CORE PROCESSES

Managing your insurance IT transformation

May 24, 2010

Introducing a new core insurance system is a complex process that is best managed in steps. Set the focus, achieve incremental goals, review the results, and then move on to the next stage of the project.

The decision to transform an insurance company’s core IT system is generally driven by one of two parties: the business owners or the IT department. While these parties may be in agreement on the changes that need making, it is also common that their views are in conflict. On the one hand, an expansive business function may be faced with an IT department burdened by an ageing system that slows down product development. Or on the other hand, an IT function that wants to introduce increased automation and online transactions may be weighed down by inefficient and rigid business structures that don’t support such a transition.

Because of these competing forces the company management team needs to decide early on in any IT transformation process exactly what the overall goals are. Does the company want growth on the business end, or does it want to save operational costs on the IT side? This decision sets the initial focus for the IT project – and maintaining focus is the key to implementation success.

Less is more
If the goal is business growth, then it is important to start small and set clear milestones. The project team should concentrate on developing just a single product, distribution channel, service concept or similar; and only once that project is completed should they move on to solving the next challenge. Combining multiple separate projects into a single large implementation should be avoided, as the projects may be in conflict and measured by different scorecards within the organization. Larger projects also run the risk of becoming unmanageable, leading to those involved in the process growing disillusioned and ultimately losing interest.

If the focus is on reducing the costs associated with an IT system, then the project team also needs to look at simultaneously changing certain internal processes. IT transformation is never only about the core system; it’s also about changing how things work in the company. Business processes need to be adjusted alongside the IT changes, or the result will be an over-customized system with compromised throughput. The original purpose of the project (i.e. reducing costs by improving processes) will have been defeated.

Staying agile
Whether the goal is business growth or IT cost reduction, open and realistic planning with the chosen software vendor is key. The project should be run according to an iterative and flexible framework so that priorities can be adjusted and goals met over manageable cycles. In general, the full implementation schedule should be no longer than a year, in order to follow the natural planning cycle of the company and prevent the work from getting slowed down by annual team and budget changes.

To conclude, IT transformation is not a linear process or a single, giant leap forward; it is a step-wise transition of learning, doing, evaluating and then moving on. This is the safest way to ensure that both business growth and cost-reduction goals can be met.

Read more about Profit Software’s implementation services.