The big boys probably don't have to worry too much--yet.
CS Stars, which is a unit of Marsh & McLennan, and Aon eSolutions, owned by Aon, have a formidable presence and dominate much of the market.
But the upstarts--Riskonnect and Origami Risk--are making waves by building their new systems on cloud computing platforms. This gives their systems some interesting capabilities that the established players aren't able to match.
What's interesting is that while Riskonnect and Origami are upstarts, they are not newcomers to the risk management information systems (RMIS) world.
Bob Morrell, who heads up Riskonnect, co-founded Risk Laboratories in 1994 when he was a sophomore at Georgia Tech.
Aon eventually bought Risk Labs and the RiskConsole RMIS that he developed. Morrell became chief technology officer at Aon, but left in 2007 to start up Riskonnect.
Bob Petrie was CEO of CS Stars from 1997 until he and his Stars' brain trust left in 2008 to start Origami Risk. So these newcomers aren't really newcomers at all. And that's got the established field looking over their shoulders a bit.
But the two are taking a very different marketing approach.
Riskonnect has teamed with Willis to resell the Riskonnect RMIS system as Willis DataWize--a move that catapults Riskonnect and Willis DataWize into position as the third brokerage RMIS system in competition with Marsh and Aon.
Origami is taking more of a free-agent approach. It works with brokers or businesses interested in an independent RMIS unaligned with one of the big brokers.
"The brokerage business is a very decentralized marketplace," Petrie said.
"There are hundreds of brokers that have clients that are looking for risk technology solutions that are unwilling to have their clients' risk data be available to a rival broker. Our model is really broker friendly."
Morrell and Petrie said they were motivated to leave their comfortable jobs atop Aon and CS Stars in part because of pleas from clients who were frustrated by both the high cost and the technical problems with the existing systems.
Why would startups have a shot at doing any better than the market leaders? It certainly helps that they get to start fresh with a clean slate and with no legacy costs to hold them back. As Petrie said, you can be revolutionary rather than evolutionary. The opportunity to build risk management information systems on the cloud is also an important factor. It's because of the cloud that the Riskonnect RMIS is so fast and so easy to use, Morrell said.
But Petrie added that the opportunity to start fresh goes beyond the ability to build a system that runs on the cloud. Petrie stressed the importance of elegant design as a factor contributing to ease of use as well. Petrie points out that a system can run on the cloud and still be poorly designed.
The new systems also come with a more affordable price tag. Prices may rise in time, but for the next year or two, there should be a significant price gap between the upstarts and the rest of the market.
Either way, the market wins by giving businesses new options and more innovation at lower prices.
PATRICIA VOWINKEL has worked for national media outlets for more than 20 years.
September 1, 2010
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