Does Legacy System Modernisation Get a Bad Rap?
At a time when legacy system modernisation is becoming a top priority amongst insurance carriers, a growing concern of project failure is forcing many CIOs to question the value and validity of these initiatives. In a recent Gartner survey, only 42 percent of projects meet the original budget and a whopping 82 percent take longer than expected. The study reported one horror story of a European life insurer that experienced an implementation that was 18 months late and three times more expensive than the original expected cost.
Not exactly the type of hype that entices a CIO to jump right in with both feet.
Yet, on the other hand, another research report by E&Y highlighted that 80 percent of insurance CEOs cited legacy technology constraints as the main inhibitor to digital progress. And of course, digital was the new market force that has been driving the massive change in customer expectations.
So what is a CIO to do?
When it comes to document system modernisation, there are some key steps – best practices – that will help smooth out the bumps of this seemingly rocky road.
1. Define your customer engagement business objectives. Business goals should drive your go-forward IT strategies and legacy initiatives – not the other way around. This is especially important as communication technologies have enterprise-wide impact.
2. Understand your market, customers, and competition—identify the desired future state. How you use customer interactions to build positive customer experiences will be a vital source of your competitive advantage.
3. Understand the available technologies. Gain a true appreciation for the limits—as well as the future-scaling potential—of enabling technologies.
4. Create a system and document architecture. Design what your solution should look like and develop your migration strategy. You’ll need to map your legacy products, processes, and underlying technologies to their counterparts in the new system.
5. Shop for best-of-breed software—shortlist the providers. Begin a more formalised, rigorous evaluation and buying process for the customer engagement solution that can help achieve your business vision.
6. Select a provider with insurance expertise and proven migration methodologies. What distinguishes market leaders is having migration utilities that automate extraction, conversion, and import processes, with no loss in legacy data, business knowledge, and accuracy. These capabilities accelerate time-to-deployment, reduce costs, and minimise operational risk.
7. Conduct proofs of concept for both software and systems. This is your reality check. Make sure that the software solutions that you have purchased (or are still evaluating) actually support the changes that you want to make in your business.
8. Create a roadmap. Develop a formal migration plan—with real (and realistic) schedules and milestones—that will drive your transition off the legacy hardware and software.
9. Begin with a small pilot project and test rigorously. Implementation should start with a small, manageable pilot project that contains as few unknowns as possible.
10. Maintain urgency about retiring legacy solutions. You should constantly communicate the progress and results of the modernisation initiative. Remember that clinging to the legacy system is not an option for most insurers.
Legacy modernisation and the automation that comes with it can save time and money. While some insurers may hesitate to migrate documents from legacy systems, the benefits of these initiatives far outweigh the negatives.
With a suite of integrated customer communications and controls, insurers can increase speed-to-market, improve accuracy and deliver highly personalised experiences across print and digital interactions across every department.
To learn more about migrating and modernising insurance legacy systems, watch our recent webinar with AM Best