Insurance companies increasingly feel the pressure to launch digital transformation initiatives to maintain competitiveness in today’s insurance industry. However, insurers must often contend with the painstaking challenge of unifying a variety of segmented digitization efforts (some of which still use legacy software and components) and identifying and integrating said technologies in sustainable ways to accomplish their digital transformation goals.
Established insurance companies, by and large, cannot simply flip a technology switch that will rapidly transform the entire operation at one time. Established operations are typically complex and interdependent. What roadblocks impede the progress of a faster digital transformation, and how do you overcome them?
The roadblocks to faster digital transformation
Understanding the needs of customers, employees and others with a vested interest is where digital transformation begins, along with making knowledgeable investments into technology. It takes extensive preparation and analysis of facets like understanding the goals of the transformation and having the required skills on your team. So, what stands between your vision of digital transformation and its successful execution? Here are common roadblocks and some thoughts on how you might deal with them:
1. Talent Gap
A shortage of qualified, skilled IT talent is the biggest roadblock to digital transformation. Currently, only 17% of companies have sufficient employees with the right skills to see them through a smooth digital transformation1. That’s because the new reality is this – tech skills are no longer centered in IT. In fact, 40% of employees say they frequently complete tasks outside of their job description, exhibiting the need for soft skills to be coupled with technical skills creating skill clusters, not singular silos2.
For the talent gap situation, it’s advisable to create a “comprehensive strategic workforce plan” to win the talent war and execute on a strong hiring strategy to land the best talent. And it’s not always about technical skills. Usually, proficiency in strategic thinking and analytics are what businesses are searching for, on top of an ability to manage others and possessing an acuity for business.
Cross-functional knowledge is essential for digital transformation. It fosters collaboration through breaking down silos to promote diverse teams to work together rather than against one another. In the same study, 88% of those who responded said they’re feeling the presence of major gaps across departments even though “extensive business-related knowledge on the IT side is crucial for developing a digital transformation strategy.” 58% say their IT executives have the proper knowledge for digital transformation, while only 27% mentioned their business executives shared an equal level degree of technical expertise. The IT- and business-side leaders must coalesce to develop a single plan guided by business goals that provides comprehensive direction the whole company can support.
Constructing a strategy is a great initial step. As part of the overall plan, check into other opportunities to gain the necessary skills – are there existing team members who could receive the additional training needed to realize those abilities? If so, this would be considered a win/win for all parties involved – the trained-up team members and the organization itself.
Strong project management is a critical first step because it’s important to note that those skills needed are now likely to go beyond the IT department. A key to success will be having the right team members, and their project managers appropriately positioned. Next, find different avenues to maintain the stability of service delivery and critical actions without interruption, especially for those services you provide that can be categorized as complex or delicate during a changeover in systems.
2. Legacy Systems
In some cases, one of the biggest roadblocks is the legacy system itself. An estimated 80% of enterprise data in the world is still housed in mainframe systems3, technology that has now passed the 50-year age mark. Refocusing operations to leave behind the relics of a bygone technology era and move to a virtualization-driven view is essential. The old mainframes need to be replaced or migrated to virtual cloud servers as soon as possible.
This usually means systems will be running together for a while during the transformation journey. It may be necessary to run a legacy system side-by-side to then phase it out over a period. Complete a “gap analysis”—looking at the gaps between the legacy system and the new solution regarding each critical function. This will help ensure a smooth transition.
Refocusing operations to leave behind the relics of a bygone technology era to a virtualization-drive view is essential.
Leading with your customer's needs is a crucial component of digital transformation. Fully understand how and why digital transformation will meet those needs and take a calculated approach based on the reason the technology is receiving your investment.
At its conclusion, you will win if your transformation registers with customer-facing technologies. The aim of the game is to deliver value. Make technology decisions that are customer value-based, but don’t forget to lend support to those who have difficulty with it, too.
- https://www.cs.cit.tum.de/bpm/fileadmin/w00btn/www/IDT_Skill_Report_2015.pdf
- https://www.gartner.com/smarterwithgartner/workforce-planning-for-competitive-advantage-post-covid-19
- https://community.ibm.com/community/user/legacy?lang=en&ce=ISM0484&ct=SWG&cmp=IBMSocial&cm=h&cr=Security&ccy=US
