This article was originally commissioned for the Oct/Nov 2014 edition of the Actuarial Post.
When it comes to buying technology solutions, many life and pension companies have a history of partial successes. Despite rigorous purchasing processes, when the solution was implemented, problems occurred that resulted in over-runs in terms of time, budget or that resulted in a reduction in scope. Far too frequently a process that was started out in great anticipation ends in disappointment and cynicism.
Whilst sometimes this is due to unreasonable level of expectations which may have been encouraged by the vendor, often it can be that the organisation hasn’t geared up for the change properly and focused on getting the most out of the new solution.
There are a number of key areas to be addressed if an organisation is to get the maximum benefit from potential suppliers of software solutions.
First, everyone involved in the process needs to be clear on the strategy that the company wishes to follow. If your company is buying a solution that will enable it to transform its processes and interact with its customer base in a completely new way, then as a group all the people involved need to have a unified view of how they see the business operating.
Secondly, everyone needs to be open to new ways of doing things. When judging a potential solution ask yourself; does the solution support the delivery of service to your customers in a way that aligns with the corporate strategy? To this end, it is vital to keep an open mind when reviewing information or demonstrations of the proposed solutions as the vendors may be able to provide better ways of achieving the corporate strategy than was specified in the original requirements. Software providers are closer to the cutting edge of technological advances and their systems may well embody new features or processes that will allow you to reach your goal in a quicker or more cost-effective way. In this case, it is important not to be too prescriptive of your needs and focus on what the company is trying to achieve, not how it should be achieved.
Finally, there is the all-important issue of future-proofing. Of course, no one can gaze into a crystal ball and see exactly what the future will hold, so some of the requirements that appear vital at the start of the process may turn out to be unnecessary. And there may be some future changes to the way people interact with technology or business that are impossible to forecast at this point. In this instance, the key is to make sure that the technology is rapidly adaptable and can be easily and cheaply manipulated to achieve new aims.
This is where you need to keep the long-term goals of the company to the forefront of your mind. Some solutions may seem to provide everything that you want but may turn out to be difficult to change or expand when market conditions change.
The key to this lies in the architecture of the system. You need to select systems that are clearly able to adapt so that their future unknown requirements can be delivered. This sounds like a difficult area to check, unless one is very technical but there are ways for non-technical people to satisfy themselves of this capability.
Most system providers claim that their system is component based and adaptable. If it is a truly component-based system, it should be possible for the providers to show the functionality in a number of configurations and to demonstrate the re-use of individual components across radically different areas of the solution.
To that extent, the team should try to avoid being overwhelmed by a glossy front-end that seems to have all they could need; that is important but even more important is the ability to cope with the known unknowns that are coming. Remember, there will always be a need to change life and pension solutions, at the very least because of the constant changes demanded by the industry regulators.
If the product needs some development for the implementation, the need to build some new features as part of the process should be seen as a positive rather than a negative, as it gives you a chance to put the vendor through their paces and understand at an early stage just how adaptable the system is and, as a bonus, just how expert the provider is at making changes to the system. If this can be managed during a proof of concept stage, you get to understand this before committing yourself to the purchase.
Future proofing is not just about the technologies, however. It is also about how rigidly the system is in terms of its design. Is it a client centric approach and are the entities re-usable across the system? Is it designed to ensure that data is only held in one place and therefore only needs to be updated once, even if it is used in many functional areas of the solution?
These are the kind of things that need to be flushed out during the selection process in order to be as sure as you can that the system is as future-proofed as possible. For although it is impossible to always be ready for the next big thing – I mean who except Steve Jobs spotted that tablet usage could become this popular – nevertheless you have to be as prepared as possible. And ultimately that means having systems and processes that are flexible and can be adapted as the world changes in order to keep your company at the forefront of the industry.
Actuarial Post is an online publication offering actuaries insight into the market, an extensive library, news and the latest job listings. With a dedicated comment section; the most talked about topics in the actuarial market are discussed by actuaries dealing with the issues on a daily basis. Articles focus on the latest trends changes in regulation and the areas of pensions, investment, life and insurance.
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