02 · Strategic Review
It Wasn't a Technology Problem
Strategic review of a problematic underwriting system and operating model.
The problem everyone thought they had
A recently acquired subsidiary was creating a Lloyd's syndicate and had implemented a new version of its policy administration system to support the new market. The organisation was struggling to close its financial period within the tighter reporting deadlines demanded by its new parent.
The parent organisation believed the implementation was fundamentally flawed and favoured replacing it with the group's corporate platform. The business unit strongly disagreed.
I was brought into the middle of that disagreement. My first question was not which system we should use. It was: what do we need to do to make the product work?
Two views. One problem.
As the accountable group technology leader for the business unit, I partnered with the segment CFO to launch a strategic review. I deliberately positioned the review differently from a conventional assessment of whether the implementation had failed.
The answer needed to follow the evidence rather than a political agenda. I therefore looked beyond senior stakeholders and spent time with the people actually doing the work.
Finding the real problem
We examined intake and data capture, the operating model, processes and manual adjustments, workarounds, financial close, financial reporting, reserving and management information.
That was the response from a middle manager when I asked why nobody had complained about a highly manual and convoluted process.
The organisation had implemented new technology but retained its old way of working.
The system wasn't the problem
The policy administration system was capable of doing what the business needed. The problem was the way it had been implemented and configured.
The organisation had married new technology with legacy business processes and tried to make the new system reproduce the outputs of the previous solution. Rather than changing processes to work with the new capability, it was effectively reverse-engineering the old level of detail.
The technology wasn't fundamentally broken. The operating model around it was.
Three choices
- Replace the system — approximately $4.5m. Move to the existing corporate platform, with the associated migration and execution risks.
- Fix the existing solution — approximately $5m. Retain the platform while addressing its configuration, processes, operating model and downstream applications.
- Make limited improvements — approximately $2.8m. The cheapest option, but one that would leave the fundamental problem in place.
I recommended fixing the existing solution. The product wasn't bad. The implementation was. Replacing it would have introduced significant risk without necessarily addressing the underlying problem.
Making the recommendation work
The recommendation was not immediately welcomed. Divisional stakeholders initially refused to attend the outcome read-through because they felt the review painted them in a bad light. At the other end, senior group stakeholders believed the implementation was unsalvageable.
My job was not simply to produce the technically correct recommendation. I needed to produce one that both sides could support.
The division ultimately agreed to address the issues. I brought in specialist expertise to reconfigure the policy administration system. The platform was upgraded and improved by the in-house team, while surrounding applications and processes were updated, retired or replaced.
The eventual solution combined technology change, process change and operating-model change.
The outcome
It took time for the dust to settle and for the emotions around the review to calm down. But the changes worked.
The number of top-line adjustments during financial reporting periods dropped considerably. The division was able to meet its reporting deadlines, with stronger controls, fewer manual interventions, lower operating costs and greater transparency.
Most importantly, the organisation did not have to replace a fundamentally capable system simply because the original implementation had not delivered the expected results.
The lesson
Technology is often the most visible part of a business problem. That doesn't mean it is the cause.
Before making an expensive change, I want to understand what problem we are actually trying to solve.
Start with the business outcome. Understand what isn't working. Then decide what needs to change.
Sometimes the answer will be technology. Sometimes it will be the operating model around it. And sometimes, as in this case, it is both.
The most expensive solution isn't necessarily the one that costs the most. It is the one that fails to solve the problem.