Modern systems provide increased flexibility, decreased time to market for new solutions, and the ability to better interact with our ever-connected world. Despite this, the decision to transition from away from existing platforms is not one that comes lightly for many insurers. There are several reasons why this change is so difficult to make, and often ends in companies choosing to maintain their outdated solutions rather than upgrade to modern systems. This article will walk through some of the strategies companies can employ to help aid in the decision-making, planning and implementation of modern insurance platforms.
One of the earliest mistakes that companies make when deciding whether to upgrade their legacy systems is defining the scope of the change. By considering too broad a scope, companies elect either not to change due to the size and risk of the project, or create an overly complex project that is bound for failure before it even gets started due to the size and scale of the changes. Instead, review your legacy system portfolio and try to implement a phased plan for upgrades. Prioritize your most business critical platforms and work with vendors who have fitfor-purpose solutions for your needs.
Creating a project plan depends on time and resource forecasting, and another common pitfall for insurers is to create unrealistic targets for the project. Whether it relates to specific project metrics (such as time or budget), or the ROI of implementing a new system, managers often create unachievable targets in order to create more interest, optimism, and in some case, executive buy-in. The reality is that all system upgrades are longer, more complex and have a longer ROI than we would hope for, and applying more conservative metrics creates a greater likelihood for project success. In fact, according to a recent Deloitte article focused on legacy system modernisation “The payback period on PAS modernization is longer than most any other technology investment… [and] Nearly one in four respondents did not know the payback timeframe for their modernisation programmes.”
Finally, a critical component to any successful project is establishing the right team. In our experience, all successful project teams have three core components – strong leadership with executive oversight, strong project management, and a strong network of subject matter experts who can dedicate the necessary amount of time to help educate and guide the project team regarding operations and help create the guideline for project deliverables.
When it comes to implementing a new core platform, it is important to establish a strong project governance framework at the start of implementation and adhere strictly to it. Clear lines of communication can greatly accelerate project deliverables, and correspondingly miscommunication can be one of the biggest sources of risk, leading to potential time and cost overruns.
Finally, one critical project accelerator that we advocate strongly for is to adopt, not adapt. This means that when you are upgrading from your legacy platform, rather than requiring the new software to adopt what you had done previously, adapt your processes to leverage your new technology investment. At NIS, we have spent over two decades building out the functionality of our core platform and with each new version that we publish comes new functionalities that our customers can implement into their operations immediately.
Working with external software vendors provides companies with the opportunity to take advantage of large customer bases and a regular product development cycle supported by the vendor, creating not only immediate value in upgrading your legacy system, but long-term, sustainable innovation with new functionality being constantly added to the platform.