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April 13, 2015

Why Implementations of Core Systems Fail

Summary:

It's the people. There are six main reasons that implementations of new core systems fail, and only one relates to the technology.

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As an engineer (at least that’s what my university degree says), I must say I like to solve problems. Big, ugly, complex problems can a great challenge.

We all know what has been happening with insurers’ core systems over the past several years. To respond to the challenging needs for product agility, customer-centricity and operational effectiveness, insurance companies are moving toward new core systems and away from the constraints of their legacy systems. And there are oodles of problems to be solved. Product modeling and patterns, configurability and customization options, integration and connectivity, external data sources, testing automation…it’s a tasty list, my friend.

And yet…and yet.

Even if these complex problems are nicely solved, many insurance companies fail to achieve the anticipated returns with their new core systems.

Over the past years of these types of projects, when we at Wipfli analyze the root causes, we find that the following risks have not been properly managed or mitigated:

1. Expectation risk – Are we all looking for the same things?
2. Acceptance risk – What could prevent us from leveraging this investment?
3. Alignment risk – What could prevent us from achieving the value we expect?
4. Execution risk – Are we getting things done effectively and efficiently?
5. Solution risk – Will this solution deliver on its potential?
6. Resource risk – Have we accounted for the total investment required for success?

What’s most enlightening about these risks is that five of them are about people and not technology. Only solution risk encompasses technology. As the engineer once said, “This project would have been a roaring success except for the people!” Don’t be that guy….

The desired future state following an implementation is only achieved when individual contributors do their jobs differently.

So, yes, systems projects are about the people.

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About the Author

Steve Kronsnoble is Wipfli’s insurance industry practice leader, helping companies gain actionable insight from data, understand and serve their customers, react quickly to economic and competitive changes and modernize technology to support their business objectives.

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