I’ve had cause recently to pay closer attention than
usual to the various segments of the IT services
marketplace. Usually my focus is on software vendors but a major segment in our core insurance
eco-system—and a key part of the success story of
generational systems improvements—is the role
of the services vendors.
In the June edition of ITA Pro, I wrote an
article titled “Execution Wins,” which traces the
outlines of one key fact about the legacy transformation marketplace: It’s getting to the point
where the decision on vendor software (given
reasonable assumptions) is less important than
the decision as to how to staff and execute the
implementation project. As the software solutions
marketplace matures and systems are generally
more capable the differences between vendor
offerings is less vital and the ability to execute
becomes even more important, both relatively
The ability of vendors to execute may now be the single most
critical factor in the success of a complex, core system legacy replacement project. And that ability to execute relies on two key factors—
plans, methodologies and other vital and repeatable intellectual
property, and qualified staff. Staff come from three sources—vendor
staff, carrier employees, and third-party services consultants. The
consulting market took off in the mid to late 1990s with the huge
bubble of work create by the Y2K issue. That was followed by the rise
of the Asian offshore/onshore vendors, which fueled a buyers’ market
of reasonably-priced, well-trained IT resources.
Initially these resources were hired en masse by large insurance
carriers to support their ongoing core systems development efforts.
In the same timeframe we saw the rise of the vendor-sourced legacy systems replacement wave in the insurance field. This created
a major resource shortfall across the industry and stimulated the
growth of a whole new tier of low cost, onshore providers. Fast
forward to today and a carrier is faced with a number of choices as
to how to staff and manage a major project.
Software vendors approach the market differently. Some
vendors are focused on software sales and minimize the number
of consulting staff and implementation functions they perform,
concentrating on those specialist, software-related functions such
as complex configuration and integration functions, which are
needed to ensure the implementation is technically correct.
usually have a more
or less formal partner
program that provides
the needed implementation services. Other
vendors perform a
wide array of implementation services
and require minimal
Often this differing
stance reflects the
ownership and organization of the vendor.
Publicly traded vendors know that pure
software sales drive
significantly higher margins and stock valuations than services
work and control the size of the revenue stream from the latter.
In-house staff numbers and capabilities vary depending on the
size carrier and the associated size and sophistication of the carrier’s
IT shop. Generally, the key roles in-house IT should play are
based on the fact that no other group in the replacement eco-sys-
At Your Service
Successful projects today rely as much on service vendors and systems
integrators as on the software itself.
By George Grieve
key roles in-
house IT should
play are based
on the fact that
no other group in
criteria as well.