Accurate or not, the use of technology and systems development in the insurance industry has the reputation of being conservative.
That approach may have worked in the past.
Today, insurance companies need high-quality information to make better-informed decisions. Going forward, insurers must instantly adapt to changing customer needs.
As a senior executive, you may lead an organization that’s lagging behind competitors that have invested in insurance transformation. Survival demands action.
In this first of a TAC4 series about the transformation of legacy insurance systems, we look at the initial decisions necessary to maximize your chances of success.
Read the Writing on the Wall
Beyond the obvious strategic advantages of transforming legacy insurance systems, the other compelling reason for implementing a major project can be summarized in one word: frustration.
We have identified four consistent clues that signal growing frustration and support the need for digital transformation in the insurance industry:
- Chicken or egg – Conversations go ‘round and ‘round on the root cause of problems.
- Disparate solutions – The lack of effective processes leads employees to create their own, often with competing priorities.
- Leadership not on the same page – The C-suite disagrees over how to move forward.
- Analysis paralysis – Exhausting debates feed continued inaction around competing thoughts on the best path forward.
Initial Questions to Answer
After moving beyond inertia, the complex journey of a transformation project requires critical decisions. Answering these initial questions will lead to better understanding and more questions.
- Priorities – What needs to be fixed first?
- Build or Buy – Should we build or purchase a solution?
- Infrastructure – Should we operate the system internally or in the cloud?
- Timeline – When do we need the project completed?
Project Governance – The How
After completing obvious initial decisions, the more obscure decisions take center stage and ultimately determine the project’s resounding success or failure.
Before any real work begins, this initial phase concentrates on “the how” of the project. This is typically referred to as project governance.
Diligently addressing governance early avoids spending time and resources cleaning up on the back end, which inevitably forces project work to a grinding halt and jeopardizes the budget, scope, and timeline.
We compare this critical work to a hospital emergency room. Determining staffing, triage protocols, and ensuring adequate equipment and supplies are all part of project governance. Medical treatments in the ER include the project work or tasks.
Avoid the common temptation to bypass organizational frustration by diving into a complex project before outlining “the how.”
Project governance drives successful outcomes through a detailed framework and adequate guardrails.
The Four Pillars of Project Governance
Successful complex projects are built on a solid foundation. These four macro considerations comprise project governance:
- Policies – Do current policies accurately reflect the organization’s strategy? How will we incorporate these policies to support the systems and vice versa?
- Regulations – What types of constraints might we need to consider for compliance?
- Processes and Procedures – Which processes are needed to create more efficiency? How will we communicate with employees?
- Responsibilities – How will we make project decisions? Who has the authority to make decisions?
Many resources are available to guide and inform you on what to expect and how to develop a project governance plan. Make no mistake, the process requires time and experience. Inadequate governance leads to 70% of complex projects failing.
However, we would like to present a more practical approach and provide real-life examples of what constitutes good vs. bad preparation for a project.
Like the emergency room example, poor planning leads to project failure. Lack of preparation creates problems that often cascade. There is no guessing.
We’ve seen real-life problems like these emerge when critical foundations are not addressed before important decisions are made.
|Project problem||Governance prevention|
Project Preparation – Ready, Set, Go
Major legacy transformation projects may happen every 10-20 years.
That means few team members have experience leading the effort. And rarely does anyone have the time to dedicate what it takes to ensure success.
Here are a few critical factors in evaluating the preparation needed to ensure project success:
Hire an external consulting firm to manage and represent your interests in the project.
- Knowing your business – Vendors do provide project management. Consider that they are vested in ensuring their product shines, and they will never be as interested in meeting your requirements as you are.
- Knowing the ropes – Experienced project managers understand the importance of project governance and how to prepare and guide you through each step.
- Guiding consensus – External project leaders who excel in emotional maturity do not engage in office politics and turf wars. They steer disagreements to an agreeable solution with buy-in from all stakeholders.
Do your best to outline what you are looking for in a solution before evaluating options.
- Defining needs – The more specific your objectives, the chances for success increase. This can be particularly important during vendor demonstrations. It helps minimize distractions that may surface when encountering appealing, but not necessarily needed, functionality.
Confirm alignment among your executive leadership.
- Marching together – Buy-in on the objectives across your executive team is crucial to position the project for success. Even small misalignment situations tend to surface during the project, often leading to delays or other project challenges.
Executive leadership must over-communicate their project support.
- Talking and listening – This means face-time, the dedication of resources, encouragement, efficient decisions when needed, devotion to understanding project complexities, and a million other ways to engage your employees.
- Committing support – This might also require addressing managers who are critical to the project yet do not exhibit the support needed for successful outcomes.
You can do things fast–or do them right.
- Planning for success – Not taking the time to build the right plan for your project and organization creates pain for everyone.
- Succeeding over speeding – It is all too common for leaders to want a fast solution and deal with changes once in production. The hacker mantra “Done is better than perfect” does not apply here.
- Skipping means tripping – A solid foundation is imperative to build on well-implemented software, and teams often skip this foundational step with the goal of quick implementation.
- Segmenting project – Managing with discipline to create an effective plan ensures efficient execution. If speed is important, and most of the time it is, consider breaking the work into phases that detail critical success factors. Each phase would set minimum completion requirements.
Focus on building the right plan for your project and the organization without losing sight of the long-term objectives. Projects, like life, bring surprises. The Boy Scouts of America offer valuable advice: Be Prepared!