This article was first published in the Spring 2015 issue of OnWindows
Today’s insurers are fighting hard to transform their businesses, but it’s no easy feat. Faced with a lack of alignment between their business and technology, combined with a high-maintenance legacy IT infrastructure, shortage of resources, and dwindling candidates with the right skill set to maintain an antiquated system, it’s clear that to be viable in the here and now requires more than just shifting priorities.
Most insurers accept that in order to succeed, they need to transition to a modern platform. To take full advantage of digital technology, this often means moving to a cloud-based solution. However, with so many different options available – software as a service (SaaS), infrastructure as a service, platform as a service, as well as hybrid models – it’s no wonder that most insurers have yet to make the leap.
Transitioning to a modern platform is a daunting proposition for many, who worry about which solution will best meet their needs with the least amount of disruption, how their own IT resources will be impacted and what it will cost both now and in the future.
At Accenture Duck Creek, we believe a SaaS model is more than just cloud-based infrastructure hosting and application outsourcing combined with software. Carriers should expect more. From our experience, a SaaS model should incorporate a one-to-many infrastructure and operations, defined SLAs that are designed to meet or exceed a carrier’s typical needs, inherent ‘always current’ upgrades and software revisions, all delivered in a predictable price and commercial model. Insurers should know what SaaS options are possible before making their final software and service provider selection.
The SaaS contract is an attractive modernisation option for insurers that would prefer to focus their internal IT resources on being responsive to their business instead of responding to hardware and software maintenance issues. Companies can leverage pre-defined templates and pre-existing configurations based on best practices and the experience of the SaaS provider. And with this approach, businesses typically experience shorter implementation times and have access to remote IT maintenance and monitoring capabilities, mitigating the need to maintain these specialised skills in-house. This type of solution means that insurers will never again be faced with issues due to an outdated legacy system because of the inherent upgrade capability included with a SaaS solution. What’s more, insurers can become extremely nimble – they can scale their capabilities up or down to better respond to market demand and customer needs.
How do we know this innovation works? Experience. With a proven track record of successfully operating SaaS within several insurers over the past two years, we are confident this business model, supported by the Accenture Cloud Platform using Microsoft Azure, delivers the outcomes insurers are looking for. Our current customers cover the industry from very large personal lines insurers to carriers with US$150M in direct written premiums.
Insurers’ success with non-core SaaS solutions, such as SalesForce, is being reported throughout the market, which has escalated interest in viable options for core solution SaaS. We have seen a significant increase in active opportunities that are preferring SaaS capabilities across all segments and tiers of our market. In a competitive industry, any advantage is pursued. With so many benefits to migrating to this solution – predictable costs via a pay-as-you-go structure, improved system functionality, expedited product development and deployment, and no hardware or maintenance expenses – insurers are likely to see an impact on operational results and customer service levels.
Looking ahead, it’s important for insurers to prepare for the future, and a SaaS approach will keep their investments current while reducing the business disruptions from upgrades and maintenance cycles. Today, the most successful insurers are beginning to realise that they need all of their resources focused on their core business. This means enabling IT to refocus on being a change agent for delivering product and shifting capital away from software and infrastructure to investments that can drive more top-line impact. Sooner or later (most likely sooner), shifting key systems to a SaaS solution will be a competitive imperative; those who move earlier are likely to see it as an advantage. Any insurers who haven’t begun modernising their systems will need to move now or acquiesce that they will likely play catch up for years to come.
Michael Witt is global SaaS product lead at Accenture Duck Creek