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Seven Causes of Ineffectual Software Buying Decisions in the Insurance Industry

We learn a bunch of great arguments when we talk around software needs of any insurance company- flexibility, scalability, speed-to-market, configurability, ease-of- use and what not. Do we really consider these traits when the senior management makes critical software buying decisions? A lot of organizations don’t. In the long run, this costs a substantial sum of money to the company for the systems become redundant before long and needs to be replaced rather than anticipated.

This article is an effort to highlight the real issues behind ineffectual decision-making in software buying decisions.

1. Multiple stakeholders
Several times the decisions to integrate business operations and upgrade the systems are marred by too many stakeholders. Due to the complex nature of insurance organizations and the fact the insurance companies keep on acquiring, merging and expanding their operations to newer areas, IT organization presumes that everybody should be involved in the transformation decision. But this may not invariably be required. Most of the times, people are involved for the sake of sharing the responsibility than adding actual value to the decision-making process.

2. Lack of knowledge
With the organizations expanding both in terms of the businesses they write and the geographies they work; there is a crucial need that the systems take care of current business requirements and future expansion needs. This essential component is mostly left out when making thoughtful software buying decisions. As newer technologies extend to grow at a rapid rate, it becomes important that when an IT investment is made, the decision makers’ focus should be the systems that could be used for a longer period.

3. Lack of dedicated resources
The end goal of any software application is to offer ease-of-use to the user, reduce turnaround time, improve customer experience and create business value. This could be reached when the actual handlers who are placed at the bottom end of the hierarchy are satisfactorily consulted when talking to prospective vendors. Apparently, most of the times, the best of resources is busy in their routine 9 am, to 5 pm daily jobs. They cannot spare time to render their judgment as to what they necessitate and the current challenges they confront. Here the question is not on senior management’s ability to call for effective decisions. The point is to engage the end-users from the time when the exercise to select software partner begins. Senior management’s must recognize this fact in time. If this part is not considered, it frequently results in severe dissatisfaction among business users during the implementation phase and after the software gets installed.

4. Ineffective coordination
With the ever-increasing size of the insurance companies and the operations, becoming complex day by day coordination is always a problem. The firms, many times write several lines of business that are complex in nature and operate through multiple units located in different parts of the country and Worldwide. The decision on which vendor to select should pass through every department of the organization. Every single division – marketing, underwriting, sales, claims, customer service or reporting, every key person should be encouraged to contribute and give their input. Often this results in the actual systems meeting the objectives of fewer units of the organization. The other divisions are then forced to look for supplementary software applications to support their needs instead of having one single solution across the organization. This certainly defeats the purpose of entire transformation exercise which aims to integrate numerous existing systems and have one single platform across business functions.

5. Improper evaluation
At times the establishments that have the best of software applications in the market are not invited to the RFI and RFP procedure. Often the businesses rely on market studies which may not echo their business demands. Companies need to understand that one size doesn’t fit all. The best way to invite prospective software partner, possibly, is to study what the closest competition is using. Getting first-hand information from competitors on the challenges they have faced and the recommendations they have, will definitely be valuable in the entire evaluation procedure.

6. Politicking
This is a global problem that affects every decision in the organizations be it large, mid-sized or small. The people making these important decisions may not have enough information around the current business and systems challenges. The user groups who need to be involved are overlooked most of the times.

7. Cost constraints
Generally, spending on Information Technology is perceived as an expense than a means to control costs in the long run. Organizations need to bring a holistic view and consider ROI in the long run, then an immediate term daily stock prices and the quarterly dividend returns. To a great deal, the role of advanced systems in cross selling/up-selling, retaining existing customers and improving customer experience is not evaluated when doing the Cost and benefit analysis.

Rajneesh is a dynamic professional, and a leading expert with more than 17 years of varied experience in the P&C insurance domain. Working for several leading P&C Insurers, Rajneesh has helped these organizations build and design their IT systems, improve efficiency, reduce cost and improve customer experience while maintaining a strong business reputation.

Insurance is both a living and a passion for Rajneesh. Keen to share his knowledge with others Rajneesh has mentored and trained many professionals on various subjects. He is the founder member of CPCU Chapter in India and was its past Secretary. When not working, Rajneesh loves to watch comedy shows and play with his kids.

Article Source: http://EzineArticles.com/8478526

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