Theres good news for insurers seeking to become more competitive and customer focused: Many of the persistent challenges related to core transformation have almost become non-issues. According to Celent, almost two out of three insurers have made progress on core transformation projects compared to 50 percent two years ago, and 25 percent four years ago.
Failure to transform core systems makes you vulnerable to a whole new set of risks, made critical by workforce issues and a radically different competitive environment. Continuing to operate in a legacy environment puts you at a competitive disadvantage compared to disruptive players such as Google, Oscar and many other new competitors. Legacy systems restrict the way you conduct business. You cant change business processes because they are limited by your systems. You are at risk of not having the right workforce to maintain them, as well.
Look Beyond Processes
Until recently, carriers believed their processes were what provided real business value. Adopting a standard process wasnt acceptable to them because they wanted to be unique. Insurers now understand that the process is not their key differentiating factor it is their products, pricing, and the customer experience they provide.
This is driving a subtle but certain shift in the industry. A few years ago transformation efforts were mainly IT-led. Today, business teams are spearheading transformation and innovation initiatives. They are setting up organizations to fuel this. This includes an increased presence of analysts within the business and business executives being an integral part of the development process.
With a number of developments in technology and shifts in the market, the success rate of transformation programs has risen, making these a less daunting task. Easy availability of software packages, innovative practices like Agile and DevOps, and the emergence of the concept of design thinking all are leading to more predictable outcomes in the transformation process.
Make Your Transformation Work
To ensure the success of your core transformation project, follow these seven fundamentals:
1. Set the Right Vision
Sometimes, management expects too much and the outcome is likely to fall short. Put in place the right governance in terms of having the right leadership for these types of projects. This may include setting up a business transformation office to serve as a liaison between the business community and other stakeholders, and IT and system vendors getting the organization ready for a transformation.
2. Dont Do Everything at Once
Break transformation into smaller pieces, with frequent deliverables, gathering feedback from users and avoiding huge potential failure points.
3. Define the Right Change Management Practices
The right program management practices, such as intermediate deliveries and collecting feedback from users, will help everyone in the organization adapt to new ways of doing things.
4. Establish a Roadmap
Things will change within a few years and you must plan for your roadmap to be flexible and able to accommodate such changes during the transformation.
5. Focus on Customers
Keep the user and customer experience and the whole customer journey as the focal point of your transformation.
6. Dont Rebuild Your Legacy System
Some executives are very focused on trying to replicate legacy processes and repeating what they already have. Transformation happens when companies reimagine processes and procedures for a new world.
8. Put the Right Transformation Team in Place
Be careful about involving individuals who manage current systems and processes. While they bring in organizational knowledge, they may insist on using existing legacy processes, as well. Cross-functional team members must have the right experience in technology, management risk and operations, along with a clear future vision so they can make decisions on the go and move toward the outcome. Work with vendors who have the relevant experience and capacity, scale, and best practices to boost your transformation effort.
The bottom line is that managing transformation is a core capability that all insurers should possess is your organization up for the challenge?