Over the past few years, I’ve worked with many insurers on core policy administration vendor selection, and I’m excited to have joined a team with so much existing experience in this area.
While most selection processes focus heavily on features, configuration tools, architecture and implementation methodology, it is equally important to understand the vendor’s upgrade process and history. Since business needs and technology continue to change rapidly, a key selection factor for a vendor partner is their ability to evolve to support tomorrow’s needs, and not just today’s.
One predictor of the future is the vendor’s record for helping customers migrate to newer versions of their software. The decision to upgrade can be impacted by factors outside the control of the solution provider such as:
- Business priorities like entering new states, deploying new products or an acquisition
- Budget constraints due to poor underwriting results
- Complexity of multi-year implementation of business transformation projects
Regardless of these external factors, upgrades are most likely to be dependent on the vendor itself. In Novarica’s most recent Property/Casualty PAS Market Navigator report, one key difference that emerged between solution providers was the percentage of current clients on versions of systems that were three years old or older. The reasons for these vendor solution differences should be investigated and assessed as part of the software evaluation process. Prospective clients should consider the following:
- Value of roadmap items. Does the vendor’s solution roadmap suggest enough new capabilities or improvements with each upgrade to warrant implementation? Well-architected and mature systems may have much of the desired functionality and integration capabilities such that upgrading becomes less important. Even if this is the case, this difference is still relevant due to changes in infrastructure components and the risk of technological obsolescence. Ease in upgrading is more critical if a vendor is catching up or building out new competitive capabilities.
- Solution provider release strategy. Some solution providers incorporate all minor releases into the scope of their implementation projects. Others hold back release updates until the system is fully implemented. What is the impact of delaying the incorporation of new functionality during the implementation? Competitors who have already implemented a new system may be leveraging those new roadmap features before you complete your initial implementation.
- Velocity of change. Frequent and material releases will drive a higher need for related regression testing capabilities and possible infrastructure upgrades. How will your organization respond to those demands? How will your QA organization manage release (regression) testing along with functionality testing?
- Upgrade accelerators. Does the solution provider offer adequate guidance regarding how to configure and manage the system to facilitate future upgrades? Do they have the tools and a proven methodology to make this process easier and less painful?
- Upgrade barriers. Potential clients should ask longer term clients either why they haven’t upgraded versions in several years or conversely, what did it take to implement the most recent upgrade. Project team size, duration, challenges and available assistance should be understood. While it is always useful to talk to new clients about methodology, new features and configuration tools, existing clients should also be contacted.
- Impact of configuration upgrades. If solution providers have improvements to their configuration tools in their roadmaps, be sure to ask if products implemented in prior versions will automatically roll forward or if a conversion effort is required. You may be surprised by the answer.
- Value of more frequent upgrades in a managed service agreement. An additional consideration is whether or not you will get earlier benefits realization from a managed service agreement. SaaS installations tend to be on more current versions of the software. If your organization does not have a disciplined program for upgrading software components, you may benefit from a SaaS implementation.
- Selection criteria weights. Given all that you learned by considering the prior seven items, should your selection criteria weighting be altered? Does it give enough weight to differences in upgradeability?
No one wants to be buying a system that will become out of date and require a large scale replacement project in the near future. One way to avoid this is to purchase a system from a solution provider that invests in the future and has a clear and cost effective methodology for managing software upgrades.
Please don’t hesitate to contact me at email@example.com to learn more about our policy administration and other core system vendor selection services. You can also check out:
- An overview of our vendor selection services
- Our Novarica Market Navigator reports on insurance software vendors
- Property/Casualty Policy Administration Systems Novarica Market Navigator
- Life/Health/Annuity Policy Administration Systems Novarica Market Navigator
- Martina Conlon’s recorded webinar on Vendor Selection Best Practices