Stop throwing good money after bad
The answer, my friends, is blowing in the wind – not clogging up your back office. Here are three key challenges insurers must grapple with to digitally transform their business.
Every time I hear an insurance company is investing heavily in a piece of on-premise technology, I struggle to contain my frustration at the inevitable and avoidable costs and wastage involved.
Nowadays it’s inexcusable. Now that cloud software as a service exists as a proven and efficient alternative, committing to on-premises technology is a classic case of throwing good money after bad, and here’s why:
– First challenge to note: technology investments can cost big money to put in place, to keep them working, and to make necessary upgrades. And they cost even more money to replace, when this is no longer avoidable.
– Secondly, to succeed, you need to commit. Too many huge projects have failed since the 1990s because not everybody who needed to buy in to them was sufficiently committed or realised that the initial commitment did not include costly and time consuming system upgrades or bug fixes.
– Thirdly, the grass is always greener elsewhere. We know that technology is advancing at an exponential pace. This means that what you have will be obsolete much faster that you’d like. The shiny new tech you just bought will soon be last season’s plain old thing.
So how can insurers grapple with these three challenges and emerge with cost-effective, long-term technology that won’t leave them lagging behind the times again in five years time?
As Google Cloud’s UK and Ireland insurance industry leader Damion Thompson recently pointed out – insurance is on the brink of a huge transformation, but antiquated legacy systems are holding the industry back.
Systems should not be closed boxes, which are vulnerable to becoming out of date, out of maintenance, and poorly understood within the business. And on top of all that, entirely reliant on the vendor to update – and therefore hostage to their fees – prices that can quickly spiral.
Less is more
Systems cost less to update when the technology is kept remote on the cloud. It’s much easier for technologists to tinker and fix things in their own backyard, and the nature of the architecture means all users benefit from economies of scale, for instance benefittng from
thousands of Microsoft security specialists working on keeping your data safe.
But it’s much more than that. A revolutionary system is one that allows an insurer to do new things much more quickly: to have open and adaptable architecture that allows it to plug into the latest data capture and analytics platforms, to make better underwriting decisions; and to rapidly release new products.
The last of these points is probably the most important, and it’s what is giving insurers that opt for cloud platforms to drive their digital transformation the competitive edge.
It’s been reported that 63 percent of insurers are looking to expand the migration of their applications to the cloud in 2019. This is encouraging news, and time will tell whether the 37% are still part of the competitive landscape in five years’ time…