For any insurance IT executive, nothing is more challenging than migrating, upgrading or replacing a policy administration system. This assembly of functions, files, rules and workflows represent the very core of the insurance business.

Many policy administration systems in place today are a decade old or more, experts estimate, and there's good reason why these systems last so long: It takes a lot of work and resources to upgrade or replace them. And when that does happen, such efforts are "bet-your-career projects," says Frank Petersmark, VP of X by 2 and former Amerisure CIO. "They're that big. Policy administration systems are complex, because they're the gateway for information into an insurance company. It's a risky proposition that requires a lot of work, a lot of money and a lot of time. And you have to do all that while the train is still on the tracks. You can't go to your company and say, 'let's take the next year or two off so we can do the system for you.'"

Analogous to replacing a train's engine while moving at 100 miles per hour, IT managers need to carefully plan each step in the process. Here are 10 questions that need to be addressed as a policy management system upgrade or replacement is undertaken:

1. How do we sell the project to upper management? A project as complex and demanding as a policy management upgrade or replacement requires a compelling business case-replacing a system due to age is not reason enough. Proponents need to explain how the new application will speed up underwriting, or make it easier for customers to do business with the company. And executives need to hear how a new system will increase business, reduce costs, increase speed to market and ramp up, or better support the organization's business intelligence and analytics capabilities.

2. Who should be on board with the new system? All parts of the business need to be intimately involved with the implementation, because all will touch the new system one way or another, including underwriters, service personnel, sales managers and product managers. "Your impetus to switching might be to increase service efficiency," says Michael Miller, CEO of Brightway Insurance. "Guess what? It's going to dramatically change your whole sales process, too and your accounting process. It's going to affect all the departments of your company. Get the buy-in of the entire company, so that everybody is part of the process that is happening with them-not to them."

3. What will be the true costs? Given that a policy administration systems migration, replacement or upgrade is a large project with many moving parts, costs can quickly get out of hand. "Most enterprises have a sense as to what their systems cost to run, but don't really have a great sense as to how they connect to a larger ecosystem at a detailed level," says James McGovern, chief architect for insurance at a large integrator, and formerly enterprise architect with The Hartford. "It is not enough to know that a policy administration system connects to a rating engine or any other high-level concept, but to know exactly how many interface points there are with upstream or downstream systems. From a budget perspective, this gap almost always causes someone to have to go back to the pot for more budget allocation. As costs creep up, executives can enter an endless cycle of having to re-justify why they are doing this initiative. This causes the team to get further distracted from delivery." A strong enterprise architecture, in which a technology roadmap is laid out, will help rein in potential scope creep, he says.

4. Whose time will the project take up? Many organizations fail to consider the amount of time people will spend on the new system. "[Implementation contracts] don't include the cost of staff time, both IT and the business," says Donald Light, analyst with Celent. "There's a lot of time and effort that IT staffs have to spend making sure outside parties, vendors, understand the kind of systems environment they're being brought into, and setting up integration methods. Plus, if somebody's working for half time or full time on the implementation, who's going to do their day job?" The IT department itself may see a shifting of resources. At Amerisure, Petersmark helped justify new projects by asking if, and how many, IT resources would be freed up by the new system-resources that could "be rededicated to something that's more important to the company: developing a new product, getting into a new geography, creating a new portal."

5. Who is going to build the new system? Implementing a new system requires a stable of talent, which may need to be brought in from the outside. "Many companies don't have the talent they need, especially to run big complex projects, where you need people who have a big-picture overview, can communicate well and can be forthright about problems," Petersmark says. This was the challenge for Cornerstone National Insurance Co. COORoger Walker, who had to hire outside consultants to conduct user-acceptance testing. "We first thought we would be able to do it ourselves," Walker says. "That was a little bit of a curve ball, and it added a little bit of unanticipated expense to the project. We still came out overall. I think it's fair to say it always takes longer and costs more."

6. Who will be the best outside partner? The qualities of the vendor selected to provide technology or assist with the upgrade or migration can make or break the success of such projects. "You're not just buying a product," says Brightway's Miller. "Lots of vendors have similar products. It's the people backing it up. It's important to understand who's going to support you going forward. Are they going to have the right culture fit? Are they going to have the right types of solutions for you going forward? Pick the right IT partner, then pick the product."

7. What's the best way to keep the business engaged? Once a project is underway, the solutions team needs to stay closely engaged with the business side. At Cornerstone, agile methodologies-in which business and IT employees work closely to release iterations of the project-ensured successful installation of a new policy administration system, ISCS's SurePower Innovation Policy. "I think it would be a huge mistake to do it any other way," Walker says. "Agile is such a huge benefit because you have monthly deliverables, and it helps the organization track the progress, and get a comfort level with the project as it evolves. It alleviates a huge strain on the organization."

8. How will business processes be changed? Often, business processes build up around the systems and software in place, and it wouldn't make sense to replicate some of those ways of doing business with a new system. Plus, there may be resistance to the processes that accompany the new system as well. "The toughest part of any core system implementation is the process change that comes with it," says Petersmark. "So people have to actually change the way they do things. And often people don't want to change. Those are hidden costs. The impact and the cost of process change, which really means people change, is a big factor that isn't part of the equation up front."

9. How will existing data be brought into the new system?Policy administration systems touch many other applications across the organization, and often share data and workflows. "The transfer of information, data back and forth from new policy admin system to other systems has to be done correctly," says Light. Petersmark agrees, observing that "many people make the mistake of not thinking about data up front in the process. How much legacy data will go to the new system? Should you create a separate repository for it and keep it around? What about people to maintain it? These things don't get talked about up front." Another consideration is the role of the new system in business intelligence and analytics, he adds. "Carriers will get smarter in how they do business-underwriting, servicing, renewing-based on pulling data from the policy admin system into other data stores to apply analytics."

10. How will the new system affect current business rules? Many existing policy administration systems are two decades old, and many business rules are embedded in the core code, Celent's Light says. While new policy administration systems have highly functional rules engines, "someone has to understand and document what rules are already in place, and which rules are carried forward or eliminated. Depending how complex the rules in the legacy system are, it can be a complicated job." Light advises looking to systems integrators, some of whom have methodologies and software to address such questions.

Joe McKendrick is a writer and consultant specializing in IT, and a regular blogger for

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