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Life Core Systems Transformation: 10 Signs You’re Not Ready

Life Core Systems Transformation: 10 Signs You’re Not Ready

Just like it “takes two to tango,” it takes two to transform. Life insurers can’t (or at least shouldn’t) implement technology without applying transformation to the business. The business can’t make major operational shifts without incorporating technology solutions (thanks to decades-old, inflexible legacy systems). Though we often call transformation a journey, it is really a goal with a fixed destination. But with any journey toward a destination, we should make our first priority to prepare for the journey ahead. With that in mind, we identified 10 signs that are key indicators for life insurers that their organization isn’t ready for major transformation. We point these out not to suggest that carriers can’t or shouldn’t attempt a transformation, but rather to help insurers spot some of those areas of concern that should be addressed ahead of transformation. A prepared life insurer is far more likely to end up at their destination after a smooth and successful journey.

Sign #1 — Missing Business or IT Sponsorship

Because effective transformation includes core components for both the business and IT, failure to secure sponsorship from both areas will inevitably lead to problems.

Sign #2 — You Think It’s a Business Program…or You Think It’s an IT Program

If life insurers limit either the business or IT to a supporting function, it will miss the mark. Business and IT must share the driver’s seat. These efforts are joint efforts by nature. They will require both areas to work hand-in-hand with mutual commitment. It helps if there is a genuine mutual desire to see success from the other vantage point.

Sign #3 — You Don’t Have a PMO, or “Program” and “Project” are Used Interchangeably

If you or your team doesn’t fully understand the difference between a program, a project, and a Project Management Office (PMO), you are definitely not ready for a transformation. If you don’t already have a PMO set up and you’re contemplating starting your own transformation, you’re definitely not ready! There is a good chance that you will want to bring in program management expertise from outside the organization, because it is highly likely that no one in your organization has done something this big before. These transformations are programs made up of anywhere from several to many different projects that are interdependent and must be managed as such.

Sign #4 — Your Core Team is Part-Time and Focused on Their Day Jobs

While some roles in transformation can be temporary or part-time (e.g. subject matter experts, steering committee members), the core team should have the program as their only job. Your best approach will be to move these key team members out of their current roles and backfill with others experienced in their areas. After all, you’ll want your permanent team to be skilled on the new life core systems and processes at the end of the program. Next, remove team members from their cubes or office locations and relocate them to a different floor or building. This will help them avoid the (often unbreakable) gravitational pull of their old roles and responsibilities.

Sign #5 — You Think Your Implementation is Using Agile…or Waterfall

Agile can be confusing. To clarify, Agile is not an implementation methodology. It is a software development approach. You should use Agile concepts and an iterative approach when implementing software and you should use Waterfall concepts as you define requirements upfront to establish estimates for time and cost. Beyond that…don’t consider Agile or Waterfall an implementation approach.

Sign #6 — You Have a Perfect Implementation Plan

No plan is perfect. Don’t let that stop you, however. The right plan will assume some failures, but it will be designed for resilience, so that failures won’t sidetrack progress. Don’t let perfect be the enemy of good or great!

Sign #7 — You Want a Flexible System That Can Replace ALL Your Current Functionality

It almost certainly took 10-30 (some maybe more!) years to build out the functionality of your current life core systems (whether anyone remembers that or not). Replacing all of that life, annuity and health functionality will repave the cow path instead of building a new highway to navigate through today’s changing market. How long it takes from the time you start to implement a system to the time it fully meets all of your current needs is a useless metric, as in many cases your current needs will have changed by the time you’re done implementing. A new core modern solution will take time to meet all your business requirements, but it will never (and should never) be the same set of functionality as your legacy solution.

Sign #8 — You’re Looking to Buy “The Best Life Insurance Core System Out There”

One size does not fit all. Not every carrier needs the same core system, so they shouldn’t necessarily buy the same system. The focus should be on finding the solution that best meets your business needs, budget, implementation timeline, etc.

Sign #9 — Your First Production Release is Large or Includes Conversion

When you manage your implementation scope, you are managing your risk. Break the implementation down into manageable chunks. Avoid scope creep. Focus the first production release on a new life product, a lower volume product, or a simpler product such as mortgage coverage. Going live is the best way to find real business issues with the system, so go-live small and learn without the headache of negative business impact.

Sign #10 — You Know You’ve Budgeted Enough

We love concrete plans. We crave fixed costs. Budgeting is more fun for some of us than for others. The transformation budget, however, has the potential to break our hearts—or at least cost us our jobs. Transformation isn’t designed to overrun budgets and rewrite expectations, but large-scale programs have lots of moving pieces. It is easy to miss some when planning and budgeting. This CAN BE planned for ahead of time. Budget teams should attempt to account for ancillary applications, backfilling roles, delays, ramp-up time, infrastructure changes, scope changes and unforeseen impacts. If the organization establishes a realistic change management process, then expectations won’t be harmed as you gracefully handle changing requirements and associated costs. Or, you can see if your board really enjoys budget surprises.

Okay, we may not be ready. Now what?

Undergo an organizational readiness assessment and make a plan. If you haven’t done a transformation recently, you may need some help. Majesco can help you assess and talk through your options and take advantage of the Business Transformation Framework.

Assume the best, but plan for the worst. Build flexibility into your plan to allow for resilience through failures, big or small.

Proactively take steps to mitigate issues, rather than waiting to spot the signs. When you do spot signs of issues (and you will), react quickly and precisely…not with a knee-jerk reaction that may not be appropriate. Foresight and planning is the key.

Once you have built a resilient project structure and processes, leverage that flexibility to help deal with changes and issues that will inevitably arise during your transformation.

There are, of course, a hundred tips and tricks to knowing that you are prepared for a life core system transformation. The most important may be to find an expert partner that knows the pitfalls and benefits to various approaches, so that you know you are prepared to reach your destination by following a timely and cost-efficient path. The first sign that you are ready for transformation is an acknowledgement that your organization’s healthy future can’t be accomplished without it.

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