Businessmodel of Guidewire

Customer Segments

Guidewire has a niche market business model, with a specialized customer segment. The company targets its offerings at P&C insurance carriers.

Value Proposition

Guidewire offers four primary value propositions: convenience, customization, risk reduction, and brand/status.

The company’s solution creates convenience. Being web-based, it frees users from the task of installing software on their desktops. Also, its web service APIs allow for the seamless integration of its applications into a service-oriented architecture and interaction with other application types.

The company’s solution enables customization. Users can alter it depending on specific needs and it can be used to support a broad range of operations. It also enables personalization by type of deployment – i.e., by region, functional area, and line of business.

The company’s solution reduces risk. Its programs are built in Java and also conform to the Java EE standard, which is the insurance industry’s preferred technology. Furthermore, Guidewire engages in constant clustering, caching, and performance-tuning to ensure that its applications can handle thousands of simultaneous users. Finally, the firm conducts over 120,000 tests during the development cycle, making the applications trustworthy and reliable.

The company has established a strong brand as a result of its performance. It serves over 200 insurance companies in over 20 countries worldwide. Prominent clients include AXA, Zurich, Nationwide Insurance, Direct Line Group, and PZU. It has completed more than 300 implementations, investing more than 2,000+ person-years in the R&D process (which it says is more than any other vendor has). Lastly, the company has won many honors. These include the XCelent Award in Celent’s annual “Vendor View” report and recognition as a leader in Gartner’s Magic Quadrant for P&C Insurance Policy Management Modules for two years in a row.

Channels

Guidewire’s main channel is its direct sales team, which is organized by geographic region. The company promotes its offering through its website, social media pages, publications in industry press, and participation in industry conferences. It also hosts an annual user conference called “Connections”, where customers deliver presentations on insurance technology subjects.

Customer Relationships

Guidewire’s customer relationship is primarily of a personal assistance nature. It maintains “Guidewire Education”, an education program that offers the following options to customers, employees, and partners: Onsite Training, Virtual Training, and Certification. It also provides general phone and e-mail support. That said, there is a self-service component in the form of Self-Study Training (self-paced online courses), as well as a “Resources” section on the company’s website that includes videos, webinars, white papers, industry analyst reports, and brochures.

Key Activities

Guidewire’s business model entails designing and developing its software products and maintaining and updating its platform for customers.

Key Partners

Guidewire maintains the following specific partnership programs:

PartnerConnect – A network of select firms that offer consulting solutions and services to enhance and complement Guidewire product capabilities. They are divided into the following groups:

• Guidewire PartnerConnect Consulting – Firms provide services such as business strategy and transformation, implementation, and associated delivery services. The program includes over 5,100 consultants worldwide who have expertise with Guidewire products. Specific partners include Capgemini,PwC, CastleBay Consulting, Cognizant, Deloitte Consulting, and IBM.
• Guidewire PartnerConnect Solution – Firms provide technology, software, and data solutions, in addition to insurance support services. They design and develop additional extensions, integrations, and other complementary solutions for the company’s products. Specific partners include HP Exstream, OnBase, Thunderhead, AgencyPort, LexisNexis, Mitchell, and DocuSign.
• Affiliations – Industry associations that offer resources to customers. Specific partners include the Association for Cooperative Operations Research and Development (ACORD), the Insurance Accounting & Systems Association (IASA), ISO, and DARVA.
• Infrastructure – Firms provide hardware and software technology infrastructure to customers they have in common with Guidewire. Specific partners include IBM, Microsoft, and Oracle. InsuranceCloud Solutions Partner Program – A program that authorizes specified Guidewire PartnerConnect Consulting firms to provide cloud solutions combining the company’s products with their own offerings and complementary third-party offerings in hosted environments. The firms implement and maintain the software. Specific partners include Capgemini, EY, FDC, and PwC.

Key Resources

Guidewire’s main resource is its unified technology platform, which serves more than 200 clients. The platform combines proprietary components and standards-based elements. The company depends heavily on its research and development staff to update and enhance the platform. It also relies on its training staff to provide instruction and sales/marketing staff for promotion.

Cost Structure

Guidewire has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent enhancements to its platform. Its biggest cost driver is cost of services, a variable expense that primarily consists of compensation and benefit expenses for contractors and professional service employees. Other major drivers are in the areas of research and development, sales/marketing, and administration, all fixed costs.

Revenue Streams

Guidewire has three revenue streams:

License Fees – Fees for term or time-based licenses, perpetual software licenses, and other types

Maintenance Fees – Fees associated with phone and e-mail support, bug fixes, and software upgrades and updates

Service Fees – Fees associated with professional services for software implementation, travel reimbursement, and training