No commercial sector will be left unchanged by the advances in technology emerging today, including the insurance industry. Customer acquisition, underwriting, policy administration, billing and claims—all of these have the potential to be improved radically by digital innovations. But with so much hype around solutions and approaches, it’s easy to get lost in the technology and forget that “going digital” should be—first and foremost—about creating business value. And that applies to all businesses, no matter the industry.
We’ve all heard the testimonials that cloud, mobility, social computing and advanced analytics will help engage customers and grow the business, but creating a strategy for investing in and implementing the right solutions that support your specific business objectives can be challenging. The good news is technologies and solutions that have the potential to transform the insurance industry are proliferating. The bad news is that the lack of interconnectedness between these technologies—their inability to speak to each other—makes it difficult to make fully informed decisions about exactly how to use them for the greatest benefit.
Digital transformations start with the creation of a “digital backbone.” This is the enterprise-specific architecture built out of cloud-based services, smart platforms, agile processes and automation capabilities that enable the kind of digital insights insurance firms need and the kind of interactive experience today’s customers expect.
But creating a digital backbone is not a one-size-fits-all proposition, especially when it comes to adopting cloud-based services. Many of today’s most innovative solutions are cloud-based, and determining where and how to leverage these solutions can make the difference in being able to take full advantage of the speed to market the cloud enables. Though cloud has proven to offer benefits to insurance companies, such as the ability to roll out new apps in a fraction of the time, it’s important to note the cloud is not always cheaper. Cloud pricing is highly sensitive to usage—the higher the usage of a public cloud, the higher the cost (and most likely higher than if deployed internally).
An important first step in creating a digital backbone is developing your cloud and platform strategy by assessing and modeling the utilization of your application portfolio workloads to determine which applications make financial sense to migrate to the cloud, and what applications to shrink or eliminate entirely by leveraging Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) solutions. A review of your application portfolio may reveal that an optimal deployment model is a careful balance between public and private cloud and your own data centers.
Digital transformations also require adoption of agile development processes and agile-based team structures. An agile team is made of up of representatives of both the business and IT with end-to-end responsibility for a single task or requirement. These teams create an ecosystem of resources that go a long way in enabling innovation and speeding delivery times. Because an agile-based team needs minimal supervision, it can operate with a higher sense of ownership and maturity with little dependency on others outside the team. The goal here is to increase speed to market, which is essential for insurance companies—indeed, all companies—hoping to gain competitive advantage.
Creating a digital backbone and transforming your legacy infrastructure into a cloud-ready, agile-enabled environment starts with answering four questions:
- What are my current costs?
- What applications should I keep, shrink or eliminate entirely by leveraging PaaS and SaaS solutions?
- What should I move to the cloud and what should I keep in traditional data centers?
- What’s the return on investment for my target future state?
Any insurance enterprise considering a digital transformation needs a strategy and an implementation roadmap that details the program timeline, service management design and other change management programs required to transform to the new delivery model. If you’re wrestling with your digital strategy, ISG can help. Contact me to discuss further.
About the author
Ray helps Financial Services organizations with all aspects of their IT, back-office, middle-office and customer-facing service alternatives. He is an accomplished professional with more than 14 years of Financial Services experience and is skilled in developing and leading offshore and outsource strategy and assessments, and implementing IT and BPO service agreements for large, multi-national corporations. Ray has expertise in assessing which functions are optimal to outsource, offshore or re-engineer through shared services and determining the associated savings opportunity. In addition, he assists companies in evaluating, negotiating and implementing ITO and BPO transactions and designing appropriate governance organizations to manage the ongoing operations. Most recently, Ray assisted a Financial Services firm restructuring its infrastructure managed service contract, which resulted in more than 10 percent cost savings. In addition, the company significantly enhanced its contract terms and created a pricing structure that allows for cost transparency and variability as its business changes.