Reflecting on GGY

The recent announcement of the acquisition of GGY by Moody’s has caused me to reflect on why I originally purchased the GGY Axis system and why I have remained a fan of their business for so long.

Why I selected GGY Axis

In 1997, I started a new role at Foresters. We had several systems for pricing and valuation, depending and jurisdiction (US vs. Canada) and product line (Life, Annuity and Universal Life) and we were in desperate need for consolidation. Consolidation made sense as it would software more manageable and cost effective, with the added benefit of making staff rotation easier. I was new to Canada and so was given a list of companies I might want to talk to; here are the ones I remember:

• Eckler — I can’t even remember the name of the software, something written in APL,
• E&Y — AVE and its sister product MARIA — nice name, but nothing about the product stuck with me,
• Mercer — a new system that was not actually ready,
• Tillinghast — we already used TAS for pricing and Tillinghast claimed it would work for valuation.

To this list I also added Prophet, at the time this owned by Bacon and Woodrow in the UK, but they were interested in working with us to pilot it in North America.

Some people also believed we should build our own system, but I never took that suggestion seriously.

I started the selection process with the good intention of involving as many people from the areas that would be affected as possible. Meetings and demos were painful — vendors showing us code and explaining that we could “inject code” as in the system is not really finished. The Eckler meeting overrun by several hours; an over-enthusiastic actuary wanted to show every detail of the system which he appeared to have developed every single line of code for. Realizing this was a non-starter, I remember leaving that meeting after 2 hours, but rest of the team stayed on to see more; at this point I realised it was not going to be committee decision.

I was about to give up on the idea of having a consolidated system, when someone mentioned GGY to me. But there was caveat “I’m not sure if they do annuities” they said, I also knew of GGY as their system had been the foundation of the UK Tillinghast system TPS — this system was the market leader in the UK, but at that time was looking a little dated.

Anyway, I made the trip up 5001 Yonge Street for what I expected to be the fifth or sixth sales pitch that month. But everything was different…

Firstly, the GGY system was much more comprehensive than anything else we had seen and, contrary to suggestions it supported every line of business.

Secondly, performance (easily measured in terms of processing time per 100,000 policies) was far superior, not only to the other systems we had seen, but also to the Tillinghast TPS system I was used to. This was explained as Tillinghast had continued to add UK functionality to this system while GGY had continued to develop the system in all areas.

Finally, and most striking was the company. They approached the system as software, not an entry to consulting — the system was continually being updated, training was provided free and suggestions for enhancements were taken on board. This may sound normal today, but in 1997 this was not the way actuarial software was sold.

About an hour into the presentation that was planed for two hours I had made the decision that this was the system we were looking for. Not only did it exceed our requirements, but every other system we considered now looked even worse in comparison.

This decision was not so quick and obvious to everyone. Other team members argued in favour of other systems, perhaps we should evaluate two systems, etc. The software “black box” argument came up; people actually argued that they needed to see the source code as if their review of the source code would give me confidence in the system. I had recently been involved in the implementation of a large administration system and sales illustration systems, in the process I learnt a lot about quality assurance testing — in short, reviewing source code is not part of this. In fact, the Axis system was the only system that actually gave us output we could test.

The next few months were strange thing as it appeared that GGY were still in sales-mode. It turned out the great support and responsiveness continued and it was not just during the sales cycle; although I was asked how the trial was going about a month after the implementation had started — in my mind it was not a trial.

Ongoing Support

Almost 20 years later Axis is still used at Foresters, and so far it has survived my tenure there by almost 15 years. The system has been upgraded with changing technology and supports new requirements, such as products and regulations. As I mentioned earlier, the competitors we considered during the selection process are only memories and ones that are hard to recall at best.

It is incredible to think how GGY became the dominate market leader they are today:

• Starting with 3 individuals and some software that was planned to be used to support consulting, to an organization that doesn’t do consulting.
• Established successful partnerships
• Entered new markets
• Pioneered technology such as grid computing.
• Established a business philosophy that embraced the values people look for in a great company.
• Grew though the growing pains of adding early employees, passing the threshold where the founders can’t be involved in every decision

Acquisition by Moody’s

I guess the question that everyone wants to know is will the Moody’s acquisition change the GGY customer experience. Not only is the company culture well established, but the evidence from everything GGY has done is that they do it well; I expect this transition will be no exception.

Furthermore Moody’s is just about the best possible suitor — alternative acquirers such as the large consulting firms have struggled to keep businesses such as software and consulting distinct — understandably so, if you have a consulting business wouldn’t it be natural to charge for training?

Will GGY change? GGY has demonstrated that it will evolve and change as necessary. It has grown to the point that that the original founders can let go of the reins, but at the same time they don’t have to.