EARNING EXPECTED BENEFITS OF ERP FOR INSURANCE ORGANIZATIONS IN SRI LANKA: IMPLEMENTATION PERSPECTIVE

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1 EARNING EXPECTED BENEFITS OF ERP FOR INSURANCE ORGANIZATIONS IN SRI LANKA: IMPLEMENTATION PERSPECTIVE Srimantha Ratnapriya Atulugama Computer Science and Engineering Department, University of Moratuwa Raj Prasanna Joint Center for Disaster Research, Massey University, Wellington Vishaka Nanayakkara Computer Science and Engineering Department, University of Moratuwa ABSTRACT There are many complains around sustainability of the benefits of Insurance ERP implementations in Sri Lanka. The reason is mainly due to lack of expected benefits from these implementations and declining the initially acquired benefits. There could not find any related study in Sri Lankan context. Consequently this research was recognized. This paper describes how to sustain the expected benefits from Insurance ERP implementations in Sri Lanka from the implementation perspective. The outcome would guide prospective implementers and a way to mitigate the risk of huge investments they make. It has three main aims. Firstly to identify important factors that influences gaining sustainable value from such implementations. Secondly find the degree of criticality of such factors for post implementation success and value addition. Finally formulate a guideline to facilitate implementations. The study was based on the data collected from insurance professionals in Sri Lankan insurance industry representing various capacities. There were 24 semi-structured interviews conducted. The analysis of findings was further validated for its criticality through a 32 arguments questionnaire from same respondents and few additional professionals. In addition the information from two real life projects concluded recently was included. The final results were further analyzed with previous literature and developed a guidance using 20 important factors to consider in depth in order to sustain benefits. 1.0 INTRODUCTION Enterprise Resource Planning (ERP) has become an important need today for insurance organizations to be competitive in the market. Development of insurance application needs specific knowledge. In house development of such application systems has become a complex and a diverted task for insurance

2 organizations. Hence insurers tend to invest on readily available ERP systems to administer insurance operations and to manage information for business decision making despite its heavy costs. But acquiring and implementing such systems successfully and sustaining its benefits have become a daunting task today with the world experience of similar missions. A latest research revealed that 53% has overrun project costs, 61% projects over ran planned duration and 60% of the organizations have received less than 50% of its expected benefits from ERP implementation projects in the world [10]. Similar experience reveal in the insurance industry in Sri Lanka. This research steered to uncover the factors of above by performing a qualitative investigation and understand how people perceive those factors facilitate gaining expected benefits from ERP implementations in insurance organizations in Sri Lanka. 2.0 APPROACH & RESULTS In performing the research study it was attempted to recognize previous findings and traditional theories to comprehend the theoretical and traditional paths of similar studies and findings. 2.1 Research Design Research philosophy has been explored to understand philosophical believes that navigate to appropriate approach [3]; [4]; [11]. An interpretive approach was applied as it attempts understand phenomena through meaning that people assign [8]; [9]; [12]; [13]. A qualitative case study methodology was used [1]; [7]. Further the techniques of grounded theory methodology were adopted as appropriately during the study [2]; [6]; [12]. The data collection was done through 24 semistructured interviews, archives of two real project charters and a questionnaire survey using experience insurance professionals as composition specified in Figure 1. Fig 1: Composition of Respondents 2.2 Method of Analysis The audio recorded semi-structured interviews were transcribed into word processing documents. The transcriptions along with archives of implemented project documentations were analyzed using the qualitative technique of constant comparison method [2]. All data accepted without excluding contents as per the method of open coding [14]. Data eventually collated to accumulate and form core categories. Such categories formed as they collated into similar phenomena. [5]; [6]. When reading the response, its concern was always compared with the existing coding descriptions to see whether it fits into an existing code prior to generating a new code. The relationship is measured based on the interpreted textual association and logical affiliation of the text script to the existing description of the code. The second level selective coding is performed towards more relevant to the emerging concepts [6]. Focus is more directed to research outcomes in current study and the text paragraphs of emerged 45 categories from first level were re-read. The concerns of the text paragraphs were compared with each other. There were 20 selective categories which were more concentrating to research needs were emerged by grouping the existing categories.

3 With the outcome of selective 20 categories, it was formed in a questionnaire to identify the importance and the degree of impact to insurance organizations in operation. There were 32 arguments placed in the questionnaire. The data collection for this questionnaire was done through the same interviewees involved in the first round and few other additional individuals who have experienced in insurance ERP implementations. The responses of questionnaire were recognized as illustrated in figure 2. Fig 2: Response Recognition Method The degree of impact as they perceived was identified through this exercise. The active response rate was measured as per Figure 3 illustrates, which is around 73% [14]. Results achieved were defined to form a guide line with the facilitation of literature of previous studies on ERP implementations in relation to the other industries. Fig 3: Rate of active response 2.3 Findings The research focused identifying factors and its level of importance in gaining long term benefits. Having that in mind, with the analysis of responses from one-to-one interviews, information from project charter reports and responses of questionnaire survey, there were 20 factors emerged through the analyzed themes as very important to consider during insurance ERP implementation processes. With further analysis of logical impacts of these factors, along with literature of findings of previous similar researches, it was arranged into groups in an order as follows; The Evaluation of the need of ERP Pre-implementation Considerations Delivery Considerations The Evaluation of the Need of ERP There were 93% respondents accepted insurance ERP as a base need for modern dynamic insurers to be in business competitively. The responses were in favor of ERP, justifying the functionality, its benefits, and competitive advantage that organization can gain. The final factor was recognized as the Justification to Acquisition Pre-Implementation Considerations There were nine themes derived from the findings. This consist the most important factors derived through the research findings. When scrutinize in depth, the factors seen as providing more psychological impacts towards success and maintaining sustainability of the benefits of implemented ERP systems. Some of the factors that reached were very specific to insurance ERP implementations which can have direct bearing to the success while some are can be seen as base requirements for any ERP implementation. The respondents were accepted the details of factors as important for sustaining benefits in the manner listed in table 1. The respondents acceptance was rated based on the level of responses to questionnaire survey.

4 Factor Derived Effective communication through a formal and a structured mechanism is an important activity to sustain stakeholder satisfaction Prior insurance experience is an obvious need for implementers to be successful Prior implementation experience helps to be successful in sustainable implementation. Management involvement and recognition of the project will influence sustaining benefits Project champions must be dedicated best functional users to lead, own and make decisions Project ownership must be held by all stakeholders representing most senior managers A mechanism must be established for application knowledge management throughout its life cycle Focus absolute necessity until a stable and robust system established Persuasive requirements must be captured with a guide to articulate all possible scenarios that could face Table 1: Pre-implementation factors derived Delivery Considerations Acceptance 95% 73% 95% 93% 93% 86% This section reaped out some pragmatic and situational considerations through the findings. Many of the factors seen as common in any ERP implementation while few considerations specific and situational. The user responses received can be considered as the real experience of past projects in Sri Lanka and those factors were further validated from the same respondents to obtain a common rating of the importance to ponder. Hence factor reflections can be considered as valid and important to reach research objectives. The factors listed in table 2 were regarded as highly influential in sustainability of the benefits of ERP. Factor Derived Acceptance User friendliness is essential to increase productivity Speedy information is crucial for making timely decisions 70% Interoperability between systems outside ERP domain is significant to 85% achieve success Operational cost efficiency is one of the main expectations of ERP 95% Iterative testing is a unique need for actuarial accuracy in insurance ERP 81% implementations Managing change to minimize customization leads to robustness 88% Managing adapting noise of post go-live needs a pre-planned 85% mechanism A planned process needs to manage expectation of stakeholders 84% Insurance ERP project management needs prior experience to achieve sustainable benefits Positive focus of stakeholders is a key to sustainable benefits 81% Table 2: Factors derived as delivery considerations 2.4 Contributions The 20 factors concluded as a very important guide (illustrated in appendix) to consider during insurance ERP implementation processes is the main contribution of this study. Some of the factors derived in this study such as effective communication, management involvement, knowledge management etc., were already identified in previous researches. This study has further affirmed and proved the validity of them. It has also discovered some new factors such as persuasive requirements, managing adapting noise, managing expectation etc., would help manage sustainability of ERP benefits. In overall this research has contributed the prospective implementers a peace of mind with planning activities to mitigate the massive investment risks that they could face.

5 3.0 CONCLUSIONS As discussed before the research has achieved its objectives fully by deriving a set of key factors to consider at planning and implementation of insurance ERP systems. It is not just a conceptual model. All 20 factors are actionable considerations that need to focus at prior implementation planning and during implementation activities. There are important caveats that can be noted in the research study. Firstly the research was purposefully limited for experienced professionals and few other users. Hence the sample collection was limited to personnel. In this the general public presence and non-insurance professionals presence was limited. Hence there could be certain important points that would have missed outside the technical domain of insurance. In this a future researcher has an opportunity in continuing a similar research on a much broader scope covering more samples to strengthen the current findings. The sample would ideally include non-insurance professionals and general public. Secondly in the current study the representation of insurance companies were limited to six out of 22 companies operating in Sri Lanka. This was purposefully done to get maximum implementation experience within the time boundary of the current research. Hence it may not represent the generic overview of the insurance community. In this there is an opportunity for further research to strengthen the findings collaborating experience of all insurance companies and even insurance broker institutes to account a much wider view. 4.0 ACKNOWLEDGMENTS I would like to extend the deepest gratitude to my supervisors Dr. Raj Prasanna and Mrs. Vishaka Nanayakkara for their continuous guidance, advice and support extended to me throughout my research study. I am also grateful to the support extended by AIA Insurance Lanka PLC, Union Assurance PLC, HNB Assurance PLC, LOLC Insurance Company Ltd, Allianz Insurance Sri Lanka Ltd, Janashakthi Insurance PLC, AETINS Sdn Bhd (Malaysia) and CSC Singapore for providing me opportunities to interview their senior professionals. I also gratefully appreciate the support given by the staff members interviewed in all the above mentioned companies, for their time and effort to assist me during the interview phases. Finally I wish to express my sincere gratitude and thanks to the Department of Computer Science and Engineering, University of Moratuwa, Sri Lanka for the encouragement and support extended throughout the study. 5.0 REFERENCES 1) Benbasat, I. D., Goldstein, D. K., & Mead, M., The Case Research Strategy in Studies of Information Systems Author(s), MIS Quarterly, 1987, pp ) Boeije, H., A Purposeful Approach to the Constant Comparative Method in the Analysis of Qualitative Interviews, Quality & Quantity, 2002, pp ) Chua, W. F., Radical Developments in Accounting Thought, The Accounting Review, 1986, pp ) Clarke, A. M., The qualitative-quantitative debate: moving from positivism and confrontation to post-positivism and reconciliation, Journal of Advanced Nursing, 1998, pp ) Glaser, B. G., The Grounded Theory Perspective: Conceptualization Contrasted with

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