Think Big. Start Small. Incremental Modernization for Insurance.

Increased competition and customer expectations are pushing insurers to accelerate their modernization efforts. Traditionally, a platform or system modernization is one large initiative executed over a long timeline, with a high budget and even higher risk. These factors can make a traditional modernization feel overwhelming, which can lead to poor or failed attempts.

It’s no wonder some insurers are hesitant to undergo modernization or don’t do so in a timely, deliberate manner. Incremental modernization can be an antidote to this hesitation. Breaking projects down into smaller, more digestible chunks can result in quick wins, reduced risk, accelerated benefits and, most importantly, soaring team morale.

Inefficiencies of Traditional Modernization

Standing still means falling behind in an industry in flux. While insurers may not see modernization as a profitable cause, it can produce long-term cost savings, risk reduction and agility. Forward-thinking CIOs will anticipate these benefits and prioritize modernization, however they may experience complications if the execution is not sound. Approximately 70 percent of digital transformation projects fail¹ — compounding the already apparent risk and hesitation surrounding them. Projects may fail due to:

• Large scope – One large project means a large project scope, which can lead to potential miscommunications, time delays and additional costs.
• Team burnout – Long projects can create confusion and strategic drift over the project timeline, leading to burnout.
• Business Disruption – A large modernization could disrupt daily operations, potentially reducing efficiency and extending the project timeline.

Without proper execution, organizations can enter a highly complex modernization that loses steam over time and appears to lack direction. While the risks of failure surrounding modernization are apparent, they aren’t reasons to avoid it but rather reconsider the approach. That’s where incremental modernization can be effective.

What is Incremental Modernization?

Modernization is more than a process of replacing something out of date with something new — it’s a process of adjusting your business and business processes to be better suited for the future. A recent study reported “61% of insurance respondents believe smaller, incremental upgrades or replacements are a more pragmatic approach to modernization.”²

While not a quick fix, an incremental approach to modernization can help insurers expand the capabilities of their existing systems while building momentum and informing next steps. Incremental projects are not necessarily easier, but can simplify overwhelming modernization goals, allowing insurance CIOs and other leaders to better define the purpose of the project, pivot when necessary and become better aligned across the enterprise. When undergoing incremental modernization, insurers may find they’re able to:

• Work faster & lower costs – Incremental projects are narrow in scope and short-term, allowing room for periodic adjustments to plans that save time and resources in the long run.
• Decrease risk & set more feasible goals – Individual projects with smaller scope and complexity are more likely to succeed. When this approach is applied to many initiatives in a modernization effort, it decreases the entire project’s risk — and reduces team burnout.
• Continue operations – Smaller projects are significantly less disruptive, minimally impacting business operations compared to large modernization projects.
• Promote a culture of change – By introducing frequent change, employees will become more comfortable with change and learn to expect it.

How to Successfully Modernize

Modernization, regardless of approach, is only successful with the right strategy. How can you ensure your goals are met at the end of your journey? Actively lead the modernization effort and curate the right approach and team – it can make all the difference. To lead a successful incremental modernization, you’ll need to:

• Make a plan – Let the capabilities or business objectives you’re trying to achieve lead the way, not the technology. Contextualize the plan to your organization and create a feasible timeline.
• Bring the team along – Share the plan and objectives across the enterprise, even to those who aren’t playing an active role in the modernization effort. They’ll respond better to the changes made if they’re informed from the beginning.
• Provide training – Go beyond the required training to ensure employees feel confident in the new changes. If necessary, invite a change management expert or advisor to help lead training and build competency from the ground up.
• Stay focused – Most importantly, go into modernization with a vision, patience, collaboration and commitment. Modernization is an enduring complexity that must be approached with care to be successful.

To reap the full benefits of a modernization journey and inspire true change, organizations must shift their perspective – viewing the efforts as enablers, not the end goal. With the fast pace of technological innovation, today’s modernization is tomorrow’s legacy — the process never truly ends.