As consumers, we expect our technology to adapt and evolve.

It's these expectations that are driving the digitaltransformation.

Digital transformation involves the adoption of new processesand models to accommodate emerging technologies and improve productivity and the customerexperience. A large focus for insurance and finance businesses ofall kinds, the hurdles that stand in the way of technology adoptioncan feel insurmountable.

Related: Digital transformation: 8 best practices forinsurers

Insurance carriers feel the pressure

According to a study conducted by Ensono and Forrester, more than a third of carriers creditrising customer expectations as the cause for their digitaltransformation plans, and 99% are facing cost difficulties in doingso.

But digital transformation is required of any modernorganization, and there are some measures organizations can take toease the difficulties, alleviate costs, and move toward smootherprocesses and smarter infrastructure.

Related: The importance of leadership in driving digital agechange

Digital transformation barriers

The ease with which many talk about digital transformation isdifferent than the actual process of implementing it. It is nosimple task, and insurers face resource and process challenges throughout.

Seventy percent of the insurance industry is on a digitaltransformation journey, and everyone is feeling the burden of it,particularly in the following areas:

Experience — Overhauling your infrastructure ishard enough, but the struggle to provide a high-quality experienceto everyone the product touches adds to the challenge. It'simportant to keep in mind this includes more than just the end customer, but also agents, brokers,compliance and legal teams.

Legacy portals overwhelm insurers with data without letting themeasily extract actionable insights about what their customers seek.The migration of this data to newer infrastructure renders it evenmore perplexing while in transit. The agent experience also sufferswhen they are forced to learn the ins and outs of a new agentportal after being comfortable with a legacy one, especially as thekinks in a new one are worked out.

Security — A full 100% of insurers surveyed byEnsono face issues with security when distributing data andaccessing it in legacy systems. Many insurers are lacking expertisewith advanced analytics and managing modern database platforms.

With the prevalence of data breaches in our digital world and theresulting impact on business reputation, stolen customer data isthe last thing an insurer wants on its plate during a major digitaltransition. Insurers hold onto an enormous trove of customer data,making faulty security a major threat when restructuring legacysystems. After all, data is most vulnerable when on the move.

Cost — As cited, price is also a huge hurdle onthe way to digital transformation. While scaling the needed systemsto become more advanced, the software license and maintenance costs alsoclimb significantly, especially when you're forced to lock intolong-term contracts.

IT talent also comes at a high price, considering the general skills gap and the drastic mainframeskills gap. Many insurers' systems exist on legacy environmentslike mainframes. Millennial IT talent is largely skipping overmainframe careers thanks to a lack of exposure to mainframes andtheir language – COBOL – during their education. This makes itdifficult for many, in-house IT teams to recruit the talent neededto help insurers move over from legacy environments to moreadvanced cloud-based applications.

Communication — When moving off legacysystems, standardizing KPIs across multiple independent departmentsand managing the tension of change – internally and among agents –is trying. A shift in IT strategy affects everyone touching theorganization. Keeping everyone looped into the progress of newchanges is essential.

Related: Insurance 2017: Priorities for innovation,automation and transformation

Breaking down barriers

Insurers have relied on legacy technologies for decades, butwe've reached a point where they are now holding the industry back.Clearly the hurdles are abundant, but they're not impossible toscale, especially not when insurers have the right help andunderstand what elements to prioritize. Insurers looking fordirection in their digital transformation journey should keep theseinsights top of mind:

• Prioritize agent loyalty — As firms increasingly go all-digital, itcan be tough to know where to begin when transforming your owninfrastructure. Agent loyalty should be the top priority. Agentsare the closest link to the end customer, and service speed andquality is of utmost importance to them. If they're not gettingthat from your carrier systems, they'll seek out a different onewith a smoother experience.
• Invest in your analytics — Data is insurers' most valuable asset. Bypulling actionable insights from their data, insurers can betterunderstand the needs of agents and customers. Having that insighthelps to create a path for the business on its digitaltransformation journey to ensure it's investing in the areas thatmatter most to its stakeholders. But getting what you need fromyour data demands a very specific skill set. If you're not findingthe correct talent, turning to a third-party solution can help tofill your analytics capabilities gap while keeping the datasecure.
• Seek outside assistance— From licensing expertise to managed cloudservice to consulting services, bringing in outside skills andperspectives can do wonders for the transition to highly digitalprocesses. Seventy-eight percent of insurers have roped in at leastone outside service to assist with their digital transformationjourney. This high demand for outside services indicates thatinsurers recognize the need for due diligence in reaching a newlevel of digital functioning in an advanced insurance world.

There's no denying the benefits of digital transformation.Insurers understand that, and are forging ahead with innovating their legacy infrastructure. Alongthe way, they are open to admitting their struggles.

Agents and end customers demand a new level of digital serviceand experience, and they expect the transition to be seamless. Byremaining open about the barriers they face and seeking the rightassistance from outside experts in IT management, insurersresponsibly set an example for others to reach the newstandard.

Brian Klingbeil is executive vice president of Technologyand Strategy at the IT solutions company Ensono as wellas a member of the company's board of directors. To reach thiscontributor, please message Bridget Devine at [email protected].

The opinions expressed here are the writer's own.

See also:

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