8 Essential Steps for Life & Annuity Technology Modernization

By Eric Plasse

Rarely is a newly-selected technology too complicated for an experienced IT team to figure out how to migrate from the old to the new—and yet most modernization projects fail. Selecting the best technology to meet your needs is naturally an important decision, and many aids exist to help you make the right choice. But that’s not what this article is about.

A technology project gone wrong is not usually due to a poor technology decision. Far more often, modernization efforts come off the rails when you select a technology vendor whose culture does not align, or you move forward with a poorly conceived implementation approach.

To help prevent a project from being destined to doom, numerous articles have been written on what you should or should not do before embarking on a modernization effort. Quite surprisingly, we continue to see top life insurance and annuity providers trip up modernization projects by overlooking or not investing enough in the following list of must-do best practices:


  1. Assess Your Organization Early in the Game

Evaluating an IT team’s readiness to support an impending transformation is a smart precursor to any significant technology modernization project. An assessment will determine the level to which a tech team is equipped to adopt and support the transformation—and map out what needs to be done to ensure success. Depending on what IT leaders already know about their team, an assessment can be conducted at a high level—to help benchmark how resource allocation, funding, and types of services delivered compare to similar teams in the same industry—or in great detail, where the capabilities of individual team members are evaluated so that any potential skillset gaps can be identified and obtained through training, hiring, etc. It’s also important to assess an organization’s business readiness, to identify how prepared teams are to embrace new processes and work within a new environment.

We recently met a regional life insurance provider who asked us to assess and up-level their IT skill sets after they had brought the implementation of a new policy administration system to a costly screeching halt. Their talented IT team had fallen a bit behind the times and was not properly staffed to manage the pace of change. A prelaunch assessment would have easily prevented that project from racking up unnecessary fees and delays.


  1. Select A Vendor Who Fits Your Culture

The importance of choosing a technology solution that will function well and meet the growing needs of your business may be obvious, but multiple options often exist, and knowing the strengths and weaknesses of each as they pertain to the life and annuity business is not necessarily what you’re best equipped to do. To make the optimal choice, consider the perspectives of a third party who works repeatedly with these technologies to solve problems specific to life and annuity companies.

Equally important but often overlooked is the need to evaluate potential technology vendors based on how they will mesh with your organization’s culture. Dive deep into understanding how each vendor operates. Ask the right questions, such as: Do they have the right values? Will they truly partner with you on this journey? Will they be flexible in their approach and adjust to your needs as they evolve? How well do they complement your team’s strengths and weaknesses?


  1. Get the Contract Right

Once you’ve selected a technology solution, make sure that your contract is structured and specific enough to reduce ambiguity around what you expect to be the outcome. For the start of any technology implementation, where the rubber meets the road is having a vendor contract written in such a way that ensures the desired outcome is well understood across both parties. This sets the foundation for success. We see too many clients who mistakenly deprioritize this effort; whether they don’t have the skills to get it right or don’t have the time to invest, they rush through the contract drafting and/or hand it to procurement to configure and negotiate.

One U.S.-based life insurer we know had outsourced all back-office IT functions to an external service provider. The challenge the insurer faced with this particular arrangement was that the vendor did not assign an executive-level client manager or engagement lead, resulting in the insurer having to direct the vendor and tell them exactly what to do. The vendor was not truly invested in the success of their client. This is a very real example of when lower up-front costs—or perceived lower costs, as we call them—actually turn out to drive higher costs in the long term. Beware of paper savings that never materialize.


  1. Deliver Incremental Business Value

Rather than defining success in one way and setting lofty goals that are difficult to tackle, approach your modernization project in more palatable increments—with specific milestones of success that will be achieved as you progress through your journey. At the onset of the project, gain collective approval from all key stakeholders on what business value will be realized with each milestone. Utilizing a helpful tool like a Benefits Realization Roadmap helps display for all involved what business value they will see upon each increment of work being completed; e.g., estimated savings to be realized, levels of increased productivity, new capabilities, enhanced customer experience, etc.

One example of delivering value to the business faster and incrementally is establishing a minimum viable product (MVP), a version of a new platform or environment with just enough features to satisfy early users and collect feedback that informs continued development. For one leading U.S.-based life insurance and annuity provider, using an MVP aligned their business and IT leaders around what level of solution functionality and user experience had to be achieved in order to go live. This mitigated the risk of taking on a level of modernization so big and complex that it would fail under its own weight. Without an MVP, this insurer would have been banking on knowing exactly what their customers needed up front—and that those needs would never change. 


  1. Keep Executive Sponsors Engaged and Effective

The tendency to take their feet off the gas after a vendor is selected is a common misstep among business executives and stakeholders after they’ve heavily weighed in on and approved the right solution. The misconception is that because the chosen vendor is highly capable and knows what they’re doing, executive involvement can be significantly reduced, and levels of stakeholder participation can ease off. In reality, staying engaged and having a clear view of what’s going to happen and how it’s going to happen is the best way for leaders to be ready to make critical in-the-moment decisions that will directly impact the project’s budget, timeframe, and business outcomes.

Recently, a large life insurer undertook an effort to identify common traits of unsuccessful technology projects. They reviewed all projects over the preceding 3 years and saw that by far the leading culprit of failure was the lack of engagement or skill of the executive sponsor. The research cited multiple factors—the sponsor’s level of participation, relevant experience on how to deliver technology projects, ability to rally support across the organization, and the know-how and willingness to proactively solve talent gaps throughout the duration of the effort—as essential to ensure success.


  1. Assign an Experienced Delivery Lead to Run Your Project

Having a well-versed technologist and an executive sponsor at the project’s helm are critical—and considered “musts”—but it is also critical to your project’s success to have a dedicated technology delivery expert responsible for driving the project forward on a daily basis. Modernization projects often span multiple teams, have numerous stakeholders, and include a large amount of moving parts, both within and outside your organization. An experienced technology delivery lead acts as a quarterback who orchestrates a playbook, ensuring that the effort is well-planned, that a team is in place with the right skills and capacity, and that tasks are being executed thoroughly and on time—all while managing day-to-day the intersections of all parts and people.

We worked with one life insurer who struggled to advance their modernization of a suite of agent-facing applications, including onboarding, learning, illustrations, and commissions systems. Despite being fortified with tremendous talent, the project repeatedly stalled and missed key milestones due to less-than-optimal communication and disjointed alignment between the IT and business teams. Adding a strong technology deliver lead enabled the project to get back on schedule and yield the anticipated value.


  1. Use GPS, not the Rearview Mirror

“Yesterday’s news” status reports and dashboards are required tools to convey the results of recent activity and show where critical tasks stand at any given moment. When well structured, these tools provide insight into what is working, what is not, and where attention is needed. However, these reports often fall short by informing stakeholders and participants where the project was and not where it is heading. Furthermore, traditional status reporting does not tell you what you don’t know. In modernization projects, it is critical to “see around corners” and detect what obstacle might lurk ahead before it becomes fully visible and takes you off course. Taking action to avoid problems before they occur is a prevalent feature of successful modernization efforts. Effective tools that create this level of visibility include top-notch communications, continual management of business value, and crisp project governance.


  1. Learn as You Go

Don’t wait until the project ends to learn from it. Assess along the way what’s working well and what isn’t, determine why, and make course corrections on the fly. Things always go wrong; an inclination to apply what you learn from missteps will help your project be successful. It is critical to foster a culture of learning, a willingness to take on risk, and an ability to fix problems when they arise. Lastly, remember that past success does not guarantee future success. Periodically stop and assess your program regardless of how well it is going. Doing so will ensure you maximize the performance of the team and the ultimate value delivered.

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