Why a bottom-up approach is key for transformation success in insurance

Editor’s note: The London insurance market has a long way to go in terms of digital transformation. To meet the demands of enterprises and large organisations on their transformation journey, Rackspace Technology has partnered with global systems integrator Tech Mahindra. Together, Tech Mahindra and Rackspace Technology can help insurance organisations realise the benefits of cloud faster through transformation services and cloud acceleration expertise.

For a long time, insurance has been the same. While sectors like retail and finance have been transforming rapidly over the last decade, insurance companies are still operating on systems that they’ve been using for 20 or 30 years. Imagining where insurance could be if organisations were able to more effectively make use of all the data at their disposal is an exciting prospect.

In the London market, we’ve seen large transformation projects get kicked off and stall, ultimately failing to deliver the benefits of cloud and only adding more complexity. After several million-pound investments on cloud migrations, organisations have reported that their transformation projects are on hold, but why?

Falling into the top-down trap

Many insurance organisations have complex IT estates embedded in their infrastructure landscape. Transformation projects within insurance organizations are failing because IT estates are being looked at from the “top-down”. It means organisations and their system integrators are first looking at applications, then at what type of cloud the application should be running on, and then at how to secure that application. Based on our experience, this isn’t the best approach, as the way data and processes work is not dependent on the application — it depends on multiple systems in the IT estate.

Mergers and acquisitions activity has been rife in this sector over the last twenty years, and when organisations inherit multiple data centres from acquisitions, it means data and virtual machines are spread across various locations and not well integrated. Kicking off a cloud migration project when your data is segregated is not a good idea, as it will be challenging to get good functionality and productivity from applications down the line. Also, it will be difficult to keep data secure.

The top-down approach to transformation leaves organisations in a worse position than before, having spent vast amounts on a migration that only intensifies the complexities and leads to inefficiencies and more incurred costs. Unfortunately, the failure of large-scale transformation projects in the insurance industry has spread more fear of this process throughout an already risk-averse industry. So now, part of the challenge is changing the mindset towards transformation and undoing some of the mistakes made. It all starts with simplification and standardisation.

Simplifying, starting with the data centre

Transformation road map design should start at the bottom — which means looking at data centres and consolidating where possible. As many organisations inherit multiple active data centres during acquisitions, an important step in the transformation journey is assimilating those acquisitions and simplifying the IT estate. You should try to reduce your data centre footprint to reduce unnecessary operational costs and this consolidation exercise will lead to large costs savings over time.

The bottom-up approach also involves addressing legacy systems in your data centres. Sunsetting a legacy system is not a simple task, but it is a needed one if a company wants to move forward with its efficiency and security protocols. An obstacle from an IT perspective is the amount of industry regulation in insurance. Data about certain policies and records needs to be kept for very long periods, and there is inertia around what to do with this data and the systems supporting it. This creates inefficiencies as labour-intensive manual processes are required to utilise the data, and the time it takes to do this creates dissatisfaction in the customer experience.

For example, renewing a policy involves going through all the records in that policy, which is done manually at the moment. Considering large enterprise contracts have billion-pound policies split between multiple insurance organisations, with data spread across various data centres, reviewing that data is a gruelling manual task. Phasing out a legacy system requires a comprehensive strategy to carry out the process. Your sunsetting strategy needs to have a data migration plan which includes backing up data so nothing is lost and to maintain data quality and integrity during the migration.

Digital transformation, done right

Given the reported digital transformation challenges in the industry, Rackspace Technology and Tech Mahindra have teamed up help your insurance organisation transform successfully — no matter where you are on your digital transformation journey.

GoCompare customer story

GoCompare has ambitious digital transformation plans that will allow them to broaden their offering. By working with Rackspace Technology, GoCompare has begun migrating its infrastructure to Microsoft Azure in a phased approach. This allows the business to trial different workloads in the Azure environment without clashing with other internal initiatives. Following the first phase of the migration, the site’s sustainability, response times and availability have improved. Read the customer story.

Large global insurance company customer story

This company provides insurance, investment management, financial products and services for retail and institutional customers. With help from Tech Mahidra, it was able to replace its data centre contracts and accelerating movement to public cloud. As a result, the insurance company was able to reduce its budget across the spectrum of services, achieve 15% savings in hardware and assets and increase productivity by 35% through automation.

A winning combination

Together, Rackspace Technology and Tech Mahindra provide you with global scale and regional support, best-of-breed technologies, a deep pool of expertise and vast domain experience — to put you on the best path for success. Joining a multicloud solutions expert with a global systems integrator creates the perfect partner for large-scale transformations, offering a wealth of technical, architectural, design, consultancy and insurance industry experience.

• A combined 130,000+ professionals
• Working across 150+ countries
• Helping 120,000+ global customers, including the majority of Fortune 500 companies
• With numerous intellectual properties and accelerators

Let our experts help guide your digital transformation. Start the conversation now.