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Can future proofing truly be achieved?

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19 January 2023
Nanda Rajgopal

Can future proofing truly be achieved?

Insurers have been transforming operations and technology for multiple decades and generally find themselves with various legacy systems and continued accumulation of technical debt. Over the years, transformation processes and methodologies have matured which has enabled shortening timelines from multi-years to a year or less. That is not to say that multi-year transformations don’t exist today. But technology transformations have evolved from mostly waterfall SDLC (software development life cycle) to agile and agile/dev-ops methodology. Advent of new technologies like AI, ML and increased utilization of cloud has enabled significant automation and efficiency gains as part of the transformation process and steady-state operations. These techniques have resulted in significantly faster transformations.

But, depending on the size of the operations and source systems, transformation programs can still be quite complicated. Many insurers find them to be a significant undertaking involving strategy, planning, leadership and organizational commitment. They touch a lot of people and require extensive knowledge of the existing systems.

Even after careful planning and execution, transformation journeys may exceed cost expectations, or over run the timeline. And worse, they may not yield the intended result(s). Even if the transformation has been vastly successful, new emerging technology and product innovations may require additional transformation effort and cost which can be ongoing.

So, carriers have to think through their approach, the cost implications, the impact on their existing and future technology plans and of course, change management which can be challenging. These factors determine the type of transformation journey an insurer needs to undertake to justify their business case and realize the intended value(s).

Which leaves us with the question “Can future proofing truly be achieved?”

Successful future proofing requires taking advantage of the latest in technology and cloud and focusing on data. Carriers who can create technology, platform, or application independence by decoupling data in essence create data independence as well. As part of this process, it is important to ensure data is cleansed, governed, organized (structured, semi-structured and unstructured), secured and up to date by being real-time or close to real-time.

Data is the key that can provide the flexibility necessary to mix and match technologies when enabling a “data-driven” transformation leading to a “data-driven” organization/business. At any given point in time during the transformation journey (ideally at the beginning), there needs to be a focus on data. Carriers can take steps to extract, transform and load (ETL) into a data lake based in cloud and leverage data fabric as needed. As part of this process, proper steps need to be taken to scrub/cleanse the data as well as adhere to all necessary governance and security practices. Once this is accomplished, successful operations and technology transformations can be achieved by a combination of new systems (perhaps deployed as a SaaS model), applications (can be serverless as well) based on microservices (API driven), Kubernetes/containers, AI/ML and low/no code platforms.

Even though there is no such thing as making a system truly “future proof”, insurers, by uncoupling their data via a data lake in cloud, will achieve scalability, flexibility, and adoptability. This allows them to mix and match applications and systems and make themselves future proof to an extent possible. With this approach, future modifications can be achieved in a speedy and cost-effective manner enabling a data driven agile enterprise.

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