In a market that calls on insurers to be agile and digitize at scale, an insurer’s mainframe can both catalyze or inhibit progress. Whereas the mainframe was as soon as a worthwhile core technological perform, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and fast digital progress.
The decision for mainframe modernization
Insurers wish to attain a digital end-state and embed the enabling features they should carry out within the cloud utilizing a route that’s quicker, higher, and cheaper. Modernizing the mainframe is the final mile in direction of enabling enterprise capabilities, reimagining the enterprise and driving a cloud working mannequin.
If we have a look at the market forces shaping the broader trade, insurers are being known as upon to be extra agile in order to maintain tempo with quickly altering calls for. This is because of a variety of things, from greater inflationary atmosphere bills for insurance coverage operations and growing claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest fee atmosphere and future predicted volatility, prices want to come back down, and one of many prices that’s growing yr over yr is upkeep of the mainframe.
Zooming in on sectors inside insurance coverage, this want for agility is manifested in numerous methods. Property and Casualty (P&C) insurers not solely have to be extra agile, however have to give attention to advertising and marketing factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement trade will profit from unlocking distribution, a feat which is at the moment not attainable as a result of lots of that logic is embedded within the mainframe. Due to this fact, the main target is on modernizing the mainframe to allow digital channels. Group and Retirement insurers are present process a compressed transformation – which means that the sector requires reimagined operations from the bottom up with the intention to enhance buyer relationships and acquire a aggressive benefit – with Group hurting on margins, and Retirement hurting on margins and scale. Lastly, Group and Well being insurers are being challenged to drive down the fee foundation, and drive progress, for instance, by including a wellness layer to their providing.
From a value perspective, the case for mainframe modernization is evident. The demand positioned on the insurance coverage infrastructure is growing, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and value. A legacy mainframe additionally has an affect on expertise, as devoted employees might be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise threat.
Modernizing the mainframe is not only about general agility, however securing a basis for vital technological transformation. In a current report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative expertise and demanding differentiator within the insurance coverage trade when utilized in tandem with people. Nevertheless, AI transformation shouldn’t be attainable if an insurer has not dismantled and up to date mainframe platforms first.
Mainframe modernization outcomes
Modernizing the mainframe affords some compelling advantages. By operating in a inexpensive atmosphere, working prices are drastically lowered, and the usage of a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 p.c discount in working bills. Whereas this financial savings is important, it’s not the one profit. Most significantly, mainframe modernization – by means of agility, flexibility and entry to crucial mainframe information – has a strong affect on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are capable of leverage their mainframe information, which might comprise a long time of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the vital function the modernization of the mainframe performs in closing the abilities hole – it could possibly counter the issue many firms are going through as their mainframe specialists attain retirement age and also can entice new expertise focused on modernizing core enterprise workloads.
Modernization additionally affords the power to deploy new options, merchandise and capabilities a lot faster and along side interoperable purposes, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities reminiscent of the power to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages could be caused by conservative changes, or an entire system transformation. All of it depends upon the strategic and progress priorities of the insurance coverage enterprise.
New platforms and migration applied sciences permit for compressed transformations
Mainframe modernization shouldn’t be a one-size-fits-all proposition. It’s pushed by the distinctive market wants of the insurer and the strategic intent of the enterprise. There’s a huge spectrum of selections out there to modernize at a tempo that’s comfy and needed for the insurer. Right now’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise contains SaaS options, Cloud maturity and advances in migration applied sciences.
When it comes to approaches, insurers can roll out the next interventions, which all fluctuate in scale and depth:
- Re-platform: Migrating an utility with out altering the programming language to a different platform / Working System
- Re-factor: Harnessing Accenture’s language migration toolkit to rework from legacy to fashionable programming language code, utilizing (semi) automated tooling to mitigate threat regarding legacy abilities, enhance agility and scale back prices
- Change: Figuring out a managed service/utility that may present required performance, together with extracting and migrating information to a brand new system to scale back complexity and prices
- Reimagine: Reimagining the enterprise fully with rewritten and rationalized purposes
How insurance coverage firms can start their mainframe modernization journey
There are nuances to how mainframe modernization is utilized inside insurance coverage. These options differ in depth from enterprise advantages to the expertise used. The applying depends upon whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and enormous business. Nevertheless, there are three key steps that decide the route of each mainframe modernization journey:
- Defining enterprise priorities
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- a. What are the best priorities for the enterprise?
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- b. How do these align to the important thing issues attributable to operating on the mainframe?
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- Figuring out price range constraints
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- a. What’s the price range out there at this time?
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- b. What’s the length out there to appreciate ROI?
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- Figuring out capability for transformation
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- a. What’s the IT group’s capability for transformation?
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- b. Are there assets out there?
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- c. Is there lots of different change taking place?
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Following this course of ends in a singular mainframe modernization plan.
Accenture’s insurance coverage mainframe modernization methodology will aid you develop a journey aligned along with your targets. Contact us to get began.
Gasoline the way forward for insurance coverage: Expertise modernization, reminiscent of AI and cloud-fueled information analytics, helps insurers ship worthwhile progress each by means of rising revenues and chopping prices.
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