Centralize Data to Accelerate Core System Replacement
Jack Plunkett | April 28, 2014
So, you've invested in a modern core system. Congratulations. As you are no doubt aware, this is the critical first step in your business transformation, ensuring swift reaction to market changes, and allowing for faster delivery of new products to market. But ties to the old days prevent completion of the transformation. The truth is, you simply can't let your legacy core system go — not because of an emotional tie; rather, it still houses your all-important historical data.
Unfortunately, far too many insurers find themselves in this position. They are ultimately blocked from achieving true business transformation because they are bogged down with worries about what data to pull from their legacy systems, how to sustain legacy systems to access important data that cannot be migrated, and how to support the business during transition. The good news is that insurers have the option of a few different approaches to achieve their data migration goals. However, some approaches will yield more favorable results than others.
The Best Approach for You
Insurers typically have three options for data migration, and their choice depends greatly on their business culture, goals, and appetite for risk. The following provides a bird's-eye view of these options, along with pros and cons to help inform your decision.
Option 1: Non-Conversion/Migration
For those insurers that fear the risk and effort associated with data migration may be too great, this approach may be best for you. With the "Non-Conversion/Migration" option, insurers leave their legacy systems running and treat them as data sources. Over time, however, the costs involved in not sun-setting the legacy system will continue to grow, as will associated risks involved with trying to keep outdated systems functioning. From a total cost perspective, this is the most expensive option long term as the cost of maintaining the legacy burden continues indefinitely, and as noted, this cost will continue to grow.
Option 2: Full Conversion
A bit more aggressive, the "Full Conversion" approach sources data from multiple locations and populates the new core system data model. Typically, a Full Conversion is attempted after the initial core system go-live due to the challenges associated with migrating to a constantly evolving data model. However, this means that the data migration must take place into a live system, with all policies and/or claims and billing in process, which presents its own set of challenges.
On the plus side, insurers can retire their legacy systems after the data migration is complete, but the complex system's ecosystem that consists of proliferating leads and feeds will not materially change and will incur ongoing expenses until modified. From a cost perspective, this approach will require significant conversion programs that will not be further leveraged and the company has not lowered its overall maintenance costs as these have shifted from the old systems to the new one. Ongoing maintenance burdens have been shifted but not reduced and will grow over time as additional technology is introduced into the stack.
Option 3: Operational Data Store (ODS)
The third option involves extracting the data from all necessary sources into an operational data store or integration repository. With an ODS, insurers can populate the new core system starting with renewals, and use the ODS as the new enterprise-wide source for all reporting and functionality that previously required system-to-system or point interfaces. Ultimately, this option will simplify the system landscape and allow an insurer to unlock data from across the enterprise.
However, while this may seem like the ideal approach, it does not come without its own set of challenges. Traditionally, such projects have been hard to get right for many reasons; namely, that it is time-consuming to obtain cross-functional consensus on the ODS design and expensive and time consuming to design one from scratch and perfect. This will typically require a multi-year, multi-functional effort. Once this consensus has been reached and the coding completed and data loaded and tested, the business and its needs can proceed and the company can start to reap the benefits.
After weighing these three options carefully, the ODS approach seems to be a clear winner, with Full Conversion coming in at a close second. But before committing to it, consider yet another option: a pre-built ODS that integrates with the new core system.
The Power of One
Ultimately, insurers must select the option that best suits the culture and goals of their business. If they are looking to gain profound operational insight from their new core systems to transform transactional data into knowledge that will guide their daily operations and better address strategic decisions, centralizing their historical data in a pre-built ODS is an ideal choice. Starting with a pre-built ODS; insurers can concentrate on optimizing for a competitive advantage rather than building an enterprise data model from scratch.
With this approach, a central hub is established that unifies, standardizes, validates and stores data from the former patchwork of legacy systems as well as external sources. As the leads and feeds are corrected to come from the central source, those legacy systems can finally be turned off. With this environment simplified, ongoing maintenance is reduced and key processes and functionality is now permanently insulated from technology change. When the ODS is integrated with the new core system, historical and external data can now be conformed, organized, and centralized, and users may take advantage of the advanced analytics and BI tools that are available today.
Effective data management is no longer a nice-to-have. It's mission-critical. In order to transform your business and remain competitive in today's fast-paced insurance market, insurers must optimize and fine-tune their entire business, not just the front end running on core systems. Modern data management infrastructure—namely, a centralized, enterprise-wide operational data store—integrated with a new core system, completes the transformation and sets the savvy insurer on a sure path to continued success.
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Desjardins General Insurance Group Deploys EIS Suite for Commercial Lines
- Acuity Modernizes Customer Communications Management with OpenText Exstream and ValueMomentum
- COUNTRY Financial Joins Roost’s Home Telematics Program
- Roost partners with The Weather Company
- Majesco Launches Majesco Digital1st Insurance, an Innovative Next Generation Platform Solution as the Foundation of a New Business Unit
- New Release of EIS Group’s ClaimCore System Delivers Dental Claims Management
- Westfield Streamlines Commercial Lines Underwriting Through New Verisk and Duck Creek Technologies Integration
- MADISON MUTUAL INSURANCE CHOOSES ROOST HOME TELEMATICS SOLUTIONS
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
It has become a common refrain over the past few years to view the practice of enterprise architecture (EA) as something that time has passed by, much... READ MORE
One important trend in society over the past decade is our increasing ability to create and consume a seemingly unlimited amount of digital content... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
Fraud detection has always been and will continue to be a critical component of claims management. Learning the lessons from current claims Straight... READ MORE
- Vendor Views