Policy system transformations are large, complex, risky, costly and downright ugly projects – but very necessary. Legacy systems are no longer able to support the flexibility and time to market necessary to compete in today’s market, and insurers are taking action.   We have seen activity peak over the past five years -- in fact, more than half of the insurers in Novarica’s research report that they are about to begin or are in in the middle of a policy system replacement.   We advise many of these insurers as they go through these challenging project and have observed several common themes on what goes well, what doesn’t go well and what ends up being downright ugly.  Some of these key lessons learned are provided below.

  • Own the project and manage your vendors. You spent months selecting the best PAS vendor and a good system integrator to be your partners through this project.  But remember, they may be best fit, but they will not be perfect.  Something will go wrong – whether it is optimistic estimating, inadequate requirements gathering framework, narrow focus, poor quality controls, or a shallow bench.  Failed or troubled projects are often a result of the insurer failing to understand the issue with their partners before it is too late to course correct.   Insurers that truly own their projects, not just govern the program or manage their vendor relationship, engage the vendor early to understand each phase of implementation and the details of how it will work.  Assigning roles and responsibilities, assembling project teams, establishing protocol for development and testing, and determining an inventory and accountability for deliverables are all crucial to ensure that the project runs smoothly. Insurers that open the hood to see how the implementation will work won’t be as surprised by mechanical issues encountered down the road.   
  • Thoughtfully embrace agile.Most insurers have adopted agile methodology within their organizations, often limited to internally developed applications on modern technology.  Agile is typically very good for insurers, resulting in accelerated delivery and better IT and business alignment.  Conversely, many vendors do not utilize agile methodology despite claims to the contrary. A few still apply a purely waterfall approach, while most use an iterative approach that is not totally agile. Even so, many vendor’s “agile-ish” methodologies are proven for implementation of their product and have some key strengths.   The best process employed will be a blend of your agile approach and the vendor approach that retains the key strengths of the vendor’s methodology.   Clearly defining the methodology and the tools you will use to manage work and provide project transparency at the start of a project can help reduce project risk and appropriately set expectations with the business community, the vendor, and the carrier IT staff.
  • Admire the forest before the trees.Many vendors and insurers alike have a tendency to dive down into detailed gap analysis or user stories without gaining consensus on big picture scope, process, and technology.  This often causes extreme “swirl” in the requirements process as SMEs try to articulate requirements without knowing the boundaries or the ultimate operating vision.  Early in inception or in sprint zero, the project team should develop and clarify the business vision, guiding principles for making decisions, high level to-be processes for key transactions, and an architectural blueprint that will govern development.
  • Solution architects are invaluable. Core systems implementation requires substantial cross-departmental collaboration and synthesis of different functions, capabilities, and technologies. But many implementation more forward with no one responsible for this.  Solution architects are critical members of a project team as they have a high-level, well-rounded understanding of the business and all technologies involved. They are able to take requirements and “solution” options for addressing the requirements through varying processes, capabilities, and technologies.  In a projects that demands enterprise coordination, team members with a birds-eye view of the business and technologies are critical.
  • Paving the cow path isn’t enough. Legacy processes work for legacy systems.  Opportunities abound to improve processes and adopt industry best practice in PAS implementations. Capabilities around automated rule execution, workflow, reporting, and analytics present the insurer with a new set of tools to improve.   Get advice from your vendor and/or analyst advisor on best practice and take advantage of the good opportunities these project offer.
  • Shortcuts should be assessed carefully. Insurers will likely take shortcuts at some point in the implementation process. However, it is important to cautiously anticipate which ones to take. Shortcuts around strategic capabilities like workflow, data and integration architecture can impede an insurer’s competitive agility in the future. It will be tempting to save three, six or nine months leaving out the master customer view, or only exposing a slice of the data for reporting and analytics, or leaving your workflow management in your imaging system. The reality is that shortcuts are necessary for some projects, but these decision should be made with full consideration of the cost of retroactively this capability in the future and the business impact in the short term.
  • It gets worse before it gets better. Here is the ugly: your organization will be exhausted and strained, and when you launch your first release into production, you will likely have more systems, business process variations and complexity than you had at the beginning.  Plan for this, communicate this, but know that it is temporary.  As your conversion completes and legacy systems and processes can be retired, the complexity will subside.

PAS implementations are complex, but we’ve come a long way as an industry.  Unlike 10 years ago, the vast majority of projects are successful.  Vendor solutions are more abundant and proven, insurers are better at integration and vendor management, and qualified SI partners are there to support us.   Implementations are typically successful, but not problem free.  Carriers who have successfully completed their transformations end up with a modern, flexible foundation that positions them for competitive advantage in the future.  

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