Ensuring Success in Core Systems Replacement: Operational Considerations and Emerging Strategies

by Catherine Stagg-Macey, December 21, 2012
Industry Trends
Global

Abstract

Sixty-five percent of insurers prefer wholesale replacement of core systems to address their legacy modernisation challenges, reflecting what is seen as an easier approach. Wrapping and upgrading remain insurers’ second and third preferences.

In Ensuring Success in Core Systems Replacement: Operational Considerations and Emerging Strategies, Celent analyses data from 141 P&C/general insurers, drawing comparisons to previous year’s surveys.

This report is part of a series on legacy modernisation within the industry, and is published in conjunction with Tracking the Progress in Core Systems Replacement: Global P&C Edition, which includes feedback regarding the current state of the IT environment, future plans, modernisation plans, and role of partners.

This report covers current strategies and goals around legacy modernisation, the extent to which business can take over functions such as rating, data conversion, and sourcing strategies. The report also details 10 factors that need to be in place to ensure the success of these transformation programs.

“Success in core system replacement is more art than science,” says Catherine Stagg-Macey, Senior Vice President with Celent’s Insurance Group and author of the report. “In the coming years, we will see many insurers deliver on their modernisation programs. To be successful, we will need more leadership, better communication, and stronger partnerships.”

This report will be of interest to insurers planning or midway through a transformation project. Data in the report can be used to test or validate decisions around replacement goals and strategies. There are clear pointers for where the company might expect increased business responsibility of maintenance in post-implementation. The chapters on factors in successful programs can be used as a refresher for the program office or as a nudge to executive sponsors who are new to the scope and complexity of such programs.

This 26-page report contains eight figures and two 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 part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Erica Ferguson
eferguson@celent.com
Tel.: +1 617 262 8225

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

1

 

About the Data in This Report

1

Emerging Strategies

3

 

Replacement Goals

3

 

Replacement Strategies

4

Operational Considerations

7

 

Changing the Role of the Business in IT Maintenance

7

 

Increasing Governance Discipline in the Business Unit

8

Data Conversion

10

Sourcing Considerations

12

Business Factors for a Successful Implementation

15

 

A Clear Business Vision

15

 

Business-Led Project

15

 

A Clear Target Operating Model

15

 

Strong Program Capabilities

16

IT Factors for a Successful Implementation

17

 

IT Reputation for Delivery

17

 

Strong Vendor Management Capabilities

18

 

Adopt Not Adapt

18

 

Underestimating the Power of Legacy

18

 

Conscious Choice of Project Development Methodology

18

 

Open Dialogue with the Vendor(s)

19

Final Thoughts

20

Leveraging Celent’s Expertise

21

 

Support for Financial Institutions

21

 

Support for Vendors

21

Related Celent Research

22

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