This knowledge helps our people do their jobs better because they understand our customers’ business. We’re big on knowing insurance.”

Listen, listen, listen

Kellner maintains that customers will tell you what you need to know if you’re willing to listen. “I was frequently hearing comments like: ‘The technology is getting more and more complex,’ or ‘The highest paid person in my agency is the systems person.’”

The Products group was getting input along the same lines. Darcy Waddell, supervisor of products, and John Silberman, supervisor of products, were also talking with Applied customers to learn what their three- to five-year goals were. It came down to four things: (1) to mitigate the operational risks associated with running a system, (2) to build a better book of business, (3) to build a bigger book of business, and (4) to improve efficiency.

The ownership change enabled Applied to assess where its products were headed. Taking the input from customers, observing the market and coupling that with Applied’s new R&D capabilities, Kellner says the vendor decided it needed to build a system for the future—one that would automate an office with ease without a lot of overhead.

“One of the things we wanted to do was to have a system that would work ‘thick’ or ‘thin,’” Kellner explains. “A ‘thick client’ gets loaded onto your computer, like Microsoft Office. A ‘thin client’ is like Yahoo! Mail. You get on via the Internet; it’s on their system.

“There’s a lot of operational expense to running a system,” he acknowledges. “We wanted a new architecture where the customer wouldn’t have to be concerned with installing software updates manually on every station in the office.

“We wanted a platform that would address the changes that come out quickly—like ACORD form changes. When we built TAM, we had to do 13 forms. Now there are 600-some.

“We also wanted to build a platform that TAM customers could easily migrate to,” Kellner adds. The new platform, unveiled at 2008 TENCon, will do all that. And the development team will keep adding new features. Applied kept the name of the product under wraps until it was introduced at the user group conference, held in Anaheim, September 9-12.

“We’re going to continue to ship software to agents, but we’ll also go in the direction of Software as a Service (SaaS) with the new program,” he explains. “You can run it on a LAN or have us host it. We can accommodate every agent and broker’s preference.”

Kellner explains that the new system “runs on the network—connected by the wire (thick client)—but you can unplug the wire, find a network in the sky (thin client), and you can keep working. That gives the industry portability.”

With the new system, Applied is setting its sights on a segment of the marketplace that Kellner says the company admittedly has underserved: the largest agents and brokers. “This is another area where it was painful to admit we hadn’t done a good job,” Kellner says.

“While many of the largest agents and brokers successfully use our systems, we knew we had to offer a solution that could satisfy the complex needs of more businesses in the large marketplace,” he says. Kellner notes that the new system will enable operational efficiencies, managed risks and reduced costs.

Doug Johnston, vice president of partner relations and product innovation, remarks: “This product really was designed by our customers, even though they didn’t know we were developing it. Those 100-plus people in the Products group were in customers’ offices, documenting specific features that we never documented before. They came back, shared what they’d learned, and we created this product.”

Kellner says that the Applied team is fiercely proud of its “build, not buy” approach to providing automation solutions. “Our talent, our expertise, our passion for delivering what the marketplace needs—those qualities are poured into our work,” Kellner says. “We build systems according to what will make agents more operationally efficient and profitable. We don’t shop around for what we think might satisfy agent needs.”

He observes that a key element of the home-grown philosophy is Applied’s own request process for managing program modifications. System users and Applied staff are committed to the process, which captures every inquiry and suggestion for improving the agency management systems. The process allows Applied’s Products group to evaluate every request and determine how it will be handled.

“The new technology platform is part of our new beginning,” says Kellner. “But rest assured, DORIS, TAM and Vision aren’t going away. However, this new platform affords our customers the opportunity to get on a system that is much more advanced than what they’re already on—one that will develop faster because it doesn’t have to address the legacy aspects of those older systems.”

“We want customers to migrate to this new platform when they’re ready,” he notes. “One of our key objectives was to architect the system very deliberately to provide an easy migration path for Applied’s current customers.

“What we have over-reaches anything else out there,” Kellner proclaims. “Architecturally it’s superior. It works for the little guy and the big guy. It’s easy to use. It’s low-cost to administer. It runs like a champ on the Web, which is what we wanted for the SaaS or ASP model. It positions us for the long haul and our customers for their future.” *


Previews of the new agency system platform for beta agency candidates began in November 2007. Beta candidates were asked not to disclose anything about the new system until Applied was ready to announce it. Darcy Waddell, supervisor of products, explains that the meeting room in which the previews were held is located in the middle of the product development area. “It’s the ‘Zen zone,’” she smiles. “The product development area is supposed to be quiet so the developers can concentrate on the code they’re working on,” adds John Silberman, supervisor of products.

Decorum went by the wayside when the previews were taking place because Darcy and John supplied participants with music buttons they could tap whenever they saw a feature they liked. “The buttons gave the participants a way to instantly express enthusiasm for something they were seeing in the system demo,” says Waddell. “The buttons made it possible to offer quick feedback, then we could stop and have everyone tell us what they were excited about.”

“Sometimes everyone in the room would be popping their music buttons at the same time,” recalls Elaine Mustari, controller for Twin City Group in St. Louis Park, Minnesota. The 24-user agency has a retail side and an MGA. She attended one of the last preview sessions and recalls pressing her music button frequently.

Her overall impression is that the new system will be more convenient to use. Her favorite function is the Distribution Manager, which replaces the Print button. The new system offers the option of print, e-mail or fax for each customer. And within that customer, the agency can further specify how specific types of correspondence are distributed. Invoices, for instance, can be e-mailed, whereas the agency newsletter can be sent via surface mail.

Sherry Burrell president of Grimes Insurance Agency, Inc., in Duluth, Georgia, admits it’s been difficult not to say anything about the new product since she and Personal Lines CSR Chivana Stephens attended a preview session in January. Burrell is also president of ASCnet’s Alabama/Georgia chapter and participates on a number of carrier technology councils. “It’s been fun to sit back and listen at these meetings,” she says, “hearing people say they wish their system would do a particular function, knowing that Applied’s new system will do that task.”

Burrell says she and Stephens used their music buttons a number of times. For them, the biggest time saver will be the drag and drop capability for attachments. “Attachments are probably one of the most time-consuming tasks that CSRs have to handle,” she points out.

Lisa Stagg, office manager for ProTECH Insurance Agency, Inc., in Houston, Texas, attended one of the first preview sessions along with another agency executive. “This is slick, awesome and totally cool,” Stagg says. Like Burrell, Stagg was wowed by the drag and drop capability. “If they hadn’t shown me anything else, I still would have said: ‘We’re in,’” she says, referring to the agency’s interest in being a beta agency.

“Overall, there are fewer workflow steps,” Stagg points out. “That’s the #1 benefit that this new product brings. People will be more productive. They’ll be able to get more done in less time.”




"We pour our talent, our expertise and our passion for delivering what the marketplace needs into our work."

—James P. Kellner
Chairman and CEO
Applied Systems, Inc.



Tim Sander, Applied’s vice president of IT (foreground), and John Silberman, supervisor of products, demonstrate that no degradation of performance occurs when the new system is running as a thin client.


Doug Johnston, Vice President of Partner Relations and Product Innovation, details how Applied Systems' new technology platform will evolve over time.


Supervisors of Products John Silberman and Darcy Waddell share the opportunity to demonstrate Applied Systems' new automated system to beta agency candidates.

Participants at the product previews used music buttons to instantly register their delight with the product's features and functionality.







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