Picking up a core system is one of the biggest IT challenges faced by insurance companies – irrespective of their size, geography of operation, number of years in operation etc. The challenges may differ slightly depending on whether it is a new company trying to get a system up or one which is running and trying to make a switch.
There are three ways to approach the initiative to identify a suitable core system.
- The Classical Way: This approach starts with the preparation of a long-list of potential packages. This is reduced to a shortlist of applications through an RFI. That is followed by collection of detailed information from shortlisted application vendors through a comprehensive RFP. The shortlist is then reduced to a set of three or four close fit applications which could be subject to testing to identify the most suitable one. The final choice is made after testing.
- The Abridged Way: This is a shortened version of the classical way, where the initial steps of long-list and RFI are skipped. From the market intelligence and experience a short-list of three or four packages are prepared. The subsequent steps are similar to the first approach, except that the testing could be considerably shorter.
- The Short-cut: The third and fastest approach is to intuitively make a choice and check whether the package would satisfy the needs. Here the objective is only to see if the chosen application would fit the requirements. All other packages, even if they were more suitable, are ignored
The choice of method depends a lot on the timeframe available for implementation, complexity of the operations, availability of easily comparable companies in the market and maturity of the firm.
The circumstances under which each option would work well are listed below :
- The classical way would be ideal under the following conditions :
- Company is looking for a long term solution
- Technology is seen as a key differentiator for the firm
- Very large volumes and complex distribution channels calling for complex technology
- When the company is a Niche playerwhich would make it difficult to straight away pick a software
- Abridged Way would be a good choice under the following circumstances :
- Market uses a limited set of software packages
- Three or four packages look similar and broadly in line with the requirements
- Company is looking for a quick closure of package selection
- Companies could go for the Short Cut approach if :
- It is looking to start up quickly and speed is the first priority
- Package is fairly well known and there is a good amount of confidence that it will work
- The priority is to get a working package rather than chase the “ideal” option
The plan is to have a tactical software solution which will work for a couple of years and make a choice of a long term solution during that period
