For most organizations, cloud migration is more than just a change in software. It’s a transformation that requires a culture change and buy-in from not only IT but also the business units whose processes are ultimately affected.
In today’s business environment, moving from legacy to the cloud most often means moving to a software-as-a-service (SaaS) solution that resides in the cloud. A recent report by Gartner forecasts that end-user spending on cloud services in 2022 will reach $482 billion. SaaS will remain the largest segment of cloud services, with spending expected to reach nearly $172 billion, Gartner indicates.
For surety companies and insurance carriers in general, the legacy system may vary. In some cases, the migration might mean moving from an older, on-premises version of software, while in other instances it involves moving from a custom-built, in-house system.
But the success of any cloud migration or modernization project is hinged on factors outside of the technology itself. Organizations tend to gloss over the culture change, but it is critical to the success of any modernization, migration, or digital transformation project.
Deloitte explains: “Digital transformation calls for more than just updating technology or redesigning products. Failure to align the effort with employee values and behaviors can create additional risks to an organization’s culture if not managed properly, whereas a comprehensive and collaborative effort can help shift the culture to understand, embrace, and advance digital transformation.”
The culture shift may include rethinking the way projects are completed, and which teams and stakeholders are involved in the modernization process. The reshaped culture and the change management team will inform the various phases of the legacy-to-cloud migration process, and, to be successful, an advocate must guide it.
Understanding the role of the change manager
That advocate is the change manager. In advocating for the implementation, this individual will drive the culture change. Organizations frequently discover that the biggest naysayer, or person who at first is opposed to change, can end up as the most vocal cheerleader once they understand the benefits of change. A good advocate helps to spread the buy-in to others in the organization. For this reason, the change manager can’t be an outsider. That person must be a key stakeholder who understands and wants the process improvement and its resulting benefits for the organization and who is trusted by others within the organization.
See also: 3 Powerful Data-Driven Strategies
One accountable and empowered business owner
Along with the change manager, it is also critical to designate one person as the business owner — a business decision maker with the authority to make key design decisions and say yay or nay to requested changes as they unfold, understanding clearly the impacts to the project. Decision making by committee can kill a project.
Time commitment is a significant consideration when determining the right business owner. As this individual will set the tone for the direction of the project and is often the project’s greatest champion, the business owner must be visible, must understand key risks and issues and must be able to dedicate the amount of time required for the life of the project.
Rethinking the preparation stage
Planning and gathering requirements are crucial for any successful modernization or cloud migration project. This preparation stage includes a vital gap analysis, in which current processes are evaluated against a forecast of future needs. Once the gap analysis is complete, the results can be compared with the future SaaS solution’s capabilities.
The business users who will be most affected by the cloud migration must be part of the requirement-gathering phase. Here’s why: The SaaS implementation will be smoother and more successful if they, rather than the IT department, specify the required capabilities of the new system. This departure from the traditional IT-directed approach requires a shift in thinking but will pay off.
Be realistic about project scope and resources
When taking on a migration to cloud, or any type of digital transformation, organizations need to move away from “big bang” or “flip a switch” expectations, which are unrealistic for a successful modernization project. It’s critical for the organization to understand the scope of any digital transformation or cloud migration project, including how much and what level of work is involved, and what resources are necessary.
The availability of business and technical resources is a common challenge when implementing a SaaS solution. Internal resources involved with the implementation must be able to commit for the entire project, from the business owner and change manager to every other modernization team member. Organization leaders must recognize that the project will be impaired if resources or subject matter experts are not available. If a key person can dedicate only a minimal amount of their time to the implementation, the project will quickly lose ground.
Rethinking IT projects as business solutions
Moving from a legacy system to a SaaS solution looks different from traditional IT projects and often means a new way of thinking about systems and IT, particularly in the insurance industry. Modernization projects must be reframed as business solutions, not merely IT changes, that transform the entire business model.
McKinsey wrote in an article about the effect of IT modernization in the insurance industry: “Insurers too often treat systems transformations as IT projects rather than acknowledging them for what they are: overall business transformations.”
Business users must play a more active role when implementing a SaaS solution. Because SaaS solutions are typically built using low-code models, organizations don’t always need IT resources involved from a traditional software development standpoint. Although IT team members will be involved in application programming interface (API) integrations, data migration and security, most of the testing can — and should — be done by the business users, not IT.
See also: Data Security to Be Found in the Cloud
Keeping future evolution in mind
There are a variety of benefits and advantages to choosing a SaaS solution over proprietary systems for modernization. As McKinsey notes, “Standard systems are typically much more streamlined and include ready-made functionality for pricing, underwriting, customer self-service and automation and claims processing. As a result, they can improve efficiency across the enterprise.”
When implementing a SaaS solution, it’s recommended that organizations stick as close as possible to the base functionality of the software. If the base SaaS system is too modified or customized, every future deployment will require more work, from the SaaS solution provider’s development, deployment and testing to the client organization’s testing, that will strain resources and drive up costs. If the original solution is altered too drastically, future upgrades could be a problem, as well.
To avoid having to customize a SaaS solution, it’s better to make sure the solution fits your organization’s needs from the start. Finally, the culture change necessary for a successful and effective modernization project needs to start from the top. Bringing teams together is a must to set goals and expectations when moving to a cloud-based solution. But culture change is most effective when steered by the leadership team. They must make the transformation a clear priority for the organization, or the move forward will be unnecessarily challenging.