Long Live Legacy and Ecosystem Transformation

Long Live Legacy and Ecosystem Transformation

When I started working at Celent back in November 2007, one of the research topic we were covering extensively was the legacy system modernization or replacement topic. Nowadays, legacy modernization remains a topic that has still a high importance in insurance CIOs’ agenda across the globe. Indeed based on our 2017 insurance CIO survey and out of 150 responses received across the globe, 57% of insurers are currently working on legacy modernization system projects. Another 10% are in the planning process and 11% will begin new legacy transformation projects next year.

It is therefore important for us to help our insurance customers understand what embarking in a core system replacement or modernization project means. While the benefits of modernizing core legacy systems are clear and compelling (gaining a competitive advantage — or achieving competitive parity, reducing operational and IT costs, making better underwriting and claims decisions, seizing analytic advantages when information and processes become completely digital), there are a lot of factors at play from the definition of the new system requirements, the approach to be chosen between the development of a new system and the purchase of a package or a best-of-breed component, to the selection of the optimal partners. Another crucial part of a legacy system replacement is the implementation of the new system as it can represent a major challenge notably in terms of project management, customization effort and migration. Implementations are particularly challenging when they involve multiple vendors and integrations.

To help our insurance customers figure out all the factors at play, every year we describe some cases in the frame of our Model Insurer program. This year we will be presenting the three cases we have received among more than 20 submissions in the frame of our Innovation & Insight Day event, which will take place in Boston on the 4th of April 2017. In addition to presenting the legacy modernization category award winners, we will also explain why they have decided to replace their legacy systems and what opportunities have been identified. We will also describe the implementation effort and draw out lessons learned. For those of you who will not be able to make it in person, we will publish a report profiling the three winners but I hope to meet you in big number at our event in Boston.

Stirring The Creative Disruption Pot

Stirring The Creative Disruption Pot


One of the great things about being an analyst is that you’re expected to challenge the status quo on behalf of the companies you work with. The analyst-as-gadfly model was on display at Celent’s Creative Disruption workshop in Boston last week. Someone later told me, “You looked like you were having fun!” I surely was.

Celent’s message of “healthy discomfort” as a driver of positive change seemed to resonate with attendees, both carriers and their vendors. It came into virtually every conversation in some way. Here are a few nuggets I noted throughout the day.

  • Disruption is generally respected but only lightly pursued. Like “change” and “agility,” disruption is a term with positive connotations for most people. But when you ask companies what they are doing to make it a reality, you mostly hear the sound of crickets.
  • Agile methodologies are enabling change. And they’re not all about technology. They seem to serve as a signpost that corporate cultures are changing, giving staff a reason to rethink their traditional behaviors.
  • Vendors have an important role to play in driving change. This is well understood, by players on both sides of the vendor/carrier relationship. But it’s easy to revert to old models, where vendor and insurer interests are in opposition rather than being aligned.
  • Leadership will determine where disruption can thrive. Front line staff are thirsty for productive change. Being part of something bigger and more exciting is on most people’s wish lists, even if they don’t know it yet.  But absent some passionate vision from the top, “big D” disruption projects are doomed.

You can expect more coverage from Celent on this topic in the coming months, as we think it is vitally important. Your ability to keep operational concerns and creative, disruptive thinking in a healthy balance will be essential for you to get to the top of a competitive heap.

Insurer Perspectives on Core System Modernization and Cloud Computing

Insurer Perspectives on Core System Modernization and Cloud Computing

The fourth Celent Peer Networking Event was held last Friday at the headquarters of Allied Insurance, a division of Nationwide, in Des Moines, Iowa. Thirty people from eleven different insurers contributed their experience with evolving cloud computing and legacy modernization strategies. As with other events, the discussion was open, active and focused on practical steps that can be taken to transition insurance automation to new platforms.

A review of recent Celent research kicked off the meeting, with Mike Fitzgerald, Senior Analyst, presenting survey data on core systems modernization and on the business case for updating legacy systems. Data from a 2011 Celent report, Still Seeing the Shadow: Groundhog Day for Legacy Modernization (Still Seeing the Shadow: Groundhog Day for Legacy Modernisation (P&C Edition):http://celent.com/reports/still-seeing-shadow-groundhog-day-legacy-modernisation-pc-edition Still Seeing the Shadow: Groundhog Day for Legacy Modernisation (Life and Health Edition):http://celent.com/reports/still-seeing-shadow-groundhog-day-legacy-modernisation-life-and-health-edition) illustrate that the rate of transition to new insurance platforms has increased in the past two years. The group validated that this was the case with their organizations. Approaches, risks and issues highlighted by the study were discussed in turn, with the loss of legacy analysis skills receiving a significant amount of discussion. Several attendees shared steps that have been taken in their shops to address the gap between the supply of, and the need for, analysis and programming skills. A partnership with local colleges and universities, described by one company, was particularly useful. Data from an upcoming report, Reviving the DOA Core Systems Business Case, were also covered and attendees had an opportunity to compare their alternative approaches to justifying a modernization effort.

A panel discussion concerning the use of a rationalized application portfolio followed. Dan Drabenstot, Principal Enterprise Architect, Mutual of Omaha, Ray Wasilewski, Vice President Technology, FBL Financial Group, and Ben Moreland, Senior Analyst, Celent, shared their experiences in using a portfolio approach to plan legacy modernization. They offered several examples of how a system inventory improved communication between business and IT areas. One participant detailed a scoring methodology that prioritized automation projects and highlighted tradeoffs in decisions concerning alternative implementation paths.

In the afternoon, Vijay Gopal, Enterprise Chief Architect, Nationwide Insurance and Ram Rao, Commercial and Specialty CTO, Allied Insurance facilitated a discussion concerning the implementation of a cloud computing platform. Alternatives were identified concerning initial projects involving cloud technology. The consensus of the group was that, eventually, most companies will employ a mixed approach that will include both public and private clouds. Participants mentioned that they currently are choosing specific systems to experiment with in order to learn the skills and processes needed to successfully manage the new environment. A key point was made that any vendor of cloud services to insurance companies must be able to meet the regulatory constraints of the industry.

Celent would like to thank all the attendees and the presenters for their participation in making this a successful event. We look forward to hosting the next Peer Networking Event: Enterprise 2.0: The Social, Mobile, Connected World at Allianz Life headquarters in Minneapolis, MN on Friday, October 7th, 2011 (for information, please visit October 7, 2011 | Insurer Peer Networking Event: Enterprise 2.0: The Social, Mobile, Connected World: http://celent.com/node/29031).