Core systems modernization remains the hardest
technology initiative that an insurance carrier will
undertake. Many of the functions core systems
perform are not visible and therefore not valued
by the higher levels of the company who approve
major technology spending.
They cost an arm and a leg. They detract from
the company’s ability to do other things. They
take years to complete. They are complicated
and hard to do well. They suffer from unrealistic
expectations. They are hard to cost justify. None
of these facts have changed, nor will they change.
On the good news side, as we have discussed
in the past, the vendors are getting better at
software development and delivery and the
third-party services available are growing and
varied. As I’ve said before, there is no better time
than now to undertake these major projects, but
I remain unconvinced the success rate of core
system modernization projects is as high as it
should be and I think the main cause for this is to
be found with the carriers themselves.
Historically, responsibility for project failures
was pretty evenly spread across the participants—
vendors that were less than honest, SIs that were
focused on billings, and carriers that didn’t know
what was going on. I believe the first two groups
have substantially improved and cleaned up their
act, but there is still too much evidence that the carriers don’t know
what is going on.
Depressingly, there is evidence that some carriers that made the
legacy migration journey in the past 10 years are unhappy enough
with the results that they are making it again with a new vendor.
One would hope these carriers come to the second go-round with
some hard-earned knowledge that will minimize the likelihood of a
third go-round at some future date.
I have been banging on (and off) for years about what makes
these mission critical projects succeed. It would seem to be worth
stating again, even though I thought we were beyond the “what
makes projects succeed” conversation.
Core systems modernizations, as I have said many times before,
are irreducible, complex, and difficult to pull off and I in no way
want to make it sound as if there is an easy prescription for success,
but the more I think about the topic the simpler the problem gets.
If a carrier does the
following three things
well there is a high
likelihood of a good
Choose the Right
I have argued recently
that the definition of
the “right” solution is
changing away from
being heavily function-ality-based to being
Vendor systems are
The More Things Change . . .
The technology may be newer and flashier, but getting a project done right
calls for a strong risk management approach.
By George Grieve
There is evidence
that some carriers
that made the
journey in the
past 10 years are
with the results
that they are
making it again
with a new vendor.