(Children’s Discovery Museum in San Jose, Calif., home of ISCS. Photo credit: LPS.1.)
Guidewire Software (Foster City, Calif.) announced yesterday afternoon that it had entered into a definitive agreement to acquire ISCS (San Jose, Calif.), provider of the SurePower Innovation insurance enterprise suite, as well as the SurePackage cloud deployment offering. Guidewire characterizes the acquisition as giving it the ability to provide a cloud-based, all-in-one alternative to its flagship InsureSuite aimed at small and mid-sized insurers. Guidewire will acquire ISCS through a cash transaction valued at about $160 million. Guidewire expects the deal to close within 60 days.
“We look forward to joining Guidewire and continuing our mission of serving P&C insurers,” said Andy Scurto, CEO and founder, ISCS. “The breadth of Guidewire’s offerings and the scale of its organization will enable us to provide additional value to our customers. We also appreciate the strong affinity between the companies in terms of focus and culture.”
The deal can be seen as the latest manifestation of a trend in core system market consolidation, according to Karen Furtado, a partner at research and advisory firm SMA (Boston). “ISCS has been one of the most successful companies for insurers looking for cloud-based applications and their associated benefits,” she comments. “The combination of Guidewire and ISCS certainly creates a powerful combination that truly reaches all sizes of the companies in the US P&C marketplace.”
A Firm with a Great Deal of Momentum
“ISCS a very successful firm with a great deal of momentum,” comments Donald Light, a Berkeley, Calif.-based Director in Celent’s North America Property/Casualty Insurance practice. “The acquisition breaks the mold for Guidewire acquisitions. Until now the company has acquired pieces that fit into a part of its total portfolio. This is a parallel full suite to Guidewire’s InsuranceCenter.”
In a Guidewire statement, the company’s CEO Marcus Ryu said that ISCS’s “technology and expertise will enable us to provide a new option to our customers and augment our progress in delivering cloud-based products.”
Guidewire’s InsuranceSuite 9 has been cloud-ready since last summer, but ISCS serves as a simpler and more convenient option for some insurers, suggests Neil Betteridge, Guidewire’s VP of strategy. “The packaging of the cloud-based delivery and software seems to be attractive to smaller and midsized carriers,” he comments. “ISCS has been quite successful in providing the software, the implementation and cloud hosting for their solutions, and I sometimes hear from them that they see [ISCS president] Andy Scurto as the one hand they need to shake, rather than having to deal with multiple providers.”
Betteridge says that Guidewire will undertake a branding and positioning exercise as part of the integration of ISCS into the company’s range of offerings. However, the value proposition he articulates implies that ISCS will function more or less with its current organizational structure intact. “Andy [Scurto] and Doug Moore [ISCS’s CTO] are strong leaders and key to success, and we look forward to working with them,” Betteridge comments.
In recent years Guidewire has significantly expanded its global presence, but for the near future Betteridge says that ISCS will continue to be focused on the domestic market. “However, Guidewire will assess opportunities to extend and adapt the solution to other markets,” he qualifies. “So, longer-term, we’re likely to take ISCS to other countries.”
Preserving ISCS Culture Through the Challenges of Growth
With Guidewire’s support, ISCS has a chance to grow, which Betteridge acknowledges will bring challenges to a vendor that has heretofore had relatively modest growth goals and a market proposition delivered with an unusually personal touch. However, he notes that when he joined Guidewire, it wasn’t much larger than ISCS is today.
“We have experience in managing through growth, and we’ll bring that experience to helping extend the number of carriers who can benefit from ISCS’s solutions,” Betteridge elaborates. “We have successfully grown the Guidewire customer community while preserving a great deal of the Guidewire culture and customer experience, so that gives us some confidence that we can similarly extend the customer community for ISCS’s solutions.