For insurers, the marketplace is changing. Companies, striving to meet evolving customer demands, are launching competitive products and services that enhance the customer experience through additional touch points. As this evolution occurs, many CIOs see their legacy technology systems as dated assets hindering development and innovation.
However, it's often legacy thinking -- not just legacy systems -- that prevents insurers from taking the necessary steps to shape their company's future. Legacy thinking, the thought process whereby new ideas are filtered out in favor of existing beliefs, accepted concepts, and widely-known generalizations, prevents company progress. Legacy thinking can pervade a company culture and actively prevent innovation and new, creative solutions from improving the current models.
While legacy systems primarily reside in data centers, legacy thinkers populate the workforce. To successfully transform your businesses, old ways of thinking need to be challenged. CIOs must strive to create an environment that will enable insurers to focus on creating the future of their business.
At Tata Consultancy Services, we regularly see the same examples of traditional thinking crop up in our insurance industry clients. My hope is that my responses below to these misconceptions will help you take a little step forward in transforming your thinking and your business, and the insurance industry:
Legacy Thought #1: Legacy systems have no value and having them is our biggest problem.
Legacy systems are valuable. They contain business rules that have evolved over time, records of products and services, client information, and reflect what experts have learned over many years. In most cases, legacy systems still run the day-to-day business, are 100% paid-for, and contain data that can be mined to develop new products and services.
Make the extraction of valuable information, business rules, features, and functionality part of legacy systems' modernization or transformation programs. Keep what's valuable and still relevant, and shed the rest.
Legacy Thought #2: The business communities to which Business Operations and IT provide services are "users" and not co-creators.
Insurers are better served with collaborative and transformative thinking. Today, practically everyone in the business world has access to information and technology and it isn't practical for IT to treat the rest of the company as end-users. Representatives from the business communities, as well as operations, information technology and other functional subject matter experts should all be considered co-creators: equal partners with equal accountability, especially when taking on large transformation programs.
Legacy Thought #3: People and their departments will get connected on their own.
Take advantage of technologies that connect departments and people and encourage technology-aided collaboration. Insurers need to encourage cross-functional working groups and projects, utilize processes that cross departmental and geographical boundaries, leverage technology to ensure information and data is kept flowing among all parties concerned, and harness new technologies that ensure connectivity.
Collaboration is the key to seizing opportunities for innovation; but, it does not happen organically in most organizations. Rather than internally collaborating within business segments, the CIO must encourage collaboration across every aspect of the business, break down silos, and enlist the best talent for any given project.
Legacy Thought #4: Company information and data is everyone's responsibility and there's no need to have a specific unit focusing on them.
View information and data as one of the crown jewels. Information and data stewardship and governance is vital to running the day-to-day business and to creating the insurer's future. Insurers cannot readily take advantage of developments such as Big Data, analytics, data visualization, and predictive and prescriptive analytics without investing in aggregating and curating their information and data.
Legacy Thought #5: Split your focus between internal and external clients.
Focus on, invest in, and innovate to provide the best external client experience you can. Consumers continue to be more demanding since they are more knowledgeable, have access to many sources of information, and are more impatient -- especially the swipe-and-click generation. Fostering and expanding customer relationships requires the adoption of cultural customer-centricity. More and more insurers have come to the realization that to grow the business and gain dominance in the marketplace, they will need to ensure that each functional area is focusing on delivering value to their external clients.
Sam Medina is Vice President and Head of Strategy and Transformation for Insurance and Healthcare at Tata Consultancy Services.