By: James St. Martin, Technology Modernization at NEOS
Some things get better with age; technology, unfortunately, is typically not one of them. As businesses grow, and technology improves, it becomes imperative to replace old, costly, and irrelevant systems with modern technology that helps the company achieve its strategic objectives.
Some systems are notoriously difficult to replace – especially ones that handle essential business processes within an organization. Legacy administration conversion projects are highly complex efforts with a failure rate greater than 60%.
From our experience helping companies successfully modernize their programs and go on to achieve their business goals, we’ve identified six key elements that ensure successful legacy systems conversions — as well as some common pitfalls that cause conversions to fail, but which you can learn to avoid.
1. Partner with your vendor
Conversions are more successful when the client and vendor have a strong bond of trust as well as clear, on-going communication. There are several key ways to achieve this positive relationship.
• Work together to create a clearly defined and mutually agreed-upon operating agreement. It will become your operating manual.
• Make sure everyone understands their roles and responsibilities from the beginning.
• Agree upon the approach you will take — point-in-time, cycle-up, etc. — early on.
• Resolve questions quickly and decisively with a ‘Yes’ or ‘No.’
• As milestones are reached, circle back together and course correct if needed.
2. Understand the target system requirements and capabilities
For a successful conversion, you must possess a firm grasp of the requirements and capabilities of the new system. This includes how the target system will perform to support all aspects of administration including new business, policy issue, billing, correspondence, and others. A real understanding requires digging deep early on, not being afraid to ask questions, and not accepting answers such as “We can customize our system to meet your needs.”
3. Develop a robust process by achieving small successes
A successful conversion is in the details and making the right small moves will result in a modernization that achieves your business objectives. Focus on these small successes which will lead to bigger ones.
• Understand the product inventory — take a pragmatic approach by building your conversion processes to allow the option of swapping product conversion order.
• Take a pragmatic approach by selecting the most straightforward block(s) of business for the first iteration of conversion.
• Check and adjust — as the next blocks come into the effort, adjust your budget and timeline expectations accordingly.
4. Test target system cycles as early as possible
During a conversion, vendors often focus on inspecting source data quality, deferring target data loads and cycle up processing. Avoid this pitfall by taking a more pragmatic approach. Iteratively loading data and performing cycle up processing will identify potential gaps in data requirements or formatting while also confirming that the target system can successfully accept premium. Taking this approach may require the vendor to make adjustments to their standard conversion plan so be sure to negotiate and document the approach as early as possible.
5. Create a robust change management strategy
A substantial change management strategy is critical to a successful conversion. During the partnering phase, thoroughly document and agree on your change management strategy, applying standard principals to assess the impact on the organization and people, and adjust timelines as needed.
6. Start deployment planning early
Executing the final data conversion into the new production system requires pre-cise coordination. Migrating from the old to new systems generally requires sev-eral days of downtime. A good plan will ensure the new system is up and running quickly so that normal operations can resume with limited impact to the business.
When planning the deployment, make sure to:
• Record execution times early and consistently, understanding you will have a limited time window to execute the go-live event.
• Engage business partners early to help build an understanding of the go-live process and where their cooperation will be needed.
• Engage accounting partners early — accounting adjustments during and just after go-live are a fact of life for conversions.
• Strive for concurrency in processes — squeeze out as much elapsed time as possible from the process to get the most out of your go-live time window. An unpleasant fact of life: holiday weekends are ideal for conversion go-live.
• Plan for and execute at least two complete dry runs of the go-live event and be sure all parties are involved. Capture metrics and continue to eliminate wasted time from the execution. These dry runs must be treated with the same urgency as the go-live event.
Legacy system conversion projects are by nature challenging — that is why so many do not go as planned. Incorporating these recommendations into your con-version strategy will mitigate some of the most common risks that inhibit success.
The Technology Modernization Team at NEOS has been involved in more than 25 legacy modernization efforts, successfully converting more than $75 Billion in AUM. Our team of experts can help ensure your legacy conversion is successful.