Insurance used to be a stable, somewhat boring business about mitigating private and corporate risks. This is about to change. We present the drivers, explore practices to improve transformation readiness, and discuss the implications for research. Continue reading
The insurance industry is a rather traditional industry. Major transformation was not an important issue for decades. However, this is going to change now. Among the transformation drivers are changing regulations, the financial crisis, changing customer perceptions, and digitalization – just to name a few. In this article we present results from explorative studies with industry experts and consultants. We discuss major challenges for insurance companies which are dealing with two very different markets, with a very special product and with IT innovation as a constant challenge. We outline types of transformation that we have encountered, e.g. industrialization and standardization, outsourcing and acquisition. Finally, we sketch some fields where insurance companies need to engage in order to achieve transformation readiness, including reduction of complexity, governance, and incorporating appropriate human transformation resources. Continue reading
Financial IT Integration at a Global Insurance Company
In 1999, Lukas Financial Services, one of the world’s largest insurance companies, implemented SAP systems for most of their European business units as part of a major Finance IT upgrade. However, country business units were still responsible for their own data management, which led to inconsistent reporting and a low level of standardization.
In 2004, there was a push to improve the efficiency and effectiveness of European Finance, and the IT unit launched the EVA project. The goal of the project was to converge all European SAP systems into one system. As the project progressed, many unexpected challenges emerged for the IT leaders. There was little buy-in from the business unit leaders, resources were limited, and the project fell behind schedule. The pilot sites were dropped, and eventually, the entire project was stopped. The company continued with decentralized systems until 2009, when a new company focus on globalization and efficiency led to the OCTOPUS Plan, which was a business reorganization plan that called
for all of European General Insurance to be based in one country. The European Finance business leaders were in charge of OCTOPUS, and they made the decision to start another SAP convergence project, MASON, to support these changes.
The case ends with the questions that the IT and Finance leaders face as they create their project strategy for the new SAP integration (MASON) and the business reorganization (OCTOPUS). The Financeled project strategy addresses many of the problems revealed in the first project, although they still face project prioritization, pilot testing, and other challenges that they must account for in their plans.