With any transformation project, obtaining a return on investment is important, but so too is the objective of lowering your total cost of ownership (TCO). Whether an insurer is modernizing with an eye towards efficiency or service capabilities, their business case must account for more than the initial planned investment and projected implementation costs. All too often insurers enter a transformation project with a set of established goals in mind but fail to think about the long term costs associated with these projects such as data conversion, maintaining legacy systems prior to sun-setting and core upgrades. With that in mind, here are the six key areas you should consider during a transformation to help lower your TCO.
Self-sufficiency: Self-sufficiency is generally defined as the ability to independently make changes to the system and execute enhancements to expand your business without having to rely on the vendor or other third parties. Many insurers have found that being self-sufficient can significantly affect their bottom line. Implementing a policy administration system with strong configuration capabilities can substantially help insurers to reach this goal.
Ease of Upgrades: Leveraging modern technology that includes a common metadata and transactional data model across all functional components and backward compatibility will ensure core upgrades are not multi-year and multi-million dollar projects. Keeping your system current is important to ensure you are obtaining the latest functional and/or architectural enhancements.
Content: The system should have pre-configured lines of business/workflow/rules for personal, commercial and specialty lines as well as key industry interfaces.
Data Conversion: A successfully implemented data conversion project can benefit an organization in ways that positively impact the bottom-line and significantly change the way you do business with your customers. Once the conversion is complete, you can expect considerable cost savings and operational efficiencies, including the elimination of back-office processing. This increases productivity by allowing your staff to focus more on sales and underwriting. It also streamlines multiple operations onto one reliable system.
Expanding the use of the Software: Equally important is a system’s ability to allow users to create and maintain products as well as extend services to new States, Provinces and Geographies. Having multi-lingual and multi-currency capabilities along with the localized content in the system will ensure the system itself is not the limiting factor for expansion.
Usability: Besides having a modern user interface, it is imperative the system provides intuitive navigation and guided workflows for processing new business and post-new-business transactions. Well-documented training guides as well as hands-on training will help ensure your users successfully adapt to the newly implemented system.
By focusing on the above tenets, you will be on the right path to lower your overall TCO.