Other parts of this series:
A new approach to the legacy platform challenge
It’s no secret that nearly all LP&I providers face huge challenges with their legacy IT estates. Five or more product platforms are the norm (some providers have over 10). Agglomerated over time, these range from modern, open architecture solutions through to custom-built applications that date back to the 1970s and written in a multitude of languages – skills in which are increasingly hard to source.
Managing blended platform portfolios like these creates a whole range of problems. I’m sure they make familiar reading: from major operational risks and total cost of ownership issues to impaired agility and market effectiveness.
It’s a heavy millstone around the industry’s neck and it’s getting heavier all the time. Legacy platforms support an ever-decreasing book, or a book with lower and lower margins, meaning the cost per policy keeps on rising. Weighty mainframe and IT support costs are a drain on limited resources that could and should be better invested elsewhere. And, crucially, while the modernisation prize extends far into the future, the size of that prize diminishes over time.
So, what to do? The silver bullet, craved by everyone, is a ‘big bang’ migration of the existing book from the current platform portfolio onto a single, new, low-cost platform. That’s the theory. But in practice, we’ve seen most of these attempts either failing completely or falling far short of original expectations. In fact, the statistics make very sobering reading indeed: the number of insurers that report having completed a migration has remained unchanged for the past two years.
In this series of blogs, I’ll be going into more detail about the reasons behind these failures. And, much more positively, I’ll be presenting alternative approaches that work. We’ve built these approaches on the conviction that one-size-fits-all actually fits no one. Instead, we’ve developed a unique hybrid solution that combines modernisation with migration. Tailored to each client’s investment and risk appetite, it takes full account of their current IT estate and the specific business drivers they need to address.
None of this is theoretical. In fact, we have already deployed this approach across a number of industries, realising some impressive results: 30-50 percent savings in IT operating costs, 20-40 percent reductions in IT cost of change and up to 40 percent improvements in agility.
I’ll be presenting our end-to-end approach in the next few blogs. That includes showing why it works when traditional approaches don’t, how and when to choose migration instead of modernisation, sharing the business case we help clients build in support, and explaining why this is such a crucial phase on the journey to becoming a digital LP&I provider. We’ll soon be publishing a Point of View that goes into greater depth on the problem…and the solution.
Meanwhile, thanks for reading.