To mitigate risk with large technology projects, experts suggest careful planning and on-going control of scope. There’s an old adage that advises: “Start small and be prepared to scope down.” Now, some data from the US and anecdotes from Canada suggest there may be one more piece of advice for success: “Be small, and be happy.”
We’d be interested in your comments.
Looks like size matters …
Analyst firm SMA is reporting that there has been progress in core insurance systems replacement. Quoted in Insurance & Technology, Karen Furtado, an SMA partner, summarized progress from 2011 to 2013: “On average, 24% to 31% of companies have a modern current system in place — over a quarter of the market has modern and current solutions in place. That’s good.”
In addition, there seems to be an interesting twist to this, relating to the size of the organization. One measure of core business systems replacement is the capability of retiring existing legacy systems. From that point of view, it appears that smaller organizations (under $1bn in assets), are rationalizing systems more quickly than larger counterparts. Two thirds of personal lines carriers have only one system. For carriers over $1bn in assets, the percentage with only one system drops 27 basis points to 40%.
But are they satisfied?
Furtado notes that the smaller organizations have a higher degree of satisfaction, noting that “struggling with the implementation actually is owned by the over $1 billion,” which includes business / technical scope, schedule, and budget. Moreover, according to Furtado, larger organizations have greater challenges with integration to other systems.
Small and happy in Canada …
We don’t have detailed data, but we have noted some smaller organizations which have had unique success in implementations. Last year, CAA Insurance (Ontario) implemented the Guidewire InsuranceSuite™, which included rating, underwriting and policy administration, claims management, and billing functionality. The really impressive part is that CAA completed all the functionality in parallel, including external integrations, in 14 months.
Let us repeat: All Functionality … In Parallel … 14 Months.
Earlier this month, Norfolk Mutual successfully implemented the Mutual Concept Computer Group’s Insurance Business Solutions (IBS) product for enterprise back office management. Not that they were competing with CAA, but the project, from infrastructure set up to ‘go live’ was competed in 9 months.
We take a ‘pregnant’ pause here: Go Live … 9 months.
What’s even more impressive, the MCCG solutions has been implemented by 28 other mutual insurance companies in Canada. Small can cooperate.
What do you think?
Smaller carriers have challenges in competing with larger insurance entities when it comes to capacity and scope. However, it seems that they have some advantages when it some to deploying core systems packages.
We’d like your opinion. Is it good to be small? Give it a little thought, and drop a short note below.