The Build Vs. Buy Debate: 2015 Update

by Nicolas Michellod, May 11, 2015
Industry Trends
Global

Abstract

Insurance companies have grown their activities through a number of means. Many firms are rationalizing their system landscape and face difficult challenges when considering modernizing or replacing core insurance components. Among them is the perennial question of whether to build or buy.   

 

In the report The Build Vs. Buy Debate: 2015 Update, Celent provides findings of a survey launched in the fourth quarter of 2014.

“A vast majority of insurers have preferred building their own producer and policyholder portals,” says Nicolas Michellod, a senior analyst with Celent’s Insurance practice and author of the report. “Over the past five years insurers seem to have purchased fewer ready-to-use portal components from vendors, and an increasing proportion of them have decided to work with development partners to build components.”

This report provides background about the build vs. buy debate and the results of Celent’s 2015 survey on this topic. It also draws comparisons with a survey Celent launched in 2011.

This report contains nine figures and five tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Survey Methodology

2

 

Survey Structure

2

 

Panel of Participants

2

A Build Vs. Buy Decision Framework

5

 

Identifying Reasons

5

 

Defining Criteria

6

 

The Generic Approaches

7

Front End Components

8

 

Recent Preference

8

 

Our Big Shift Towards Buying Portals Did Not Happen

9

 

The Relative Status Quo for Quote and Underwriting

10

Core Bank End Components

11

 

Recent Preference

11

 

External Development Partners Are Gaining Traction

11

 

IT Services’ Vendors Strength

12

Other Back End Components

14

 

Recent Preference

14

 

Document Automation Is a System Vendor’s Race

14

 

Increasingly Relying on Development Firms to Better Engage with Customers

14

Final Thoughts

16

 

A Perennial Debate in a New Context

16

 

Future Perspective

17

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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