There is tremendous demand for growth and innovation in the industry these days. And there is a lot of emphasis the the critical role that modern technology plays in meeting this demand. Is the reality bearing out the demands put on technology? And, if not, what can we do to improve our results?
Theory and Reality of Policy Admin Systems Replacement
Policy Administration Systems replacement projects are frequently sold on the basis of supporting growth and profitability by:
- reducing time to market for new products,
- improving underwriting results, and
- reducing costs by creating internal efficiencies.
A recent survey conducted by Novarica suggests that Policy Administration Systems projects are not producing some of the benefits that might be anticipated by our plans.
Justin Stephani, writing in Insurance Networking News, notes that the Novarica survey found that improving speed to market was the only category where mid- and large-sized insurers found improvement as a result of the implementation. Other areas, including underwriting results and maintenance costs did not show improvement for the majority of insurers. Moreover, the report suggests that there are potentially hidden costs, with about 50% of total project costs coming from internal services.
It seems that the reality is not aligned with the expectations.
Better Estimation and Requirements of Growth
So what, if anything, can we do to improve alignment? A recent post on the Harvard Business Review’s blog offers some interesting insight. The author, Scott Anthony, from global strategy and innovation consulting group Innosight, suggests that demands of our planning processes might be subverting our final plans. Anthony writes “To get through the corporate approval gauntlet you have to project big numbers. Then early results disappoint.”
This sounds like the pattern that is described in the Novarica survey. So what can be done?
First, Anthony suggests that we take available data into account. Certainly the Novarica data will benefit us there.
Further, Anthony also suggests that growth, derived from innovation, requires unique consideration. He advises that there are three critical questions that need to be addressed:
- Are we following best in class approaches to ensure that we identify and accelerate our best ideas?
- Do we need to increase the amount of resources (both human and financial) we are investing in growth?
- Do we need to increase focus on acquisition as a growth strategy, at least as a way to “buy time” for organic efforts to develop?
This looks more like business transformation than systems replacement. While we see modern technology as important basis for supporting growth, it may not be the only critical element in the equation. We may need to fund innovation and growth as a separate initiative.
What Do You Think?
What’s been your experience? Are we putting too much emphasis on systems as we look for improvement and growth? Leave your thoughts below.