with user defined configurations and extensions.
The other salient technical feature is the greater ease of integration provided by mature, modern core systems. The incorporation of XML and web services as well as the delivery of more
pre-built interfaces has significantly eased the task of integrating
the new system with other components of the application systems
environment. These features, plus aforementioned configurability,
provide the user with a more robust, readily implemented, and
easily maintained and enhanced solution.
Best of Both
Another key maturation feature in recent years has been the race
to the middle. Best-of-breed vendors, recognizing that an integrated implementation is sometimes favored by clients, have built
major additional functionality and have “put their solution in a
box” allowing it to be implemented as an integrated suite.
By contrast, the suite vendors have recognized that not every
client wants to undertake a full rip and replace implementation
so they have componentized their systems, essentially allowing
for a best-of-breed implementation if required. This best of
both development provides more software choices and more
implementation options to insurance carriers and is another
maturation sign on the part of the vendor marketplace.
Not only are vendors maturing in terms of the software they
build. They are also making great strides in the ways in which
the software is delivered and implemented. Ten years ago it
wasn’t unusual to deal with vendors that wrote decent software,
but were pretty horrible at leading their clients in successful implementations. It always stunned me that vendors could do the
incredibly hard task of building decent software and then fail at
the less arduous job of getting the software implemented.
To me this was a case of snatching defeat from the jaws of
victory. I think 10 years ago some vendors still thought it was
their job to build the software and the client’s responsibility to
get it installed. While it is true that many aspects of an implementation project are client-driven e.g. requirements definition,
user acceptance testing, and data conversion, the vendor must
be responsible for leading critical implementation tasks and
providing options to the client to support other project areas.
Some vendors simply improved their delivery capabilities.
Others developed partnership programs that allowed carriers
to contract not only for software specific skills, but also for program and project management, QA, integration, and conversion
capabilities. These developments, I believe, are behind a gradual
increase in the success rate of core system replacement projects.
As I have lamented elsewhere, it is very difficult to get
reliable statistics on how many projects succeed, how many
fail, and what these terms even mean. No CIO is interested in
publicizing a failure and neither are the vendors, so estimating
success rates is a dicey business.
Qualifiers aside, my take, based on talking to vendors, carriers
and analysts is that the success rate of core system replacement
projects is on the rise and seems to be sustained. I think the fact
that more carriers are undertaking legacy replacement projects
supports the perception that more projects are succeeding.
We cannot leave the topic of implementation success
without mention of one key reason for the perceived success,
and that is the wide adoption by vendors of some flavor of
agile methodology. The core of agile is to build, review, adjust,
and build some more. This simple formulation, which involves business users early and often, leads to better defined,
more accurately delivered software and allows the users to feel
ownership and promote in their respective parts of the business
operation. Agile has done away with the “look what IT has
done to us now” experience that was once so common.
Software Delivery Models
Another vendor maturation feature is the increased options
that carriers now have for how they use and pay for software.
Beyond the traditional license model there are lease options,
various premium- or transaction-based usage models, and
emerging SaaS and multi-tenant cloud options.
Perhaps the best indicator of maturity on the part of vendors is the
move, which I believe to be genuine by most vendors, toward a partnership rather than a vendor/customer relationship. More vendors
are committed to their clients’ success and know that is the only way
they will succeed. This partnership mentality is reflected in many
ways—contracts and pricing schemes that normal humans being can
read and understand; willingness to embrace pay-for-performance;
greater transparency in sharing roadmaps, issues, and solutions;
taking responsibility for guiding clients; and supporting carriers best
interests, even at the expense of short-term revenue.
Growing, growing . . .
If you take the key elements of better software functionality and
technology, improved software implementation and delivery, and
a genuine partnership commitment, it is apparent that the vendor
marketplace has matured significantly in recent years. While this
is great news for carriers we are nowhere near an end state. The
process will continue, driven as it is by competition. To illustrate,
let me leave you with a quote by an executive from a very successful vendor company when asked about his new job: “My new job
is to figure out how to halve the cost of a client implementation.”
Halleluiah, brother! ITA
(George Grieve is a popular writer and speaker on the
subject of insurance technology solutions and is the author of the book “Shop Talk.” He is CEO of the consulting
firm CastleBay Consulting. The views and opinions in this
column are those of the author and do not necessarily
reflect the views of the Insurance Technology Association
and its members.)