Most life insurers are in mid-journey when it comes to digital transformation. Initiatives have been underway for the better part of the past decade, and, when we look back at those projects that have been completed, what we find is a surprising amount of misalignment/unmet expectation or dissatisfaction with the outcome(s). Insurers with high expectations for everything from new customer engagement methods/tools to advisor enablement tools are finding that realizing maximum value from digital initiatives can be a challenge.
In many cases, these projects were touted as ‘easy’, low-hanging fruit projects, designed to be implemented quickly and to deliver value in the short term. Unfortunately, this approach often falls short because the initiatives were not conceived and planned with an enterprise view in mind.
3 ways to get more value from your digital transformation projects #
In order to realize the planned-for value of all digital transformation projects insurers need to adopt some bedrock principles that will increase the effectiveness of all future initiatives.
Begin taking a holistic approach to digital transformation #
Projects that have been executed in silos and not inclusive of the entire organization tend to , run into more challenges in QA cycles, result in delays and overruns, and deliver fewer organizational results… And thus don’t produce the expected value.
So, rather than implement new projects in isolation, insurers should envision and build an over-arching strategic plan for digital transformation across the enterprise. The plan would include solutions for all major pain points from all stakeholders. It would consider core systems, and digital sales and service solutions, as well as advisor and distributor solutions.
In creating an effective digital transformation plan, it’s critical for executives to engage all stakeholders and ensure everybody communicates their unique needs and understands how they contribute to the plan’s success. One sometimes unintended (but amazing) outcome of this exercise is a strong sense of the organizational benefit and cross-over benefits that each phase of the transformation brings to the company.
You want organizational buy-in? Start with a well-conceived/well-communicated plan. Within that overall plan the enterprise can prioritize upcoming projects and allocate resources accordingly with energized teams ready to lay the foundation for future success.
Reduce reliance on and complexity of legacy system(s) with a consolidation strategy #
Kartik Sakthivel, CIO, LIMRA/LOMA
Over time, most insurers evolve increasingly complex policy administration environments. These legacy ecosystems built up over time because of new product initiatives or M&A activity have created a disconnected landscape of siloes.
A map of data islands unable to communicate with each other. These isolated pockets of data make it difficult to provide customers with the same type of smooth digital experiences they enjoy in most other industries. And yet, many insurers choose to either kick the modernization can down the road year after year, or they choose to paper over the cracks with patches and upgrades.
Keith Raymond, Principal Analyst, Insurance, Celent
Every year, this increases the gap between the fully digital and mainly manual. And it’s hard to get the most from any new digital initiative when it is delivered into an IT environment where connections are difficult, interactions don’t happen in real-time, and most data is inaccessible.
It’s fundamental to the success of the overall digital transformation, as well as each initiative within it, that legacy systems be retired and policies consolidated onto modern solutions.
Focus on data as the Foundation for Digital Transformation: #
Rather than focusing on isolated digital initiatives, insurers can increase the chances of project success by taking a holistic view of the entire insurance value chain. As part of this panoramic view it is important to prioritize data as a central component of your transformation efforts and investing in its management, quality and effective utilization.
Addressing Data Quality and Efficacy Challenges: #
Historically, the insurance industry has treated data as a byproduct rather than a strategic asset. For the sake of application entry efficiency, the industry made many decisions that were “data minimalistic”. If you enter ONLY what you need, you can move the application or process along quicker. This mindset poses challenges when attempting to make better risk decisions. For example, many organizations are having to rework their data strategies when implementing artificial intelligence (AI) and machine learning (ML) initiatives because the outputs from those applications are found to be only as good as the data being fed into them. Thus, the need to think data first!
To extract maximum value from digital transformation projects, insurance companies must embrace a data-centric approach. They need to find ways to bridge the gap between their siloed legacy systems and the broader digital ecosystem, ensuring seamless integration and alignment of data assets.
When an organization puts in place foundational data principles like adopting robust data management practices, retiring old core systems, inter-connecting systems with APIs and using new event driven integration techniques, they are poised to leverage new digital solutions. These solutions are much better positioned to provide maximum value and are implemented leveraging new tech and old data that is effective and operationally meaningful.
Laying this type of comprehensive data framework benefits all digital transformation initiatives. It increases the value generated by each one by producing actionable insights, optimizing processes, enhancing customer experiences, and accelerating the development of innovative products and services.
Wrap up #
When digital transformation projects are approached as isolated events they are far less effective than when they are conceived and executed as part of an over-arching transformation plan. Maximizing the value of each initiative requires a strategic approach that recognizes the importance of building a foundation for all future development and growth by modernizing core systems and focusing on data.
Successful organizations understand that digital transformation is not just about implementing technology, but to gain organizational participation and buy-in, emphasize the importance of reducing complexity, and the immense value of data in order to better align the benefits of transformative efforts. These companies are on a holistic digital journey that empowers them to make informed decisions, drive innovation, and deliver superior customer experiences.
To find out more watch the Tackling Your Legacy Challenges: Holistic Digital Transformation for Insurers webcast