Are insurers really moving toward suites?
It’s no great secret that there’s a lot of change going on – and not just in the insurance industry. The turbulence of the last few years has led insurers to become more creative in their approaches to IT modernization. Insurance is a saturated market and prices have been forced down by competition: most lines of insurance are no longer overly lucrative. The trick to both survival and success is to get costs down, to become more agile and also more transparent.
A platform that can help an insurer save money – and at the same time offer customers more agility – brings huge benefits to companies struggling under the weight of ageing, incompatible IT landscapes. This is a trend we’ve seen in most other sectors, and SAP can now offer the same benefits to insurance as it does to many other industries: insurers will be able to integrate, and transform their businesses one step at a time.
Not only can we now offer an end-to-end solution in the US market – including auto-ISO updates – we can also separate policy admin from product management. This might not seem like much at first, but what it means is significant. If you have an old policy system, we can modernize it with a new front end, providing new product agility while leveraging your existing system. There’s no need for open-heart surgery.
“Legacy modernization” has finally become a reality, and it allows us to modernize bit by bit without jeopardizing the whole. Also it allows CIOs to act with confidence. Add the speed of HANA, plus our analytics capabilities and insurers are able to go to market faster, with immediate benefits and low costs, in increments with which they are comfortable.
At SAP, we don’t really make a habit of acquisition. It tends to be focused on particular technologies. But insurance is such a promising market that the synergy of the Camilion acquisition made total sense. In such a hugely fragmented market, there is plenty of opportunity to help insurers in coming years – and for companies to really feel the benefits in a measurable ways.
We are beginning to see a new wave of customers approaching insurance IT in a new way. This is especially true in many emerging markets where insurers are leapfrogging generations of technology into the newest platforms. Stay tuned…
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The greatest challenge insurance companies face now is indeed the transisition from their legacy system(s) to a unfied architecture like SAP is offering.
Do you have any examples of transitions that go well and some that happen to be more critical?
Hi Erik - Bob just saw your question and wanted to respond.
Hi Erik, First of all, sincere apologies for my late reply!
A very important question. There are different ways to get to an integrated architecture:
1) Big Bang. Very popular in many industries but rarely seen in insurance. This is where the company leapfrogs into the new generation by replacing all systems at once. Smaller companies in emerging markets are increasingly embracing this although I believe they will still be a minority.
Although the benefits are clear, the risk, disruption and change costs associated with such a leap are of course much larger.
2) Start where the pain is biggest and just move from there step by step over time plugging in neighbouring modules until one day you get there.
3) Targeted Transformation. Define an end-state architecture along with a roadmap for how to get there step by step while focussing on the large data architecture elements first.
There are examples of companies who have achieved their goals with each of these approaches or variations of them. I always believe it is important to have a long-term vision of where one wants to go and work backwards from there into manageable steps and short term wins. The short term wins will give you the organizational alignment and energy needed to stay the course.
Bob, great article. What steps are being taken at SAP to integrate Camilion with FS-CD and FS-CM? And does this mean FS-PM will go away?
Hi Jon, A very important topic which is keeping us all busy at the moment.
Let me answer your second question first. FS-PM will not go away. We are taking the Product Lifecycle as well as Underwriting and Quotation functionality in Camilion and putting this in front of FS-PM. This will allow SAP to offer its customers a full end to end capability from Front Office through Middle Office to Back Office. The integration to the other systems you mention in your first question will be handled, as it is today, via FS-PM. Best, Bob