Execution Wins in Core Systems Implementations
George Grieve | June 01, 2015
Execution trumps all else in the IT world. An imperfectly formed strategy, which is well executed, is better than a perfect strategy that never happens or gets badly implemented.
Similarly we are reaching the point in the core systems world where the choice of software solutions is less important than the ability of the implementation team to execute the legacy modernization project required to get the new system into production.
Obviously, the previous statement comes with some strong qualifiers. For example, a workers’ compensation carrier would be ill advised to choose a vendor that has never done “comp,” but if the comp carrier has a short list of, say, three well qualified vendors with modern software and strong domain experience then the key differentiator should be execution. The best solution is of no value if it does not get implemented. ROI requires go-live.
As we have discussed many times, core systems legacy modernization is the hardest thing an insurance IT department can undertake. These projects are complex, enterprise-wide, of extended duration, and heavily risk-prone. Therefore, the size, makeup, and experience of the implementation team is critical to the project’s success. Also, by their nature, core system replacement projects are not frequent occurrences. It is common to find the legacy system that is being replaced is 20, 30 or more years old.
This raises what we at CastleBay Consulting call the Carnegie Hall Problem. As the time worn joke goes: A man stops someone on the streets of Manhattan and asks “How do you get to Carnegie Hall? The stranger answers, “Practice.” If you want to play at a world class music venue you have to practice and train to be a world class musician. Similarly, if you want to be capable of executing a major legacy replacement project you need to have practice and training at doing legacy replacement projects.
The problem is that the in-house IT group has spent the last 20 years doing maintenance projects. Playing Chop Sticks does not prepare you for a piano concerto. And just as you cannot suddenly figure out how to successfully play Beethoven’s Moonlight Sonata, you also cannot learn to run a legacy replacement project on the fly. Such an undertaking has too many moving parts, is too broad, too risky, and too visible to learn on the job.
So, what is the answer? Build a team that incorporates three skill-sets that are critical to project success. The three skill-sets are:
- Detailed knowledge of the insurance carrier’s business operations, system requirements, and success criteria.
- Detailed knowledge of the new system solution, what it does, what it does not do, and how to modify and extend its behavior and integrate it to create a successful solution for the carrier.
- Detailed knowledge of how to plan and execute all the key components of a core system legacy replacement project, preferably accounting for the vendor specifics.
And where do we find these skill sets?
Detailed knowledge of the insurance carrier’s business operations, system requirements, and success criteria is the core of the insurance carrier’s knowledge and competence. A combined group of business subject-matter experts, business analysts, analysts who support current systems, and technical architects who know how the current application suite operates are the critical contribution from the carrier for the success of the project.
No one else knows what the carrier does today and wants to do tomorrow. Further, as the customer, the carrier owns the responsibility to define what they want from a third-party system (define the requirements) and to verify that they get what they asked for (acceptance test the system).
Detailed knowledge of the new system solution, what it does, what it does not do, and how to modify and extend its behavior and integrate it to create a successful solution for the carrier is usually the domain of the vendor. As the developer of the software, the vendor is ultimately the expert on what the system does and how to modify and extend its functionality. Vendors vary in their approach to the services component of software delivery.
Some vendors offer a limited and strictly defined set of “expert” capabilities that focus on executing the most complex configuration and integration tasks while also providing mentoring for carrier or third-party staff who will do the majority of the work. Other vendors offer much broader implementation services including project management, quality assurance, conversion, and testing functions. Vendors that have a limited approach to implementation services often have a partner program, which allows third-party services vendors, often referred to as system integrators (SIs), to build product expertise and bid for client project work.
Detailed knowledge of how to plan and execute all the key components of a core system legacy replacement project, preferably accounting for the vendor specifics, is usually the domain of the aforementioned SI companies. Depending on the size the carrier (and its pocketbook) it may hire a SI to manage the entire project including the carrier staff as well as the software vendor and its own resources.
System Integrators are companies dedicated to the delivery of a broad range of IT services from program management through business analysis, configuration and programming, integration, testing, deployment and maintenance. Until recently, these service vendors worked mostly in large insurance carriers on large projects, but recently they have become commonplace participants in legacy replacement projects for lower-tier carriers, providing specialist skills in vendor software as well as structured offerings for specific project components such as QA or conversion. In smaller carriers, services vendors may be hired to perform specific aspects of the project e.g. conversion or QA, while the carrier provides its own project management or contracts for that service from a separate third party.
There are, of course, an infinite number of variations as to how the team gets built. Also, the makeup of the team can and should change over the different phases of the project. The earlier phases of the project tend, out of necessity, to focus on technology and integration at the expense of business functionality, whereas later phases are largely business function driven.
If 20 integrations are required to write one policy for the first line of business in one state that is what is going to get done first. Once the 20 integrations are in place a relatively small amount of additional integration work will be required for the remaining states and lines of business to be supported. Variations and phase changes aside, what is most important is to focus on one deceptively simple question: Does the project have the combination of knowledge, skills, and resources to successfully deliver the objectives of the current (or about to start) phase?
Of course, successful execution requires more than just human resources. A major part of the value of hiring an SI is the methodologies, tools, and accelerators they bring from prior projects, which benefit your project by saving time, reducing effort and ensuring quality. Methodologies are usually assets that support the planning, execution and tracking of the various project streams. Tools can be anything from automated test generators to bug trackers or other capabilities. Accelerators are reusable code assets that provide head-starts for such functions as configuration changes or ETL functions for integration.
The main value for any carrier in hiring third-party expertise is not only do they bring seasoned resources and other assets to facilitate the project, but they significantly reduce project risk. While budgets and timelines are important, most executive management groups understand and appreciate that complex projects can and do run over. This doesn’t bother them if they feel the project is firmly on track and will ultimately deliver a high-quality result, which can be leveraged for years to come.
The definition of success for a core system replacement project is best measured two or three years after it is completed and should focus on the business transformation and attendant benefits that have been achieved. Whether the system was a few weeks late or some percentage over budget becomes less important with the passage of time.
Project execution should focus first on getting a system into production and second on providing enough functionality and quality that the system can be built on for years to come. The only way to do this is to ensure the right mix of knowledge and skills, combined with the right tools and other assets are available to support project execution.
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