Learnings from an insurance firm

In the past 10 years, the insurance industry has withstood numerous mergers and acquisitions. For many firms this resulted in a complex web of legacy and internal IT systems. When it comes to investment management systems, more is not merrier. Firms with spaghetti architecture are now dealing with operational inefficiencies and unnecessary cost and risk.

The 2023 InvestOps report showed us that insurers recognize a need to address the situation, as many said they are prioritizing investment in tech innovation.

Recently we shared an example from a North American client who is saving USD 50M annually after consolidating several legacy systems.

Here we share some learnings from that client’s experiences.


Taking it one step at a time

Investment system consolidation can seem like a daunting task. To avoid overwhelming internal resources and disrupting operations, it is crucial to take the process one step at a time. Once you have decided on the ideal investment management architecture, you should break this down into manageable phases or modules. Consider following the path of least resistance. This may mean starting with a new affiliate or finding a group within the company that is more open and ready for change.

By implementing a phased approach, you can minimize risks, test and validate each step, and gradually integrate systems without disrupting the entire organization. This allows for a more controlled and successful transition and lets you see results in incremental stages.


Strategic alignment

Before initiating any investment system consolidation efforts, you need to ensure that whatever the set-up you choose, it will be aligned with your company’s strategic direction.

For some, it makes more sense to consolidate applications to a public cloud of their choice first, most likely as a stepping stone to the next level of Software as a Service (SaaS). Other firms choose to build for purpose or instead move directly to a SaaS model where a vendor takes full responsibility for operating the applications on their own cloud. With this latter, more direct option, firms can focus on their core business rather than dealing with operational IT issues such as installing, configuring, upgrading and running software.

Start with defining clear outcomes from your chosen operating model and outline how this will support the overall business strategy. This alignment will help you cement the business case, gain management support, and secure the necessary resources.


Set measurable goals

Setting clear and measurable goals is critical for tracking progress and managing expectations going into any system consolidation project. Establish specific objectives that are realistic and aligned with your overall business strategy. These need to be broken up into different phases and modules to ensure progress can be seen over time (see #1). These goals could include reducing operational costs, improving efficiency and productivity, timely and transparent access to data, increase in regulatory ratings, improved employee satisfaction and/or automating reporting processes. Define key performance indicators (KPIs) and regularly monitor progress against these metrics to gain insights into the effectiveness of your consolidation efforts and make timely adjustments where needed.


Stakeholder management

Successful investment system consolidation requires effective stakeholder management throughout the process. Identify and engage key stakeholders, including senior management, compliance, accounting and IT teams as well as operation management, and end-users. Communication and collaboration are vital in gaining buy-in and addressing concerns or resistance to change. There may also be another project planned in another department that could derail or distract your project. By involving stakeholders from the early stages, you can gather valuable input, ensure their requirements are considered, and manage expectations. Additionally, provide training and support to stakeholders during the transition to facilitate a smoother adoption of the new platform and operating model.


Choosing the right partner(s)

Selecting the right partners to assist with investment system consolidation is crucial.

Thankfully the era of closed-off black box systems is gone. However, the landscape of technology providers, data vendors, marketplaces, custodians, and infrastructure providers is getting more complex.

Understandably, you may be overwhelmed by the options, but ignoring them means you are ignoring innovation and you risk being left behind. The way around these integration headaches is to choose a core operating system that allows for plug and play integrations with the larger market ecosystem. Here the technology provider does the hard work of curating niche solution partners, integrating them into their core platform so you can fast-track innovation at a fraction of the cost.

Finally, also ensure your chosen partners have experience in insurance industry processes and systems, they must possess a deep understanding of regulatory requirements, and demonstrate a collaborative approach.


Key takeaways

By taking a systematic and strategic approach, setting clear goals, managing strategic and tactical stakeholders effectively, and selecting the right partners, you can navigate the consolidation process successfully and reap the benefits of improved operational efficiency and reduced risks.



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