What the SAP/SAS In-Memory Partnership Means for Insurance

The combination of in-memory computing and advanced analytics paves the way for big data solutions that could add speed to multiple insurance processing areas, including customer intelligence, risk management, price optimization and telematics.

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SAS and SAP have announced what the vendors have termed a strategic partnership to create a technology roadmap to merge SAS’s analytic capabilities with SAP’s HANA in-memory computing platform. Running SAS’s advanced analytics algorithms on HANA will give decision makers the power of real-time data analysis within their existing SAS and SAP environments, according to a SAS statement.Insurance Innovation Reporter (IIR) asked SAS and others what these capabilities might mean for insurance carriers.

Craig Beattie, Celent.

Craig Beattie, Celent.

Among the cross-industry benefits of the partnership, according to SAS, are the delivery of the combined benefits of the two platforms, while helping to eliminate data movement, duplication reconciliation. The vendors also tout the combined technologies’ ability to enable massive parallelization of computationally intense workloads, all in memory, enabling new “big data” solutions that were previously out of reach. SAP and SAS plan to launch a co-selling pilot to engage select customers with existing relationships with the vendors. The applications of the SAP/SAS platform are expected to target business areas that require a combination of advanced analytics running on an in-memory platform that will be designed to yield high-value results, such as customer intelligence, asset management and anti-money laundering.

As the insurance industry prepares to take advantage of the opportunities of big data, their challenge is not so much access to the data but being able to use it for making data-driven business decisions rapidly, according to Stuart Rose, global insurance marketing manager, SAS.  “By leveraging SAP HANA in-memory application with SAS advanced analytics insurers will be able to realize real-time data analysis on all their data,” Rose tells IIR. “Incorporating the analytical processes into the data and transactional environments minimizes data integration, eliminates data movement and avoids data duplication – thereby increasing data scientists’ productivity.”

Opportunities that the combined SAP/SAS platform creates for insurers include applications in areas such as customer intelligence, risk management, price optimization and telematics, according to Rose.

Maturing technology is opening up challenging analytical tasks that lie at the heart of insurance, and it will be interesting to see how two vendors who have invested in the vertical will turn their partnership into insurance solutions, observes Craig Beattie, a senior analyst with Celent.

According to Beattie, possible applications of the SAP/SAS solution could include timely solvency analysis – particularly for insurers operating in Europe facing Solvency II compliance – and running annuity models, which require significant compute power and time and could be sped up by in-memory capabilities.

“For insurers selling complex policies, quoting in a timely manner is key, and insurers keep adding things to that process, such as predictive models, pricing optimization, data augmentation, etc.,” Beattie adds. “For very complex risks, understanding total exposure at the point of quote is becoming a necessity.”

Whatever the long-term impact of the SAP/SAS partnership on insurance may be, it’s a little early to project shorter-time benefits, suggests Gartner VP and Distinguished Analyst Kimberly Harris-Ferrante. The first impact is likely to be felt by insurers using SAS business intelligence and analytics rather than fraud solution users, she says.

The combined solution using in-memory, “will offer higher volume and faster processing for companies that will be moving towards big data using the SAS solution eventually,” Harris-Ferrante adds. “That will help the tier 1 companies that are doing big volume and unstructured analysis, and those need faster run time.”

SAS’s Rose acknowledges that the first beneficiaries of running SAS on SAP’s HANA will be large insurers seeking to solve complex analytical problems. “However,” he comments, “as analytics and big data become more prevalent in the insurance industry, mid-sized carriers will require this high-performance analytical platform.”

 

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For over a decade he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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