White Paper Trasform Legacy Systems for Improved Customer Experiece Property ad Casualty (P&C) Isurers aroud the world are at a crossroads today, i search of a respose to the traditioal challege of keepig pace with the everevolvig busiess eviromet ad techology ladscape. They have t paid eough attetio to the matter i the past, because busiess agility, customer experiece ad competitio have ot challeged their busiess process to the extet that they are doig today. Hece, it has ot bee oe of the top priorities of Isurace CIOs util recetly. Now IT departmets are costatly beig asked to deliver more with less, i order to meet risig busiess demad i a icreasigly volatile ad competitive market. The majority of IT decisio makers amog these P&C isurers have idicated that the moderizatio ad trasformatio of existig legacy systems is IT s respose to meet busiess goals. This paper discusses the big picture of moderizatio busiess drivers, typical challeges ad mitigatio, curret treds ad best practices i the idustry. It demostrates how Tata Cosultacy Services (TCS) has uderstood the problem ad addressed it. We will discuss differet approaches for moderizatio ad key competecies. The paper will coclude with a focus o TCS successful partership with P&C Isurers to seamlessly take them to the ext level ad give them the experiece of certaity.
About the Authors Aupam Karar Aupam is a Busiess Solutios Cosultat i the Isurace vertical of TCS. He has held various roles i IT delivery ad maagemet for key isurace ad fiacial services cliets of TCS. He is ow part of the Busiess Solutios Group ad works actively with leadig P&C ad Life Isurers o strategic iitiatives, icludig, Legacy Moderizatio, Busiess ad IT Trasformatio, ad Busiess Rules Exteralizatio. Ramesh Kumar Ramesh heads Isurace Busiess Solutios for TCS - UK ad Europe. His may roles have icluded that of a cosultat at a cliet CTO orgaizatio, lead large (up to$200m) strategic trasformatio ad migratio programs for cliets i Europe, UK ad APAC regios. He has bee istrumetal i desigig the strategy ad factory based migratio approach for these programs 2
Table of Cotets Itroductio 4 Major Challeges: Why Moderizatio Iitiatives Fail 5 Legacy Moderizatio: Differet Approaches Adopted by TCS 7 How TCS Helped Isurers Moderize their Systems 9 Best Practices 10 Coclusio 10 Refereces 10 3
The Need for Moderizatio P&C Isurers today eed to review their busiess process. With more agility, ehaced customer experiece, high degree of compliace to the regulatory eeds, iovative products, ad commesurate TTM ad GTM strategies, there s a urget eed to adapt From the IT stadpoit, with operatios spaig over decades, isurers today fid themselves stragled with outdated techologies, usupported software products, old ad icompetet architecture ad lack of huma resources with the appropriate legacy skill set. The result is the huge cost of maiteace for their applicatio portfolios. Recet ecoomic slowdow has promoted the creatio of umerous mergers ad acquisitios. This chagig ladscape has aggravated the situatio,- furtherig the eed for a chage, ot oly to respod to curret challeges, but also to create versio 2.0 of these compaies. Thus, moderizatio is vital for the cosolidatio ad trasformatio of legacy systems. Busiess Drivers for Legacy Moderizatio TCS Isurace Idustry Solutios Uit has bee executig full-scale Moderizatio of Legacy Systems for isurers globally for more tha a decade. From our extesive experiece, we uderstad that the key drivers for legacy moderizatio are as follows: Reduce Time-to-Market (TTM) by improvig the ability to respod to chagig market coditios, acceleratig rate chages, ad deliverig ew products through flexible solutios Improve Operatioal Efficiecy - Miimize huma effort ad itervetio through Busiess Process Automatio a goal of Straight Through Processig (STP) Reduce Total Cost of Owership (TCO) by icreasig operatioal efficiecy by simplifyig busiess rules ad workflows Customer delight - Provide a Seamless Customer Experiece across all chaels Drive growth i Reveue ad Profitability Cosumerizatio - Product Ratioalizatio for segmeted customers ehace Go-to-Market (GTM) strategy by retaiig existig customers ad attractig ew oes with the right products Treds ad Forecast Accordig to Garter, isurers premium growth ad profitability will be challeged by ecoomic ucertaity such as Euro crisis, regulatory ucertaity such as Solvecy II, cosumerizatio ad iteratioalizatio. A survey of top isurers foud that more tha 75% of participats stated a goal to moderize oe or more of their legacy applicatios ad 50% said they have a set time frame to do so. Followig is a list of the most frequetly used areas i which P&C Isurers have recetly take up projects: Adopt emergig techologies i the area of Cloud Computig, Big Data, Social Media ad Mobility Re-architectig or SOA eablig 4
Product or Portfolio ratioalizatio customize existig products ad create ew products Platform migratio or re-hostig curret applicatios oto a ew platform Web eablig curret legacy systems Laguage migratio (e.g. re-writig Assembler code i Java) Database migratio (e.g. IMS/IDMS, Sybase to DB2/Oracle) Busiess Rules Extractio Major Challeges: Why Some Moderizatio Iitiatives Fail P&C isurers ofte face sigificat risks of failure i their legacy moderizatio projects. TCS, after rigorous research ad through its ow jourey, has idetified the causes that have spurred large moderizatio efforts. Some of the most promiet cotributors to failure are featured below: Value articulatio - Creatig the busiess case for legacy system moderizatio is a challegig task for may isurers. Failure to quatify the busiess value of ew core isurace systems or to assess the overall legacy moderizatio costs ad risks has cotributed to overall collapse of moderizatio effort. System Itegratio- Isurers have a proliferated ladscape due to mergers ad acquisitios with a large umber of applicatios, product set, ad admi/claim platform icludig surroud systems. Itegratig ew techologies with legacy applicatios is ofte a very complex task. Goverace These programs typically fall ito multi-year-multi-millio-$ league therefore, sposorship is required from the existig seior maagemet. Failure to establish rulig Key Performace Idicators, right methodologies ad roll-out strategy, ad measure post-moderizatio orgaizatioal value, has always challeged success. Customer fitmet I case of product ratioalizatio, fittig the existig policy holder i the ew coverged product ladscape is a dautig task because of its sheer complexity Process rigor - Defiig the sequetial steps ad the scope of legacy moderizatio projects requires careful aalysis. P&C isurers must cosider may aspects, such as, the developmet of meaigful busiess metrics, vedor risk aalysis, migratio scearios for existig IT systems, readyig data for regulatory requiremet, data quality to recreate the policy i future system, ad more.. Techology selectio Isurers are icreasigly lookig for packages to replace core legacy systems. Gap betwee expectatio ad capability of these packages led by fuctioal isufficiecy, techology ad architecture icompatibility have ofte lead to disappoitmet. Kowledge Absece - Lack of documetatio ad o-availability of Small ad Medium Eterprises (SME) especially i case of reegieerig. 5
Solutio Dimesios for Moderizatio We have idetified the key dimesios for moderizatio through TCS Covergece Framework, ad segregate the trasitio to Target Operatig Model (TOM) ito bad-to-good ad good-to-great phases by takig accout of these dimesios. They play a key role i: Creatig Moderizatio Roadmap Formulatig Trasformatio Strategy Buildig Compoets Deploymet ad Support Beefit Realizatio Busiess Led Program & Goverace Executio (Factory) Approach Product Ratioalizatio Ifrastructure & Process Optimizatio Covergece Framework Lie of Busiess based approach Decommissioig ad Archival Data Migratio ad Retetio Target IT Architecture & Operatig Model 6
Differet Approaches to Legacy Moderizatio P&C Isurers have adopted differet approaches for moderizatio which we have broadly classified ito six categories. Busiess Rules Exteralizatio Extractio Classificatio Ratioalizatio Portig to Rule Egie Legacy System Busiess Rules Exteralizatio Gap Aalysis COTS Product Selectio Gap Closure Reegieerig Use Case/Modelig Forward Egieerig Restructurig Package Implemetatio Rust-proofig & Optimizatio Re-structured Applicatio Product Implemetatio Fully Re-egieered Applicatio SOA Eablig Package Selectio Customizatio Implemetatio Moderized System Migratio Data Assessmet Data Proflig/Cleasig Extract-Trasform- Load A sapshot of differet moderizatio approaches adopted by TCS Busiess Rules Exteralizatio: Rules are scattered all over the legacy applicatios. Hece, it is essetial to exteralize them i order to moderize legacy applicatios ito fuctioally rich systems. Busiess kowledge i the form of IT vocabulary is extracted, traslated ito laguage that busiess ca speak, classified ito schemas ad the ratioalized by busiess aalysts to form rules before they ca be ported to a rule egie. Product Ratioalizatio: Cosumerizatio drives cosolidatio of the product portfolio to retai existig customers ad attract the ew. Isurers eed to apply sophisticated aalytics o marketig ad social media to peetrate customer midshare ad subsequetly build ew products. This ofte eeds a ew platform wherei existig products ca be customized ad cofigured o reewal ad ew products ca be created. Reegieerig: Isurers reegieer their legacy systems to augmet fuctioal ad techical capacity. This eeds uderstadig of curret fuctioalities, trasactioal view, ad busiess value of data, followig which ew requiremets eed to be documeted. The etire process ivolves reverse egieerig the legacy applicatios to documet the curret busiess ad the forwardig the egieer the system with additioal busiess requiremets. 7
Restructurig: This is a simplistic approach compared to its predecessors. Certai activities such as web eablig of UI applicatios, SOA eablig of busiess services, ad busiess rules extractio are udertake by isurers, i isolatio or i combiatio, purely based o the eed ad mostly depedig o the budget available. Package Implemetatio: There is a upward tred amog isurers to opt for a packaged applicatio offerig ed-to-ed services of isurace fuctios such as Policy Admiistratio, Claims, ad Reisurace. While the expectatio is oe-size-fits-all, the delivery ofte eeds a fair amout of customizatio. This buy rather tha build approach ivolves Commercial Off-the-Shelf (COTS) product selectio based o busiess directio, gap aalysis, ad package customizatio. Migratio: This icludes the upgrade of database products ad programmig laguages, re-hostig applicatios o differet platforms, or simply data migratio. Ay migratio eeds detailed uderstadig of the legacy ad target data models which are ofte i differet formats. We recommed data-drive activities such as Profilig, Cleasig ad Maskig ad customer/reewal based migratio to icremetally reduce Total Cost of Owership (TCO). Covergece with retetio/archival/retrieval of data for regulatory eeds is i a itegral part of TCS Isurace Data Migratio. Moderizatio Approach Busiess Aligmet Techology Currecy Architecture Fitmet Busiess Rules Exteralizatio High Low Low Product Ratioalizatio High Medium Low Reegieerig Medium High High Restructurig Low Medium High Package Implemetatio High High High Migratio Low Medium Medium The moderizatio approach for a orgaizatio depeds o its curret state of busiess aligmet, techology currecy ad architecture fitmet. Thus, the first step ivolves the evaluatio of moderizatio requiremets of the isurers, followed by a recommedatio of the right approach, (such as Factory based busiess led approach for product ratioalizatio, rules extractio ad migratio). Fially, a partership is formed for implemetatio. Isurers must cosider the fact that ofte it is ot a sigle approach, but a bled of approaches that meets their eed. 8
How TCS has helped Isurers Moderize their Systems TCS has bee eablig eterprises to trasform their legacy applicatios to fuctioally rich ad agile systems that help them meet existig ad future busiess demads. This has bee a high-ucertai ad expesive udertakig because of the lack of reliable ad highly automated trasformatio processes. Hece, TCS focuses o makig a seamless trasitio of the eterprise to the future state with miimum risk. Our o-the-groud experiece i large-scale moderizatios has bee orchestrated by a matured bled of cosultig services, assets, accelerators ad Ceters of Excellece. Cosultig: Global Cosultig Practice (GCP) has provided advisory services for sophisticated ad trasformatioal solutios to isurers. Services iclude assessmet, roadmap creatio, risk & program maagemet, ad assurace services. Assets: The Tools group has bee costatly researchig i collaboratio with our customers ad has created tools to automate maual processes, improve productivity, ifluece performace, automate ad mature testig methodologies ad gai cotrol over techology cosumptio. Some of these tools are REFORM, Migratio Platform, Masketeer, SmartTest Maager, ad MapAgile, Velocit. Accelerators: Moderizatio Workbech, Simplify ad Covergece Framework, Factory based agile approach i assurace services, strog domai flavored Process Maps & Models have supplied mometum to the legthy ad complex trasformatioal iitiatives, ofte ruig for years. Ceter of Excellece: TCS has set up dedicated focus groups both o domai ad delivery capabilities. Isurers have bee leveragig domai cetric iche services from PAS ad Claims CoE s; trasformatioal fuctios from Busiess Rules ad Migratio COE s. All moderizatio egagemets have leveraged the rich kowledge ad experiece of our Techology, Process ad Delivery Excellece Groups. Cosultig Assets Over 4millio Customer migratio i WCC products i less tha 1.5 years Lauch of Sigle premium Variable Auity product i 10 moths - Gree field i a ew geography Migratio Trasformatio of New Busiess applicatios of a leadig isurer i US- TTM improved by 50% Busiess Rules Exteralizatio Simplificatio of ladscape from 1500+ to 300+ with $150 MN USD savigs Product Ratioalizatio Accelerators Legacy Moderizatio Ceter of Excellece Platform based solutio leveragig packaged products to lauch ew products, trasformatio of claims, Policy Maagemet to ew platform Package Implemetatio Moderizatio Experiece Ladscape Restructurig Reegieerig Reegieerig of Policy Maagemet System for a large auto isurer i US- Maiteace cost less tha half ad reductio of TTM by 080% Trasformatio of Hoeywell BULL maiframe applicatios for a large isurer i Frace - sigificat reductio i TCO ad maiteace cost Eablemet of self service ad leveragig legacy applicatios through SOA for a Caadia Isurer 9
Best Practices TCS provides guidace ad best practices to help P&C isurers adapt to legacy moderizatio ad Busiess-IT trasformatio. We cotiue to receive queries from isurers o the idustry best practices which are arrated here briefly: Isurers must cosider Moderizatio as a Braded Iitiative to achieve Orgaizatio level buy-i. Separatio of busiess requiremets from iso-fuctioal trasformatio Workflow automatio, Chael eablig, Webificatio; participatio from Busiess accelerates acceptace. Uderstadig Busiess value of data Uderstad the trasactioal view of data from domai perspectives through experiece of maitaiig Isurers legacy applicatio portfolios ad deploy the kowledge to address the complexity whe it comes to trasformatio. TCO focused solutios - Aligmet of the trasformatio iitiatives to the larger roadmap from TCO perspective ad miimizig or havig o impact o busiess cotiuity. Solutio orietatio with Eterprise Techology Roadmap Focus o optimizig techology cosumptio through aligmet with techology map ad established idustry stadards such as ACCORD, IIA. Preparatio phase to set baselie for moderizatio- Hardware ad software upgrades to lauch moderizatio, idetificatio ad decommissioig of redudat applicatios, appropriate testig strategy. People reegieerig Groom Champios ad ivolve them i every step through Trai-the-Traier programs Traceability at all levels ad reportig the same regularly as most trasformatio programs are multi-year Acceptace criteria for o-fuctioal requiremets defied upfrot ad tracked Coclusio Though it ca prove to be a dautig task for a eterprise, a successful trasformatio ca help to mitigate risks, optimize costs, esure cotiuity, ad alig iformatio systems to the busiess eeds. Isurers are adoptig either top dow or bottom up approaches based o their curret busiess priorities of either customer experiece or operatioal excellece. Based o our experiece, we see that these large ad complex, ofte multi-year,multi-millio, programs should be a braded, busiess led iitiative with clear strategy for TOM, migratio, ad retetio. Thus, they should ru i a factory approach. A clear visio with a icremetal self-fuded program yieldig icremetal but tagible beefit should be created with covergece before cosolidatio to demostrate busiess beefits. Refereces [1] Garter Aalyst Report - Ageda for P&C ad Life Isurace, 2012 [2] Platform Moderizatio Alliace (http://www.platformmoderizatio.org) [3] Busiess Itelligece: The Savvy Maager's Guide by David Loshi [4] Lessos i IT Trasformatio: Techology Expert to Busiess Leader by Larry Bofate 10
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