When we discuss software requirements for any insurance company, there are many great arguments. These include flexibility, scalability and speed-to-market. Configurability is also important. These traits are often overlooked by senior managers when they make critical software purchasing decisions. Many organizations don’t. This can lead to significant financial losses for companies as the systems are made redundant and need to be replaced sooner than expected.
This article aims to expose the true causes of ineffective software purchasing decisions.
1. Multiple stakeholders. Too many stakeholders can make it difficult to decide how to merge business operations or upgrade systems. Because of the complexity of insurance organizations, and the fact that insurance companies continue to acquire, merge, and expand their operations into new areas, IT organizations assume that everyone should be involved with the transformation decision. This may not always be necessary. Most people get involved to share the responsibility, rather than add actual value to the decision making process.
2. Knowledge gap
As organizations expand both in terms their businesses and their geographic reach, it is crucial that systems can meet current and future business needs. This crucial component is often overlooked when making software purchasing decisions. It is important to consider the long-term potential of new technologies as they develop at an increasing rate.
3. Mangel of resources
Software applications should be easy-to-use, minimize turnaround times, provide customer service, and generate business value. When prospective vendors talk to potential vendors, they should be able to contact the actual managers at the bottom of the hierarchy. It seems that most people are busy with their 9-to-5 work hours. They are unable to spare the time to make a decision about what they need and what current issues they face. The question here is not about the ability of senior management to make effective decisions. Engage the end-users starting at the beginning of the process to choose a software partner. This must be recognized by senior management. This is a critical part of the process that can lead to severe dissatisfaction from business users after the software has been installed.
4. Ineffective coordination
Complex coordination of operations and insurance companies is becoming a bigger problem due to their ever-growing size. Many times, the firms write multiple lines of business and have multiple units operating in different areas of the country. Every department should be involved in the decision about which vendor to choose. Marketing, underwriting and sales should all be involved in the decision. This often results in fewer units being able to achieve their goals. Instead of one solution for all, the other divisions must look for software applications that can support their specific needs. This is a huge defeat for the entire transformation effort that aims to integrate multiple existing systems and create a single platform for all business functions.
5. Improper evaluation
Sometimes, the RFI or RFP process does not invite establishments with the most innovative software applications on the market. Many businesses rely heavily on market research that may not reflect their business needs. Businesses need to realize that not all companies are the same. It is best to research the software used by your closest competitors before you invite them to join you. It will be invaluable to get first-hand information about the problems they faced and the suggestions they made during the evaluation process.
This is a global problem that impacts every decision made in organizations, large or small. These people may not have sufficient information about the current business and system challenges. Most of the time, users who are needed to be involved in decisions are not considered.
7. Cost limitations
Spending on Information Technology is more often seen as an expense than a way to reduce costs over the long-term. Companies need to look at the whole picture and evaluate ROI over the long-term, as well as the immediate stock price and quarterly dividend returns. When analyzing the Cost and Benefit analysis, it is often overlooked the importance of advanced systems for cross-selling/up-selling, retaining customers, and improving customer experience.
Rajneesh, a dynamic professional with over 17 years of experience in the P&C insurance industry, is an expert. Rajneesh worked for many leading P&C Insurers and has helped them design and build their IT systems. This has allowed them to improve efficiency, reduce costs, and enhance customer experience, while also maintaining a strong business reputation.
Rajneesh considers insurance both a profession and a passion. Rajneesh is keen to share his knowledge and has mentored many professionals in various fields. Rajneesh is the founder of CPCU Chapter India and its former Secretary. Rajneesh enjoys watching comedy and playing with his children when he is not at work.