Breaking Down the Core Capabilities of a Successful PAS Transformation
Insurance Experts' Forum, July 10, 2013
The traditional measure of success for a PAS transformation is delivering scope on time and within budget. In today’s market, this presents a challenge to carriers that continue to cling to legacy development processes (e.g. all up-front planning with little flexibility for change and long development cycles where stakeholders rarely see completed code).
Leading carriers are moving beyond the status quo and differentiating themselves by using faster, more flexible approaches to policy administration transformations. They continually map program decisions to the business case, and establish the appropriate committees and frameworks in order to better control changes and meet goals; they rapidly deliver working code in an iterative manner that they can immediately demonstrate to business users; they utilize a policy-specific framework to proactively identify and respond to common issues, which results in more consistent project performance.
In my previous post, I outlined the 10 steps to attaining success through a policy administration transformation. Let’s dig a little deeper into five of those steps, which pertain to the core delivery capabilities indicative of successful PAS transformations.
1) Program management – A holistic approach that links the business case to strategy and execution, as well as pointing out the benefits throughout implementation. This includes:
a. Business and IT Alignment. Breaking down the business case drivers into desired capabilities provides both perspective into the foundational business areas that will be implemented and a consistent benchmark for prioritizing functionality against business value. Additionally, PAS transformations typically involve the consolidation and retirement of legacy systems. To help this happen smoothly, linking capabilities to the current and future technology landscape provides a complete view of the solution that can inform a logical breakdown of work necessary for supporting the transformation.
b. Release planning and mobilization. Defining the appropriate processes, structure and controls can effectively bridge the gap between strategy and execution. Leading carriers establish an agile-like development methodology to appropriately balance speed, continuous feedback and program control against scope, schedule and budget.
c. Management and governance. Managing to the business case requires fact-based and informed decisions, quality deliverables, and benefits that are within scope, schedule and budget. Successful transformations feature a fully dedicated executive-level resource who leads the project and is responsible for the attainment of these objectives.
2) People and change management – A critical success factor for a PAS project is how well the carrier reduces the disruption that comes with a complex and long-term transformation. This requires PAS projects to integrate people and change activities throughout the project lifecycle, ensuring the right engagement with the right stakeholders at the right times. For example, in order to effectively re-engineer business processes and encourage adoption, successful transformations engage business representatives in the daily management of the project in order to promote buy-in, maintain alignment and develop change agents.
3) Integration and architecture – A modern enterprise architecture is the foundation for a successful PAS transformation and a critical factor in realizing expected project benefits. A successful transformation goes beyond simply replacing the old PAS with a new one; it refreshes the technology foundation by making it efficient, effective and flexible, all of which makes it more responsive to business needs. Some examples of enterprise architecture investments include:
a. Utilizing an enterprise service bus that promotes reusable services and speeds project implementation;
b. Developing an abstract enterprise data model that reconciles disparate data across multiple systems and facilitates the staged retirement of legacy systems; and
c. Segregating core business functions from the presentation layer to support both consistency in the customer experience, as well as tailored functionality and workflow for different users.
4) Program quality and testing – Because of timeline constraints, PAS projects often compress the duration of system integration testing (SIT) and user acceptance testing (UAT). However, this increases the risk of undetected defects and gaps winding up in the live system. To avoid this, we recommend a “test first” approach in which risk-based tests take place during the development phase in high-risk areas (e.g. rating, forms inference, reporting, downstream integration). This should reduce the volume of defects in later testing phases. Additionally, we recommend investing in test automation and test data management early in projects in order to improve testing efficiency in later cycles.
5) Supplier management – Achieving an efficient PAS transformation on time and within budget requires resources with the right skills at the right time and at the right price. Carriers often need to onboard external contractors to fill skills gaps, but this approach runs the risk that not all team members (including external contractors) may be equally committed to on-time and on-budget delivery. Successful transformations employ a general contractor to serve as a one-stop shop that addresses sourcing needs. Benefits of using a general contractor include its ability to fill skill gaps (including industry experience across a variety of disciplines), provide variable capacity to quickly ramp up/down resources, and optimize cost through onshore and offshore resources. In addition, successful transformations typically see the carrier and general contractor share accountability for delivering in a timely, cost-effective manner (e.g. “fixed bid”), thereby mitigating implementation risk.
In today’s current market context, carriers that have not changed how they approach their development processes will quickly fall behind their competitors, as the ability to deliver on time and within budget is table stakes for a successful transformation project.
Imran Ilyas, partner with PwC's Advisory Services, coauthored this piece with Matt Hurlbut, Matt Wolff, David Tiejen and Marc Gallo of PwC's Advisory Services.
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