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Many of us will argue that the sports teams, music and entertainment of our youth set the gold standard, but that fondness for the past rarely holds true when it comes to insurance technology. While past technology may have been adequate in the “good old days,” it falls far short of meeting insurers’ current business demands. That doesn’t mean, however, that we can blindly assume “the latest is the greatest” when thinking about technology.
Insurers planning to implement new technology to remain competitive will be inundated with all sorts of technology bells and whistles – it will all sound good, but upon closer inspection, may offer little in the way of true business value. To select the best technology solution, each insurer should carefully consider its specific business needs to determine the solution fit and then take a good look at the technology provider expected to stand behind the solution and the value promises.
Given that new technology investment is a long term commitment, insurers need a technology provider who can stand the test of time. Not every software provider is able to achieve market longevity and choosing the wrong partner can lead to wasted investment, failed or delayed projects and a subpar customer experience.
The best approach to mitigating technology decision risk when making a decision that can make or break an insurer’s business comes from finding a partner with a proven history of success, scalable solutions and proactive investment in technology. Here are some important factors to consider:
Provider’s history and sustainability
How long has the company been around? Companies with a long track record typically offer a greater sense of stability and proven capabilities to deliver. In this industry, if the platform doesn’t remain viable, or if the company doesn’t offer good product support, the provider won’t be around for long.
Is the company private or public? Public companies must adhere to strict reporting guidelines and provide full transparency regarding financials and other critical information. There is less chance a public company will be acquired, translating to more stability among the company’s key management and leadership. If a technology provider is at risk of acquisition, insurers should be concerned that the new parent company could deprioritize, or even eliminate, the target solution in light of the new parent’s strategy and/or alternate offerings.
Technology’s upgrade potential
How is the technology architected? Is it built in layers, so the overall package can be updated in increments, rather than all at once? Platforms become legacy platforms mostly because there was no easy upgrade path. Month after month and then year after year, the vendor chose not to provide meaningful and timely updates (or was unable to do so), until the task became insurmountable.
Neither vendor nor insurer can eat an elephant in one bite. Upgrading an application over time, using a minimally invasive approach where portions or layers are upgraded incrementally, is the most viable method.
Annual technology investment
This consideration goes beyond the simple question of, “How much of your annual revenue is reinvested in the product?” Identifying specific areas of investment and evaluating the provider’s commitment over time is crucial. Is there an annual budget to ensure the solution is updated to run on the latest versions of operating systems, databases, application servers and web servers? And is the vendor investing to ensure the system will operate on the latest web browsers?
With continual technology updates, ensuring the application is routinely tested for scalability is important. Performance tuning cannot be an afterthought, since it requires planning and budget. Ideally, the incremental technology upgrades to various layers will necessitate only modest re-architecting, which will result in improved system performance. Performance tuning, paired with regression testing, helps ensure the application continues to scale with technology improvements.
One throat to choke
Can the technology provider offer an end-to-end solution that satisfies all of the insurer’s requirements? If not, who are they partnering with and how will communication and oversight be managed? It is difficult to manage large-scale projects involving multiple parties, and if the vendor is outsourcing the delivery, for instance, the project could deteriorate into finger pointing between vendor and partner, putting the timeline (or entire project) at risk.
Additional questions to consider
Does the vendor constantly review its development plan in light of current client engagements and invest in areas that will result not only in future sales, but in reduced implementation costs in the future?
Does the vendor work to implement capabilities for the broader customer base to add incremental value for all current and future customers?
Regardless of the new technology and provider selected, implementation is a long-term endeavor and an ongoing investment. Following a few simple guidelines can dramatically increase the likelihood that the technology partner you select is as committed to their solution and your success as you are.