Less is not always more when it comes to software solutions
Choosing software for an organization is a complex and often unappealing process. There is always the possibility of unnecessary costs, painful installation, or ending up with a system that doesn’t meet business needs. Life insurance carriers appear to be suffering more from the struggle to update than the broader financial sector, and it’s certainly dragging it’s feet compared to other global industries like entertainment and travel.
Why is this happening (or not happening)? It could be because of the nature of the insurance industry, and life insurance in particular where change has always happened at more of a slow burn. Insurers seem reluctant to try new models of software procurement, sticking with the traditional on-premise installations of complex software products, or updating existing legacy systems. Despite the advent of cloud computing and the success of SaaS for enterprise in other industries, over complexity caused by using too many separate solutions is still a common fear.
This can often make companies resistant to adding new tools to their suite. Too often this results in organizations “shoe horning” new tasks into existing systems that weren’t intended for the purpose just to avoid the potential risks of a new application. The failure to make use of new tools carries its own, much greater risk; being left behind.
It’s no wonder that companies are resistant to adding new systems, the enterprise software world has had a painful history of complexity, failed integration, and process silos that could make a seasoned CTO wince. But since the advent of specialist cloud applications I would argue that this fear is no longer well founded.
I’ve often been told by CTOs that they operate on a ‘one on two off’ policy (for every new system they implement, it has to reduce two). But this often means they go for whatever system can manage the broadest range of tasks, not the one that will give them a specific advantage. The result? A clunky ERP style solution that does everything, but many things poorly. And we’ve seen from the ERP world what dangers this can have.
Cloud tech that is off-premise and open from an integration perspective removes most of the arguments against a ‘mix and match’ model. SaaS products are not normal on-premise software installs, therefore introducing them for a stand-alone purpose that solves a problem is generally fairly simple, and open integration means that data silos are easy to combat.
What does that mean for insurers? They should be choosing software based on needs, not just looking for the system that will do the widest range. After all, “one size fits all” software will never perform as well as something made for purpose. Trying to limit the number of applications you use, regardless of the potential benefit of a “mix and match” approach is a pointless exercise. This is where the “business” needs to be engaged. By truly understanding each department’s business needs and what they require to be at their most efficient, technology departments within life carriers can make better decisions that actually meet business goals.
Using software that is ‘fine’ is massively different to using software that is the best for the job. We are in a new economy now, one where flexibility and agility is essential, and large cumbersome systems can leave you struggling to keep up. If you are using a mediocre tool you’re missing huge opportunities; opportunities to improve efficiency, to increase profitability, or to take advantage of strategies based on well managed data. As mentioned in the last Shifting Gears blog, this means you’re leaving money on the table, and that is something that life insurers can no longer afford to do.
About the Author
Geoff Keast is the SVP of Market Development for Montoux’s US and Canadian business. In his role, Geoff is responsible for leading Montoux’s growth ambitions in North America and helping life insurance carriers to speed up the product development pricing process. Prior to joining Montoux, Geoff spent almost a decade in FinTech, operating in Asia Pacific, North America and EMEA, including leading a business unit focussed on digital banking technology and improving the method at which consumers engage with their financial institution. Geoff holds a B.A from the University of Canterbury and an M.B.A from from Victoria University.