When you reach the pain point, you need to take action, but be sure to do it effectively.

If yours is a mature insurance organization – or likely any mature financial services operation – and you lack the ability or resources to move technology forward, you’ll likely wake up one day feeling like the character Howard Beale in the movie “Network.” That is, you’ll want to open the window and scream out “I’m mad as hell and I’m not going to take this anymore.”

Of course, you won’t do anything like that.  Instead, as you are hit full-force by the realization of the toll that legacy systems take on your organization’s limited resources, you’ll need to make difficult decisions. This pain far outweighs the perceived pain of moving away from legacy technology, so you’ll need to stop it by creating a reasoned, bulletproof business case for eliminating your organization’s dependence on legacy systems.  And that could be a big job.

Overcoming the legacy technology trap

Whether this “aha moment” is precipitated by merger/acquisition, or simply the high costs of maintaining these systems, making the business case is tricky.  The transformation often involves a piece-by-piece approach of implementing a new platform, migrating data to the platform, then decommissioning the legacy platform.  Doing this is typically complex, time-consuming and expensive, so unless maintenance has been extremely expensive and the benefit of replacement is clear, you may find it tough to show that legacy replacement will reduce the total cost of ownership.

Especially with older systems where their original costs are now fully depreciated and where platforms have not been upgraded or enhanced, the perception may be that the legacy systems are quite cost-effective when compared with upgrading to a new platform. The equation is:

Technology Transformation = Piece-by-piece Expense of New Platform Installation, Data Migration, Decommissioning Low-run-cost Legacy Platforms = Major Time & Dollar Costs = Pain

That appears to make sense – but it really doesn’t.

Pivot to the business view

Here’s a radical (and effective) approach: Shift focus from piece-by-piece technology remediation to building business-oriented, enterprise-technology architecture WITH KEY BUSINESS LEADERS.  That is, stop looking at the technology you have and take a top-down look at what the business really needs by enlisting users.

An immediate benefit to this approach is that IT must fully engage with business units and gain an enterprise user perspective. Even more important, it encourages businesses to stop thinking of small incremental improvements and instead refocus on the big picture — how technology transformation will enable them to transform and execute their business strategy in ways they’ve only dreamed of.

This becomes a paradigm shift away from IT’s traditional role of seeking resources to help support its business clients, and it is likely to be a lot more fruitful for IT than trying to a make its own business case for migrating away from legacy systems. Instead, by encouraging business leaders to understand the role agile technology could play in transforming their businesses, optimizing their sales and marketing, and meeting their competitive goals, IT can gain a powerful ally.

The equation now becomes:

Technology Transformation = Technological Agility = Pursuit of New Target Customers/ New Revenue Streams = Profit

and business leaders can logically drive adoption, since it makes business sense.

Helping business leaders understand the intersection between business and IT strategy is something IT will have to address effectively. Success will also depend on strong leadership within the businesses to create the vision of how they will operate in the future. IT transformation away from the snare of legacy technology is just one part of that vision, but it is an essential one.

Next week, I will discuss some of the technical matters to consider when shedding some or all legacy technology.

To learn more, read Overcoming the Legacy Technology Trap: A Playbook for Legacy Transformation in the Insurance Sector.

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