Q&A with Ronnen Fischer, CO-CEO at Insurtix
Why are Insurers worldwide failing when trying to renew their legacy core systems?
Fischer: To understand the challenge in existing systems in insurance companies, one must review the history of these systems. Insurance companies’ information systems, are the result of centuries of pre-computer activity, based on written forms that are, in most cases very neatly filed by topic (policy type and unique number); not necessarily by customer, and not centralized by any criteria known to us today in current information systems world.
In the beginning, when information systems were being introduced to the world of insurance, many systems were born. Each system with a specific responsibility. Although each system was without the ability to communicate with each other, and thus a history of poorly constructed information in outdated systems was created.
The process of replacing a core system is a complex process – it requires, as mentioned, a potential replacement of almost all existing systems or at least the construction of a systemic process that embraces most of them.
How to approach such a process? Should a full mapping and construction of a work plan be carried out that will include the entire full process, or should an agile procedure be built, that can be carried out in a step-by-step procedure?
For such a long-term process, one must have a platform that can accompany it along with very few products (obviously core) that are designed in a way that they can accompany such an agile procedure.
It seems that failure lies on both sides of this challenge barricade – on the one hand “rigid” product companies do not know how to support a scalable yet flexible adaptive process.
On the other hand, an organizational culture that has difficulty building a long-term move while walking baby steps is costly and very time consuming if achievable at all.
What are the common mistakes?
Fischer: Mistakes in the process of any complex IT project result from both sides of the barricade:
First, on the part of the product
Second, on the part of the service provider, and
Third, on the part of the customer – the insurance company.
Very few software product vendors know how to provide a proven product along with a flexible service – Generally, traditional product companies are looking for a customer who knows how to use an existing product with minimal changes to the core of the product itself.
On the other hand, insurance companies over the year have created quite a few challenging subjective needs, including:
- exceptional products
exceptional agreements with reinsurers, agents, unique processes, etc.
- Exceptional unique procedures
The capabilities of a product supplier to supply a flexible product is essential. It must be designed out of service consciousness, along with an understanding of insurance product requirements. These requirements include, “opening the engine hood” of the product to adapt to a unique world of the customer.
On the other hand, the customer – the customer must also be flexible. Sometimes concessions (business as well as technology) will be required to promote, operate, and succeed.
In such a challenging bilateral process only a proven product company with many years of service and experience can ultimately succeed, and to find them both in the same vendor is rare.
Implementing new core systems often creates integration problems.
How do you think they can be solved or even prevented?
Fischer: Integration is often one of the complex mines for management and mediation.
Reinforced with over 20 years of experience in managing complex integration projects, the conclusion is clear; the ability to succeed is first and foremost in an honest, supportive, and trustworthy dialogue between parties! This may sound straightforward, but you often come across product or software vendors that make it difficult to cooperate, with diverse stakeholders who do not necessarily support integration and more.
In conclusion the biggest absurdity is that in most of the failed integration projects the technological component was not the main minefield.
Still, how can it be avoided on the integration mines?
At least one of the parties must be flexible enough and serviceable enough to know how to bridge the gaps, this is the starting point. Next, it is important to identify and harness the right factors in the organization at the right time, while delegating the right powers and defining a clear leader with authority for the process itself.
How can the software vendor help insurers with that process?
Fischer: A software provider with a high sense of service and experience in carrying out implementation and integration projects, will often be the key to the success of this process and vice versa. The ability of the software product to be flexible enough to support an assertive process of implementing and flexing the product for the benefit of the process is an equally important component.
When choosing a software vendor, there are several key considerations:
- The functionality required in the proposed software solution
- The vendor’s experience and professional knowledge
- Technological adaptability and flexibility for known changes as more will appear in the joint process.
Each of these components is a critical component to the success of a complex project.
What are the ways to gradually replace core systems?
Fischer: Success in a joint process of implementing an innovative solution in an organization, is not necessarily just the way to the finish as well as a path to the future. A core system is not a system of “implement and forget” but a system that requires the continuation of the assimilation process and changes even after the end of each and every stage. The ability to involve key people in the process, while harnessing them to joint success, while addressing their needs (which often change in the process,) whether in the process itself or in the continuation of the joint work is a critical key.
It is crucial that the system has the ability to change and support in the future innovative and changing procedures, as well as in a living and breathing business world.
You see this step as “Evolution”. Please explain.
Fischer: It is difficult to impossible to predict in advance all the challenges that will arise along the way, as well as the challenge to foresee all the needs and changes that will apply. Things change as life in the business world changes. It’s the understanding that these are usually organizations that also do not stand still – business / human and technological are all things to consider and be able to move with.
Therefore, in a system replacement project, both parties must understand together – customer and supplier alike, that this is a path whose end is known, but the connected path must be flexible and the ability of both parties to adjust along the way is critical.
A core system is a living and breathing creature and this is how it should be seen – a system that throughout its life the supplier must know that it must continue to support the customer and give him full alignment and adaptability to give the customer support to meet his changing needs.