Blog: How to get rid of legacy systems

old legacy computers

  • Disruptors can target niche markets and create products more quickly than incumbents
  • Replacing IT systems can help redesign business processes and cut maintenance costs 
  • In project management, the skeleton technique consists in building first the crucial frame and then adding progressively the ‘muscle’
  • C-level engagement is key to success

Insurers are aware of the hurdles associated with replacing legacy systems. But there are ways to make it a smooth and beneficial transition, as listed by Grzegorz Podlesny, senior manager at Sollers Consulting.

We’ve been talking about the need to move from legacy to modern core systems for years: every insurance conference is laden with experts telling us to upgrade and move on. Every industry paper and website include numerous articles imploring companies to ‘get with the times’.

The biggest issue with these systems is the fact that they are old. Some have been around since the 1960s and have been patched, updated and constantly ‘modernised’ over the years. This tinkering and adjusting only intensifies the problem. It essentially means one thing: ‘they still work’. If one day they just ceased to work, it would make the decision to change a hell of a lot easier.

Keeping the individual system on a life-support machine of upgrades and patches masks the fact that the company is still tied to its legacy systems. This brings us on to the secondary problem: the cost and time to upgrade in the insurance industry is usually measured in millions of pounds and multiple years. These are scary figures for management to digest, and set off alarm bells warning of business disruption, loss of revenue, slow adoption times and unhappy clients. No wonder commitment is an issue.

The technological world is not waiting for incumbents to keep up. Industry disruptors are posing a threat with their rapid modernisation. This allows them to target niche markets, create products more quickly and form partnerships with new businesses.

Customer expectations are also one of the biggest reasons to ditch the old system. Potential customers have now gone digital and they want their insurance products to go digital too.

Why make the change?

Recent studies have put legacy systems right near the top of many insurers’ fears for the future list. New systems need to be implemented or the company will get left behind. At least this shows that the topic is at the forefront of many decisions within IT departments.

Although the initial outlay involved is high, the reward could mean a reduction in operation costs through efficiency in newly redesigned business processes. Maintenance costs could be reduced thanks to easier upgrading ability. Increasing the use of robotics and artificial intelligence could also cut the cost of manual processes by up to 80%.

New, more advanced systems allow insurers to create, change and manage product ranges much more efficiently. This in turn allows them to cater for customers’ needs as well as being able to produce more flexible products. Happy customers equal more willingness to part with cash in the form of premiums.

New insurtech companies coming to the market will also be easier to collaborate with. So instead of being worried about them ‘disrupting’, the insurer can acquire or create links with them without fuss.

How to ensure a smooth and successful project

With large projects, the way it is managed is paramount to any success or indeed, failure. However, this area is often the most overlooked. An interesting example when carrying out large-scale projects is the skeleton technique. It requires the management team to focus not on scope, but value. The aim is to determine what is most important and build an initial framework to which the ‘muscle’ is added gradually.

In a recent successful project, the skeleton method allowed the company to go live four months earlier than planned. Being able to launch a fundamentally sound – if basic – system allowed the old legacy system to be decommissioned, saving money, along with new products being released more quickly, which increased sales. The bells and whistles were added later.

It is vital to have everyone rowing in the same direction, from C-level, project team, all the way to the final user. In another successful project, the CEO was said to be willing to invest 10% of his time exclusively to the project, other board members invested up to 60% during the initial stages and the whole company was engaged on a day-to-day basis with the progress in parallel to running daily business successfully.

Add this level of dedication to a service provider with the experience and background to deliver and you have the makings of a successful project.

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