Filed Under:Carrier Innovations, Technology Solutions

VIP: Revolutionizing the Approach to Core System Vendor Evaluations

(Laura Drabik is a principal with the Guidewire sales consulting team.)

Getting a core system replacement right the first time is paramount: No insurer wants to discover a year after implementation that his new core system is not what he originally thought it was, and will therefore ultimately fail to map back to the broader business vision.

Yet unfortunately, this scenario plays out all too often, and likely can be traced to an unclear project vision. Sure, an insurer might think he knows exactly what he wants, but without a trusted advisor to point out that he "doesn't know what he doesn't know," the selected core system will never accurately fit the insurer's business, and his "to be" world (the environment an insurer wants to create) will never be realized.

The Vendor Immersion Program, or VIP, seeks to address this, setting the stage for a core system selection that helps insurers achieve their long-term vision without a hitch. Its fundamental function is to quickly pair an insurer with a vendor and system that are best suited to the insurer's needs, while taking into account the insurer's specific "to be" environment.

By embracing a VIP approach, insurers can feel confident that their evaluations will yield the best possible vendor and system fit that delivers business value for the long term.

Pre-VIP Prep

While the VIP process is designed to help insurers streamline the core system evaluation process, they don't have to pull it together solo. Insurers should consider bringing in a best-practices vendor (their trusted advisor) early in the process so they can work together to devise a VIP agenda for all vendors, who, left unguided, will inevitably default to the traditional POC approach. Outside of the VIP agenda, conduct a discovery call with your trusted advisor so they can understand how you do business and what you want to achieve. Armed with this information, they can then help write a business flow (not a script) that can be used as a scorecard for the VIP.

Equally important in the pre-VIP prep is entering the evaluation process with the notion that whichever vendor is ultimately chosen will be the insurer's partner for the life of the core system—possibly for a couple of decades. So before the VIP discovery begins, bring each prospective vendor in to evaluate how you might work together. This is also a great opportunity to communicate expectations for the VIP, so that the vendor's presentation can be tailored to best demonstrate system capabilities that will help the carrier achieve the project's business objectives.

The pre-VIP prep phase is also a great time to put selected vendors through the installation process to see how the insurer's existing network and environment can support the new system.

The Breakdown: What to Include

The VIP process encourages multivendor (two to three) evaluations in succession, each taking approximately four days. Following is a breakdown of what should be covered during a VIP.

Day One: The Kickoff, Part I

Day One begins with all the insurer's key players in attendance: executives, core business, and technology teams. The first part of the day is dedicated to a comprehensive overview of the first vendor's company and system being evaluated. (It's important to note here that the system comparisons should be base or out-of-the-box systems—with no extra modules or add-ons to present a false sense of what the insurer will get at the outset. Keep your vendor honest by insisting they present an out-of-the-box system.)

The overview can include competitive differentiators and a discussion about what to expect during implementation. There should also be some discussion about the insurer's "to be" environment so all parties understand that the new system will not simply revise the current environment, but instead, will seek to create a new environment that will ultimately achieve the greater business vision.

VIP adds an extra unique component to provide even more value: an in-person, current customer testimonial. With this, the insurer has an opportunity to get a first-hand account of the system and vendor from a peer in its own industry—someone who understands the challenges and pain points the new core system will hopefully solve.

Day One: The Kickoff, Part II

During the second part of the day, the group of key players is split up for a "parallel activities" event. The executives are excused, and only the core business and technology teams remain to take part in a deeper dive in business and technology content. Business flows are used instead of business scripts, and the focus shifts to the business problem the insurer is trying to resolve with a new core system. This concentration on the business problem should dictate the course of the technology conversation; a feature discussion will not.

Multiple lines of business (LOBs) should be demonstrated during this deep-dive session—not only the current LOBs, but those that hold potential for the future, as the insurer must be able to see that the system can scale to meet the company's future needs. (As part of this test, the insurer should ask the vendor to "configure" something unique to his business to show how hard or easy it is to manipulate the system once it has been implemented.) And here is where seeing the aforementioned out-of-the-box system holds significance: If the insurer knows exactly what he's getting at the outset with the base system, he will know what the company will need as the business grows. Indeed, an insurer can't outgrow a system if he sees what he has to begin with and how it can be configured as the business scales up.

Day Two: The Test Drive

In the next session, the key players are reassembled and real-life users are added to the mix. The overarching purpose of Day Two is to present a typical day in the life with the new core system. Users should be allowed to take the system for a test drive — not just to check out the feature sets, but to apply it to relevant business life cycle events specific to the insurer.

Day Three: Implementation

Integrating a new core system into existing infrastructure is challenging enough to rattle the most seasoned IT professional. Yet reaping the most value from a new system will depend on its ability to assimilate seamlessly. With this in mind, Day Three brings back the key technology team members to tackle the all-important implementation process.

During this session, several points should be explored and answered:

  • How will the vendor implement?
  • Do I have the right resources?
  • Tell me about an implementation with a customer that is similar to my company in size, territories and LOBs. Why did this customer implement the way they did?

The insurer should also take this opportunity to challenge the vendor to provide an estimate of time and resources needed for the implementation.

Day Four: The Good, the Bad and the Ugly

While feedback should indeed be provided throughout each session and at the end of each day (this also serves to demonstrate now nimble the vendor is, whether they can adjust and what they are like to do business with), the final day of evaluation is dedicated solely to providing honest feedback to the vendor from all the insurer's key evaluators. Indeed, keeping a "vendor scorecard" confidential does nothing to help the vendor understand where the system (or presentation of the system) hits or misses. Insurers should share their scorecards with each vendor, making public their concerns about the system and its perceived risks or issues. This type of feedback provides an opportunity for the vendor to improve and grow its product to better serve the industry in the future.

Parting Thoughts

There's no doubt that a traditional POC can introduce an insurer to a solid core solution that appears to meet all current needs. But the ultimate goal through all of this is to settle on a core system that will last as long as 10 to 15 years, and will be flexible enough to continue to meet changing business needs as the insurer grows and its business changes. The VIP approach helps ensure the insurer reaches this goal. Indeed, using VIP, insurers can expect a greater return on their core system investment, as well as a partnership with a trusted technology advisor that will last the lifetime of the system.

Laura Drabik is a principal with the Guidewire sales consulting team. She is a former State Farm adjuster, as well as a consultant for both Deloitte and Accenture, with an MBA from the Rotman School of Management. She can be reached at ldrabik@guidewire.com.

NAPSLO 2016

 

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