Future-Proofing Your IT Investments: Lessons from the Industry

by Craig Beattie, April 2, 2015
Industry Trends
Global

Abstract

Historically the insurance industry has had mixed success at future-proofing. One might say the industry has done a good job, with many insurers running systems that are multiple decades old that are still serviceable. On the other hand, participants in the industry are facing increasing technology change and are challenged with where and how to invest.

In the new report Future-Proofing Your IT Investments: Lessons from the Industry, Celent suggests that future-proofing should be concerned with getting faster at change and positioning for flexibility. The key challenge to change speed and flexibility in insurance is legacy.

Celent presents five “legacy makers,” behaviours that increase the likelihood of creating new legacy. Sometimes the symptoms of legacy are hard to spot. Celent advises insurers to look for activity that is missing:

  • The business units no longer requesting change.
  • The systems no longer seeing change activity.
  • The alternative routes to change that don’t exist.
  • The software products that see no upgrades.

Agility or speed of change isn’t something found solely by avoiding legacy; rather it is something that must be designed into the organisation. The solution is part technology and automation, part who makes the change and with what tools and under what governance. Insurers must design for the expected speed of change, and must do so by reducing the decision points in the change processes where needed, and deploying automation and self-service for change where necessary. The prize for improving agility is differentiation for the insurer.

“Ultimately future-proofing is about preparing the insurer for an uncertain future,” says Craig Beattie, a senior analyst with Celent’s Insurance practice and author of the report. “The future will bring new requirements for change. The future-proof insurer will be able to better differentiate themselves by implementing novel options and responding to requirements faster.”

The report is 32 pages and contains four 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 a wholly-owned subsidiary 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

3

 

Key Research Questions

3

 

The Temperature Is Rising

3

 

Defining Future-Proofing

3

Insurers Have a Problem with Future-Proofing

5

How to Avoid Creating a Newer Legacy: Introducing the “Legacy Makers”

6

 

Don’t Customise a Package

7

 

Don’t Design for Day One

7

 

Don’t Govern Out Change

8

 

Don’t Run Projects You Can’t Stop

9

 

Don’t Treat Software Like Documents

9

 

Doing It Wrong?

10

How to Deliver Change Faster

11

 

Agility

11

 

Pick the Right Change Horse

13

 

Govern for Agility

13

 

Put the Tools in Place for Speed

14

 

Delivering Agility

15

How to Position for Flexibility

17

 

Flexibility and Migration Capability

17

 

Prepare for End-of-Life

19

 

Integrating Applications

19

 

Flexibility in the Future-Proof Insurer

21

Final Thoughts

22

 

For Insurers

22

 

For Software Developers

23

About the Survey

24

 

Respondents

25

Leveraging Celent’s Expertise

27

 

Support for Financial Institutions

27

 

Support for Vendors

27

Related Celent Research

28

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