Business Processes: The Chicken or the Egg
Part of the push to improve core systems in the insurance industry is a greater understanding of how a
carrier operates—its business processes. A carrier saddled with legacy systems faces enough challenges
in life and failure to address business processes is just one of them. As carriers make plans for updating
their core systems, addressing processes needs to be one of the first steps of a long journey. Providing
insight on this subject are: Russ Bostick, managing partner, MVP Advisory Group; Gerald Shields, IT
practice director at The Nolan Company; and Martina Conlon, senior vice president of research and
consulting at Novarica.
What Do You Think?
This month’s question:
How have outdated business processes affected a carrier’s ability
to maintain and/or upgrade its systems?
MVP advisory Group
As with the chick-
en and the egg,
we ask, “Which
came first? The
or its automa-
tion?” In insurance,
the answer is the
birthed the system.
Legacy systems are highly modified,
often proprietary applications designed
to fulfill the operational needs of businesses in the 1980s and early 90s. They
are difficult to change and navigate.
The underlying legacy systems’
architecture generally assumes a volume of work that is much smaller and
doesn’t require as much specialization
of skill as what’s needed in today’s systems. To get around this issue, carriers
have built complex workflow systems,
portals, and a number of ‘surround and
connect’ technologies to hide these
In 2015, underlying assumptions
about work have changed dramatically.
It’s time to modernize the core system
and begin to accommodate a much
wider variety of configurable, responsive business processes that better
serve the needs of your business and
The nolan Co.
In many cases, out-
are embedded in
the system and the
know all the details
of the business
process. It’s diffi-
cult for the busi-
ness to articulate the business process
because the system has the business
rules and nuances buried deep in the
The legacy system is the process and
is the business rules. This impedes the
ability to upgrade or replace systems
because of the risk and complexity of
extracting business rules; often the processes’ logic is unknown.
As an example, in a recent design
session a business person emphatically stated how the business process
and rules were applied. In the same
meeting, another business representative vehemently disagreed, and
explained the business processes
They were in a battle of experts. As
a solution, I took the business scenario
and validated it through the system.
Both of the business experts were surprised at how vastly different reality was
to what they “knew” to be true.
change has a huge
impact on the busi-
ness and technol-
ogy decisions they
view change as risk
will be more likely to maintain the status
quo, while those that view change as
opportunity will embrace technology
innovation and transformation.
I don’t think resistance to busines-pro-cess change is what keeps insurance
organizations on legacy systems. More
likely they just aren’t in enough pain, they
don’t have the budget, or the executive
team doesn’t have the stomach for the
risk related to a big project at that time.
The tipping point for a typical insurer
is when the legacy platform constrains
key business strategy. The tipping point
for companies that are change averse is
usually when a change agent enters the
picture with enough vision and clout to
sponsor the transformation.
We see opportunities for revolutionary
change being driven by technical innovation, big data, and consumer expectations. Insurers that embrace change and
invest in agile platforms are positioned
for success going forward.