Insurance company bets health on open source

Software shift from data centre to desktop

I've been writing about the use of open source software in business for nearly a decade and during that time I discovered the level of interest in free software to be somewhere between non-existent to various point solutions for routine or mission-critical tasks.

It was therefore with pleasant surprise that I was invited to report on the activities of an independent Sydney-based health insurance company, IMAN International Pty Ltd, which has committed to an end-to-end open source strategy and is reaping measurable results.

The company's founder and managing director, John Braithwaite, has a long history in IT dating back to punch card machines and sees a similarity between now and 50 years ago when hardware came with free software.

When IMAN started in 1981, the company was using DOS and "everything revolved around Microsoft", Braithwaite said.

"All we operated with for 25 years was Microsoft and it served us very well so we can't complain," he said. "I saw the opportunity open source offered and it was time to make the move."

IMAN is a provider of health insurance services to people living in Australia under 457 visa temporary work permits.

There were two changes in the software and insurance industries that ultimately pushed IMAN towards open source.

Changes in Microsoft's technology road map meant legacy VB applications would need to be modernized with .Net and the Financial Services Reform Act (2001), which mandated a higher standard of data integrity for auditing purposes.

"Moving to .Net was going to cost a lot of money, so it was better to take the punt and use open source," Braithwaite said. "Microsoft was going to cost us $300,000 a year in licence fees, but with open source we only pay for development and have reduced operating costs to 40 percent of the industry standard.

IMAN spent $800,000 developing its core information system with local open source software development company Polonious, and adopted global BI with the help of another local provider, Bizcubed.

IMAN was not alone in that staff frequently used Microsoft Access and Excel to build up silos of information that was not visible across the organization.

"I realized open source had the potential to get a single view of the company operations," Braithwaite said. "Everyone lives in fear of the 'VP of No' in the IT department, so they build their own spreadsheets and this is becoming a nightmare for auditors."

IMAN, with $20 million in revenue, 15 full-time equivalent employees, and some 10,000 members, may be small by insurance company standards, but its breadth of open source software adoption eclipses even the largest of enterprises.

The company has even prepared a diagram illustrating what open source components it uses and what business processes they are used for.

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