Is the Dinosaur Dead Yet? Tracking the Evolution of Core System Replacement in Insurance

by Catherine Stagg-Macey,  Jamie Macgregor, August 11, 2015
Industry Trends
Global

Abstract

The good news is that much has changed since Celent started tracking the topic of legacy modernisation almost a decade ago, and there are certainly fewer types of legacy systems around than even a few years back. However, the dinosaur is not dead.  

In this report, Celent takes a look at the issue of core engine replacement from the perspective of insurers. The report is part of an ongoing series (published every two years since 2008) exploring the progress that insurers are making in this area.

Four years ago, one in four insurers reported being well into the program of change. Two years ago, the figure was at 50%. Today, almost two out of three insurers have made such progress.

“This is the offset from companies moving out of early stages of evaluation into making progress,” says Catherine Stagg-Macey, an executive advisor with Celent’s Insurance practice and author of the report. “However, it should also be recognized that knowing your direction and making progress are not completion, and for many, especially in the life industry, a substantial programme of work lies ahead before they can claim success.”

This report will be of interest to insurers to get a sense check of the industry’s progress. Data in the report can be used in a variety of ways, including educating program sponsors, baselining against market experience, and being forewarned about matters such as likely areas of cost overruns. There are clear pointers to where the company might expect increased business responsibility of maintenance in post-implementation

Vendors that sell core systems will find the data and findings in the report useful in evolving their market and value propositions, as well as identifying potential related service offerings. Vendors offering services around core solutions can also draw upon this report to refine and strengthen partnering propositions.

This report contains 13 charts and 4 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

Introduction

2

 

About the Data in This Report

2

 

Key Research Questions

3

Key Findings

4

Measuring the Impact

5

 

Two Sides of the Same Problem

6

State of Play

8

 

Persistent Project Challenges

9

Emerging Strategies

11

 

Replacement Goals

11

 

Replacement Strategies

12

Operational Considerations

15

 

Changing the Role of the Business in IT Maintenance

15

 

Increasing Governance Discipline in the Business Unit

16

The Business Case and True Costs of Core System Programs

18

 

In Many Cases, a Valuable Tool

18

 

True Costs of Core Replacement Projects

19

A Case for Partnerships

22

Where to Next?

24

Final Thoughts

25

Leveraging Celent’s Expertise

26

 

Support for Financial Institutions

26

 

Support for Vendors

26

Related Celent Research

27

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