This article is the first in a three-part series which will culminate in the release of a new eBook: How to Build the Business Case for Life Insurance Modernization.
In this installment, we’ll point out pitfalls and opportunities to watch out for in your modernization kick-off, based on our 25 years’ experience in the industry. Make sure to subscribe below to be notified when the next articles and e-book are released.
The need for modernization is well understood by Life Insurance executives. But the process by which modernization is achieved is complex. Projects can take 2-5 years to complete and costs can be significant. Choosing the right approach and the best vendor is not always easy—especially since few executives have a lot of experience with these types of transformations.
That’s why, after 25 years working on modernization projects, we’ve decided to share our experience and help organizations avoid the pitfalls of planning for modernization as well as offer some shortcuts to success that can enhance the process.
Step One: Set the stage for success—the business kick-off
In this first, exploratory phase of the process, both Business Executives and IT begin to informally gather information through online research, conferences, and talking with peers, experts or partners.
To ensure agreement amongst stakeholders and alignment with the corporate vision, it is important to define the overall strategy for policy administration modernization—then identify the key goals and priorities (e.g. increasing conversion or developing new products) which will guide the organization through its transformation.
3 Pitfalls to avoid during the kick-off phase
1. Lack of alignment on goals
A central question at the outset of any modernization is “What are we trying to do here?”
Business leaders and IT may have different goals, different visions, and may not be aligned on budget or timing. For example, the business leaders may want a modern PAS for all lines of business in a relatively short timeline. IT doesn’t feel they have the resources and instead suggest taking a staggered approach.
Or, different stakeholders may turn out to have differing views on issues like whether or not to migrate closed books of business and how much risk would be involved in doing so. For some companies, the issue of how and when to sunset legacy systems is contentious.
In any case, agreement on key issues needs to be established before progressing down the vendor selection path. Otherwise, evaluation criteria may not be clearly defined, making it hard to find agreement on which vendors to work with.
2. How to reconcile practical vs visionary goals
Some companies strategically focus on short-term, investments on smaller projects with well understood outcomes. For instance, regulatory changes like IFRS 17 or CCPA, which require immediate attention might mean working hard to keep the scope of the project small and containing costs.
This is at odds with a more visionary approach which seeks to bring the benefits of digital transformation to all products—which will entail undertaking a larger project executed over a longer time frame.
Companies that aren’t clear about which approach they will pursue, run the risk of falling prey to scope creep, increasing costs, loss of commitment or failure to deliver expected benefits.
3. Faltering commitment during the difficult days of a project
Goals and strategy need to be addressed, and the approach or plan agreed to by all stakeholders at the outset of the process. Otherwise, conflicts arise, unexpected outcomes and extraneous paths may be taken. Motivation and commitment to the end goal may falter if there are too many difficulties during the process and buy-in was low to begin with.
Even with buy-in distractions and new priorities often emerge over the duration of a project. Companies need to regularly monitor, manage and ensure continued alignment to goals and strategy in order to avoid deviations from the original intent.
Shortcut to success: Involve key stakeholders right from the beginning
Modernization projects are transformational. Their impact on an organization cannot be overstated. It’s critical to get buy-in from all executives so that the enterprise-wide benefits can be realized.
In many companies, the initial exploration into what modernization would entail and what options exist is conducted by the IT team. They may spend as much as a year or two gathering data on potential solutions. Not surprisingly, they tend to look at each new opportunity through the lens of technology—and in the context of the current state of the company’s IT infrastructure.
What gets missed, sometimes, is that the solutions available on the market are very different from one another and they all have gaps in certain areas. This means enterprises should have operations and business leaders involved from the beginning, so that all perspectives and business needs are considered during the vendor selection process.
Involving key stakeholders early in the search process helps set the right level of expectation for vendor presentations and demos. It gives everyone confidence that the selection team has considered everything that is available in the market.
Key questions to consider at kick-off:
- What do you want to get out of this project: revenue, cost savings, process/efficiency improvements, risk reduction?
- Do you have executive commitment?
- Over what time frame?
- How much will you spend?
- What is the scope of the modernization?
- Which product line or legacy PAS will you start with?
- Will you need to migrate your data to the new system?
- Are all stakeholders represented and involved at the outset of the project?
- Are you mapping out the communication and change management process to properly inform staff who will be impacted?
Putting it altogether
The initial business kick-off that launches your modernization process is critical to ensuring the success of your project. Make sure to involve all stakeholders in the process and define the scope of your initiative. That way, you’ll ensure that buy-in remains strong and deadlines don’t creep.
Armed with clear requirements defined during the kick-off stage, companies will be able to create more effective and efficient RFIs and RFPs—the subject of our next article in this series.
Read the rest of the articles in this series:
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Vice-President, Account Management
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