05 Feb 2007
Insurance companies are risking future profits as they struggle with the cost and complexity of existing IT and legacy systems, according to the Economist Intelligence Unit.
The European-wide survey of 126 executives from the insurance industry, conducted for BT, reveals that legacy systems, poor integration and an uncoordinated view of the customer could de-rail insurer's quest for profits.
The survey says more than half of insurers have between one and 12 legacy IT systems and nearly one in 10 have more than 25.
However, there is a question mark over how to move forward - 37 per cent of executives say they will focus on upgrading legacy systems, whereas 42 per cent plan to adopt new infrastructures.
Respondents were also divided as to the impact of their existing IT infrastructure on business flexibility - 38 per cent believe their current situation hinders their agility, compared to 40 per cent who disagreed.
Another problem is achieving a single view of the customer - 40 per cent of respondents said it is a goal they have yet to achieve, while 36 per cent agreed that a close relationship with their customers is a main source of competitive advantage.
However, the industry is committed to growth - 65 per cent said the main priority for their organisation over the next two years is to increase sales to existing customers, 56 per cent want to acquire new customers in existing markets, and 47 per cent will focus on developing new channels or expanding existing ones.
Andy Nicholson, managing director of finance industry solutions at BT Global Services UK said: ‘In order to meet the combined challenges of regulation, competition and growth, the industry needs to get as close as possible to its new and existing customers.’
'Insurance companies need to make business processes more flexible in order to improve the customer experience and properly exploit new channels for products and services,’ he said.
What do you think? Email us at: feedback@computing.co.uk
It's no surprise to hear that many insurers are struggling to decide what to do with their legacy IT investments. These systems, often developed some 30 years ago, sit at the heart of a company's critical business processes, and yet have become in time increasingly complex and disconnected.
While it may be tempting to "rip and replace" such aging systems, there is now more choice than ever before for modernisation, giving insurers the chance to realise fully the value they have built up in their IT infrastructures. The advent of SOA is hugely relevant to these systems, and means that companies who have retained their legacy applications can improve operational efficiency and business agility without risking the loss of the vital business data and competitive advantage stored within. Far from being a hindrance, insurers now have the luxury of choice, through modern tooling and technology standards, to build on the solid foundation they already possess and grasp new market opportunities.
Posted by: Julian Dobbins, Director, Product Management, Micro Focus 08 Feb 2007
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