Insurance software: choosing wisely
Companies spend millions on software they don’t use. Here’s how to navigate the abundance of offerings to choose from.
Money is being wasted globally on IT solutions which are never actually used.
According to The real cost of unused software report by software company 1E, based on research amongst 129 corporations from various industries, the installed-and-unused software accounts to 23% in EMEA region and 37% in North America. The finance sector, the report says, wastes approximately one out of three pieces of software installed.
Compare this to Statista: in 2019, IT spending as share of company revenue was the third biggest in the finance sector companies, with 10% of their revenue being invested in IT.
In finance, insurance included, the investments are typically large, impact many clients, and have very complex regulatory requirements. Thorough planning for such projects is highly important.
Additionally, the finance sector never sleeps. The software purchase processes are constantly open for new products and vendors. Forrester research from 2019 shows that as much as 32% of insurers’ IT budget goes to digital transformation. That’s where you have to know how to navigate the rough waters.
Two main product types
Very broadly, the types of software offered on the market can be divided by size and complexity. With the means of such division, we can narrow down the options to two: smaller and bigger in terms of scope.
The bigger option encompasses core systems and complex suite solutions, popular especially in the finance industry. These can be even referred to as over-stacked with functions. Such systems always have numerous options, however part of these can be used very rarely – or even not at all. Until now it seemed to be the only way for back-office operations.
The smaller, alternative option are the applications created with agile approach. They focus on the fast delivery of business values, with only the critical functional scope without any extras. Sound perfect, especially for front-office, but maybe not only.
Pricier, more comprehensive
A core system or software suite refers to a multiple applications connected in one solution, offered by one vendor. Having a single solution for various tasks can be a relief not only for memorising all the passwords but especially for the which-function-is-where problems. These products have very large function scope and can cover many operations, from sales to accounting. There are many types of this kind of solutions, e.g. from Microsoft or Adobe.
What pros and cons do they have?
|+ Variety of functions
+ Convenient for the unknown of the future needs
+ One purchase process
+ One solution, easier to keep track of
|– Bigger investment from the get-go
– Lengthy implementation and consultation phases
– Less specialised in single functions
– One-size-fits-all approach
– Many functions may never be used
Less pricey, more adjustable
Products offered with agile approach in mind are highly adjusted to very specific needs of the customer. As they’re less comprehensive in terms of scope at the beginning, the delivery will be quite fast. These however will not cover a full range of functions for the whole company in one product.
What pros and cons do they have?
|+ Fast delivery
+ Adjusted to customer needs
+ Functions designed for one field or process
+ No useless options
+ Cheaper than core or suite systems
+ Easy to learn due to limited functions
|– Fewer functions
– Need to be integrated with other solutions within the company, which can have different design (GUI)
– Many purchase processes
What’s right for you
With many solutions offered by vendors, the choice isn’t simple. The solution might be to find a vendor that offers both comprehensive services and specialised solutions in many fields. Such vendors may be able to support the business in optimising the IT architecture step by step towards expanding the whole IT ecosystem with further systems from their offering.
The biggest step towards buying the proper software is to focus on the end-user needs and discuss these with employees from different departments. This way the company will be able to audit what is already in place, what is useless and what is needed. A whole digital vision of the company will be helpful to create a path of changes.
By Julia Burda, insurance marketing product manager, Comarch