This article is the first in a series of three. It is abstracted from an upcoming article of the same name.
Deciding to buy a core system—whether policy, billing, claims or some combination of the three—is often a once-in-a-career event. It’s also a critical point in what should be both an IT and business transformation process. This is the first in a series of three articles that look at three major milestones in a carrier’s core systems transformation: deciding to buy, selecting the vendor and completing the implementation.
Having helped dozens of carriers with their buying decisions, we’ve seen firsthand how a particular vendor can make or break a core systems transformation project. The vendor selection process has been written about extensively, so there are just a couple of key points to highlight. First, unless you’ve been through the process before with a successful outcome, get outside help from someone with a lot of experience. Make sure your outside help is unbiased and vendor-neutral, understands your business and knows the vendor space inside and out. Second, keep the vendor selection process relatively high-level and quick. The clock starts ticking even as you develop requirements, and requirements do “expire” as business needs change. Over the course of a drawn-out vendor selection process, requirements gather dust and momentum wanes.
An often-overlooked step that carriers should consider even before choosing a vendor is to develop a strategy for the overall process, from sequencing the effort (should you implement billing first or claims?) to a high-level data conversion and/or integration strategy. While these factors could change based on the system(s) you select, they are important inputs into the decision-making process. These preliminaries also can be a great use of otherwise idle periods—for example, downtime on a frozen project when budget approval is pending.
Another essential step is to examine your business processes, whether before or immediately after the vendor selection process (or even in parallel to it). Look at your existing processes, your potential future-state processes and the gap between them. The analysis will accelerate your implementation efforts down the road while increasing the likelihood of project success. This step is critical to achieving an actual transformation rather than just a smooth system implementation.
Finally, carriers should build a business case for the effort, even if the project is deemed strategic and doesn’t require one internally. Doing so will encourage the development of metrics and benchmarks up front so that the results of the project can be tracked and quantified. This is important because insurers often consider “success” to be a project that goes live, perhaps factoring in whether the project is on-time and within budget. However, carriers rarely consider how well the transformation meets the business needs (not just the business requirements) when evaluating the success of the efforts.
This is a lot to consider, but remember that it’s just the beginning. In the coming months, we’ll look at what happens once the implementation starts. Needless to say, it doesn’t get any easier as the process goes on. However, solid planning can lead to a well-executed, successful project.
Chad Hersh is senior vice president at The Nolan Company, a management consulting firm specializing in the insurance industry.
Readers are encouraged to respond to Chad using the “Add Your Comments” box below, or by email at at chad_hersh@renolan.com.
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
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