New technologies, new competitors and empowered consumers are driving most insurers along a journey of digital transformation in some shape or form.
For many insurers, a lion’s share of the IT budget is often locked up in legacy systems and “‘keeping the lights on.” Combined with lower levels of growth and profitability across the insurance industry, resulting from lower macro-economic growth in Australia, many insurers lack sufficient short-term funds to invest in their digital transformation programs.
However, in low-growth markets where there is greater competition for the same pool of customers, insurers that continue using out-of-date applications risk not being able to meet longer-term market challenges.
Nevertheless, there are important alternative ways for organisations to release sufficient funds to update and modernise their applications.
One key strategy is to automate manual processes. This kind of digital transformation program is necessary to ensure organisations can compete effectively. Today, most customers expect seamless online experiences when dealing with organisations. Automating customer service functions can lower ongoing operating costs and modernise how you manage customer relationships at the same time.
Another strategy involves replacing obsolete hardware and software that’s costly to maintain with efficient up-to-date alternatives. This approach unlocks operational savings and lets organisations defray operating costs by only paying for the software they need, when they need it, via cloud-based solutions.
One perennial tactic is, of course, to trim IT budgets to find the savings necessary to pay for a digital transformation program.
As well as these budget-raising measures, it’s also valuable to look at narrowing the scope of your digital transformation initiative. Pilot programs offer a number of advantages. If you’re facing substantial risks and inertia in your organisation, pilot programs let you model your future state in one particular business area.
Narrowing your scope also involves looking at your priorities. It’s important to put your limited funds into initiatives where the dividends are clearest. To rank and prioritise your initiatives, examine their risk, value, and complexity. Your ideal pilot project might mean you’re stating small, but you’ll prove your business case, and gain greater support, for larger digital transformation projects down the track.
For more information, please visit csc.com/power-forward-anz/insurance.
Paul Cronin is the CTO of Insurance at CSC Australia and New Zealand. Paul advises clients, prospects and partners on the business and technology challenges faced by insurers across the region and provides guidance on solutions that deliver growth, increased efficiency and speed to market through digital transformation. Paul has over 20 years experience in the IT industry and since joining CSC in 2003, he has led a number of large and complex transformation initiatives for CSC’s clients. A recent achievement was performing the role of Chief Architect and leading the digital transformation of one of Australia’s largest health insurers. Paul brings together commercial and technical stakeholders to ensure strategic IT projects transform organisations and deliver value for money. To find the most innovative solutions, he works with start-ups and some of the world’s leading technology companies.