Most insurance companies have historically addressed transformation through information technology initiatives, including ITO. In this approach, operational transformation is addressed through a technology solution, which demands investment in one global instance of a system or global standardization of platforms. It is then followed by wrapping a BPO solution around the capital - and people-intensive systems implementation. Read on to find out why this approach is flawed. The link in the PDF/Presentation is not working due to some changes in the website. Please refer to the new link http://bit.ly/exC7wi

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Does IT-led Transformation Fail To Deliver On The Expectations
Of Insurers?
By Jeremy Owenson
Most insurance companies have historically addressed transformation through information technology initiatives, including
ITO. In this approach, operational transformation is addressed through a technology solution, which demands investment
in one global instance of a system or global standardization of platforms. It is then followed by wrapping a BPO solution
around the capital - and people-intensive systems implementation.
This approach is flawed. Given the current cautious business environment, ITO-led transformation may not be the most
viable option for many insurance companies because of the following reasons:
The approach is linear by nature: A majority of insurers believe transformation to be sequential. They beli eve
that extensive changes and modernization efforts to existing systems are a prerequisite to achieving successful
business process transformation, as opposed to changing business processes directly to yield higher productivity
and fewer errors.
The pursuit of the latest or standardized technology may be long-drawn: It can require a wholesale
replacement of all platforms and tools in order to move to a single platform.
The need to re-engineer business processes may be time-consuming: Re-engineering business processes
requires the participation and buy-in by a host of stakeholders from the range of insurance lines with an
associated substantial investment in resources.
The approach delivers cost savings only in the second or third year : Experience indicates that most
insurance companies spend between two to five percent of their premium revenue on IT, and ITO-led
transformation requires an additional and steep capital investment, which typically starts to deliver cost savings
only in the second or third year due to the cost of transition and training.
The bottom line is that IT-led transformation involves extensive upfront capital expenditure, a lengthy deployment program,
and a substantial investment in program management, all of which are disruptive to the core business and do not get to
the heart of the transformation initiative - delivering standardized processes at lower cost while simultaneously providing a
high - quality service experience to new and existing policyholders.
What is the solution to the transformation initiative then? BPO-led transformation. Click here to read our white paper
titled BPO-led Transformation Insures Results in Changing Times, where we have outlined HOW companies can benefit
from the approach of a BPO-led Transformation.
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