Although the insurance industry has a long history of building its own technology solutions, the pendulum has been firmly paused on the “buy” side of the “buy vs. build” spectrum for the last few years across most core application areas. Insurers are looking for proven solutions built by expert software development organizations that benefit from both the best practices created by serving a broad range of like customers as well as the support and R&D that external vendors can provide. Like the insurance carrier marketplace that it serves, the insurance technology vendor marketplace is large and diverse with more than 100 significant independent software vendors and portfolio players offering enterprise and stand-alone software products across multiple areas of insurance core systems. One of the most important inputs in evaluating technology products is current client experience. While technology and feature/functions are important, the critical question is how the product contributes to creating business value, and the best source of that information is current clients. The Novarica ACE Ranking Survey asks insurer executives to rank their degree of agreement or disagreement with 35 statements across the following five categories that relate to the delivery of business value: Staff, Organization, Functionality, Technology, and Overall Customer Satisfaction. Of those questions (which are listed online at http://www.novarica.com/acerankings.shtml), we've found the differences in responses to the following questions are most pronounced between those solutions that have the highest overall customer satisfaction and those with the lowest.
Vendor invests aggressively in improving technical performance through new releases and fixes. (Technology)
This was the area with the largest spread between the high-satisfaction and low-satisfaction groups. It is something that is difficult to evaluate during a selection process and must be carefully researched through references and detailed questions into client experience. Continuous improvement is supposed to be one of the major advantages of a vended solution over an internally developed one.
I have great faith in vendor's senior management and overall vision. (Organization)
We see this as correlative rather than predictive. We hope insurers in the low-satisfaction group are reporting a loss of the faith they presumably had at the time of product selection, rather than a purchase of software from a team in which they had no faith at that time.
Product is an elegant solution to our business problem, and Product is well liked by business users. (Functionality)
These also may be correlative, but there may be an element of caution here, too. Products that are selected without sufficient business involvement and “personal investment” are much more likely to result in failure.
Vendor provides effective training and documentation to my business and technical staff. (Organization)
This is a universal weak point for vendors. Even the high-satisfaction group ranked this area lowest among all 35 questions. Yet effective training is critical for creating business value!
Product is easy to integrate into our overall infrastructure. (Functionality)
This is another area that can be overlooked during selection. Insurers may focus too much on a solution's capabilities or technology and not understand how difficult it will be to integrate it into their environment.
Vendor aligns its business interests with mine, and Vendor has my business success as a top priority. (Organization)
This is another area that's difficult to evaluate in advance without detailed reference checking and understanding of the vendor organization, corporate structure, and even compensation schemes.
Product has significantly enhanced productivity. (Functionality)
In addition to being a symptom of a subpar product, this also may be a symptom of poor upfront analysis and expectation-setting. Insurers should carefully understand and model the impact they expect new systems to have on productivity and then iterate those models based on experiences in pilot programs.
Product uses technology that fits our long-term technology vision. (Technology)
Many of the solutions that received low rankings in this area were older, mainframe-based solutions. Insurers actively are looking for solutions that fit these long-term visions. Insurers that are evaluating new solutions should be careful to look beyond feature/function mixes and technology stacks and carefully consider their potential vendors' track records in getting clients live, delivering measurable business results, and enhancing their products to keep them current. In the open comments section of the ACE Ranking Survey, customers tend to focus on responsiveness and relationship even more than specifics of the solution. This is an important reflection of the fact these are not simple product purchases–insurance IT applications typically involve a long relationship with the vendor. As many CIOs have put it, “It's almost like getting married.”
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