Businessmodel of Sapiens

Customer Segments

Sapiens has a niche market business model, with a specialized customer segment. The company targets its offerings at organizations in the insurance and financial services industries.

Value Proposition

Sapiens offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by providing a wide variety of options. It has acquired more than six firms since its founding, including StoneRiver, Maximum Processing, Insseco, IBEXI Solutions, and Harcase Software. This strategy has enabled it to greatly expand its capabilities and diversify its portfolio. It now offers solutions in the general insurance, property & casualty, life, pension & annuities, and reinsurance & retirement markets.

The company offers convenience by making life simpler for clients. Its customer engagement platform generates significant information about a client’s individual customers, enabling the client to make more targeted offers. Combined with the Sapiens Portal, the platform also provides multiple touchpoints between client and customer, resulting in more opportunities for active contact and thus more cross- and up-sell opportunities. Lastly, the company’s automated marketing tools set clients up effectively for immediate “push“ and “pull“ customer interactions and saves them time.

The company has established a strong brand due to its success. It is a top provider of software solutions for the insurance industry. It has 2,500 employees operating out of over 21 offices across North America, EMEA, United Kingdom, and Asia-Pacific. It serves over 400 clients worldwide, including Eurolife, RAC Insurance, Aegon, Haverford, Aviva, and Hiscox.

Lastly, it has won a number of honors, including the XCelent Award from Celent for its ALIS Policy Administration System product and the highest scores in three categories in a Gartner report evaluating 15 life insurance vendors.

Channels

Sapiens’ main channel is its direct sales team. The company promotes its offerings through its website, social media pages, webinars, and participation in road shows, forums, and conferences.

Customer Relationships

Sapiens’ customer relationship is primarily of a personal assistance nature. The company assists customers in the following ways:

Support Services - These include the following:

• Standard Maintenance Agreement - Included in the basic support package. Covers defect fixing and upgrades of the core product.
• Extended Maintenance – A premium service consisting of a maintenance package customized to a client’s specific needs. Covers maintenance of the customer layer and can include defect fixing, system enhancements, and functional consulting.
• 24×7 Help Desk – Offers 24x7 support for customers in production.
• Onsite Support –Involves experts visiting clients onsite and providing tailored support services such as business analysis of new processes and features, set-up and configuration, knowledge transfer to customer teams, and end-user training.
• Ongoing Configuration and Administration –Enables clients to outsource system configuration and administration to the company’s experts. Training Services – Specific services include application configuration training, train-the trainer programs, customer layer development training, user acceptance training, IT knowledge transfer training, and deployment training. Formats include public classroom and onsite at client facilities.

Professional Services – Specific services include the following:

• Consulting – Includes performance evaluation monitoring and tuning, KPI/measurement development, business process evaluation and improvement, pre-blueprint evaluation, expert visits, project management office services, go-live readiness services, and change management.
• Project Implementation – Includes system set-up, analysis/design, development/configuration, and internal testing (performed remotely or on-site).
• User Acceptance Testing – Analyzes issues raised by end-users and determines their root causes.
• Migration – Loads and validates migrated data from existing systems into the company’s systems; specific services include migration data extract, migration data load, migration data reconciliation, migration data masking, migration data-to-data comparison, and business and systems migration strategy.
• Hosting – Provides server installation and maintenance from hosting service vendors
• Product Upgrades – Offers analysis, development, testing, and deployment of upgraded projects. Despite this orientation, there is a self-service component. The company’s website features a “Resources” section that includes the following tools: articles, white papers, analyst reports, case studies, eBooks, brochures, infographics, and webinars.

Key Activities

Sapiens’ business model entails designing and developing its products for customers.

Key Partners

Sapiens maintains the following key partnerships:

• Technology Partners – The company works with technology vendors to ensure its solutions are fully compatible and easily implementable with its clients‘ hardware and software platforms. Specific partners include IBM, HP, and Microsoft.
• Solution Partners – The company works with global and regional partners to offer full consultancy services and solutions. Specific partners include IBEXI Solutions and SAPRUN Group.
• Industry Association Partners – The company collaborates with industry groups and associations to advance the industry. Specific partners include the Association for Cooperative Operations Research and Development (ACORD) and Innovation in Insurance (i3). ### Key Resources

Sapiens’ main resources are its human resources, who include the engineers that design and develop its products, the sales employees that promote them, the training/consulting employees that provide instruction/advisory services, and the customer service personnel that provide support. Its consultants have significant insurance and technology domain expertise.

The company maintains important physical resources in the form of five research and development centers. Lastly, it has relied on funding from outside parties, raising $22.1 million as of September 2011.

Cost Structure

Sapiens has a value-driven cost structure, aiming to provide a premium proposition through significant personal service and frequent service enhancements. Its biggest cost driver is cost of revenues, a variable expense.

Other major drivers are in the areas of sales/marketing, research/development, and administration, all fixed costs.

Revenue Streams

Sapiens has two revenue streams:

• License Revenues – Revenues it generates from fees charged to clients for perpetual and term-based software licenses.
• Service Revenues – Revenues it generates from fees charged for support, maintenance, and professional services such as implementation.