From the energy crisis and inflation through to issues surrounding tech talent, here are Mark Weller's top four trends in insurance modernisation for this autumn.
We all know we are operating through an extremely volatile and uncertain time in our history. It can be tempting in such environments, to hold on to capital and prioritise 'quick wins' over longer-term IT (Information Technology) projects.
We are all facing similar challenges - be these regulatory, financial, competition and risk. But when it comes to technology, we need to keep investing or we'll get left behind, lose our front office talent and become more vulnerable to cyber intrusions and others risks.
While nobody can claim to have a crystal ball, here are some clear trends that can help guide your strategy over the coming weeks and months.
1. Factor in inflation
A year ago we were all anticipating that inflation would be a short-lived event, as economies emerged from the pandemic. Now there is an appreciation it is going to be here until at least 2024, and that's if the efforts of the Central Banks are successful.
What does this mean from a technology point of view? It means that money you held on to last year and didn't invest in modernising your IT systems is now worth less than it was 12 months ago. Every pound you could have spent on overhauling your legacy systems is now worth 80p or less.
All big tech projects have a tendency to overrun and cost more than anticipated - this is almost inevitable. A well designed and agreed scope from the outset, and being clear on timeframes and budget, can prevent costs from spiralling out of control and projects from under-delivering. There is always scope creep and managing it effectively with an appropriate delivery assurance approach is fundamentally key.
2. Avoid taking on 'IT debt'
Another side effect of hyperinflation is that nonessential projects are being squeezed and IT departments are under pressure to deliver more, with less. The lack of investment means too many IT leaders are spending their time fighting fires and not on transforming their legacy IT infrastructure.
For companies that do not have a “war chest" to spend on their transformation journey, (the vast majority), there is a positive trend towards adopting low-code platforms as a more cost-effective solution that moves away from costly monolithic transformations.
The idea is sound enough: buying a straight out the box, plug and play solution. But as every organisation is different this typically means spending additional time and money re-engineering that solution to fit your estate and architecture. Choosing the right low code or even no code solution can buy time, save money and significantly increase technology resilience and user experience, however this doesn’t always tackle IT debt and can still result in the CIO having to go, cap in hand, to ask for more money. It just depends how quickly.
There is no doubt that CIOs working on long-term, multi-year projects have a challenging task ahead of them at the moment. Whatever they do, every year they are going to have to ask for more money without always having much to show for it in the hands of the user.
3. Prepare for winter blackouts
The UK National Grid has warned we could be facing rolling blackouts this winter as the energy crisis worsens. Under their most extreme scenario, such blackouts could be up to three hours a day.
The pandemic was the first major test of the industry's business continuity, accelerating digitalisation, cloud adoption and investment in new infrastructure. And it seems increasingly likely the energy crisis will be another curve ball and a test for our disaster recovery plans. With this being more likely there are clearly lessons from other countries on how to manage this, but are organisations in the UK already testing these scenarios?
4. Consider near shoring
The war for tech talent is real. One solution is to tap into near-shore and onshore centres of excellence - such as Portugal or perhaps Poland - when there are cost pressures, to take a hybrid approach to your transformation journey.
Companies like ours bring flexibility through the access to the people that we have and by being able to blend onshore with near-shore. It creates a price point that actually is competitive whilst not compromising on delivery.
People in the industry tend to insist that such skills must come from inside the industry. But increasingly we have seen this is not the case.
My view is that you've got to look further afield and seek the right skill set. For technology particularly it is irrelevant whether they come from inside the insurance industry, a pet manufacturer, or a top-tier bank.
Underwriters and brokers have got to be less resistant to more people from outside of the sector. And more generally, insurers and brokers have an opportunity to keep up with the pace of intelligent automation, competing for talent from the wider technology sector.
The banks have already learnt this. They have invested heavily in data centres and AI, and have extensive process re-engineering experience building across technology, infrastructure and applications. Data is the crown jewel, and if it is running down a rusty, even leaky pipe, it is no good for anyone.