Exclusive: ‘The new nimble’ – Richard Farrell, Netcall; David Germain, RSA and Nigel Walsh, Deloitte in “The Insurtech Magazine”
IT projects that have been overlooked for years have shot to the top of board agendas, as companies, galvanised by the pandemic, commit to new ways of working. So, just how do you get buy-in for transformational change and how do you deliver it now? We asked Richard Farrell, Chief Innovation Officer for Netcall, David Germain, Group Chief Information Officer at RSA, and Nigel Walsh, who leads on the insurance industry and insurtech at Deloitte, to discuss their experience
It’s been a monumental struggle to win hearts, minds and budgets for transformational change in insurance. So, when the pandemic hit, there was a hold-your breath moment as boards who’d previously committed to shifting the dial, weighed up their priorities in the face of business-critical pressures.
But, according to Richard Farrell, chief innovation officer at Netcall, which offers low-code contact centre and omnichannel messaging solutions over its Liberty platform, no one’s considering taking their foot off the gas.
“Some of our larger insurance customers, that already had long-term digital plans, told us quite early on in the pandemic that they were prioritising our projects, because they were so important to their business outcomes,” he says.
In fact, if anything, projects that had been idling at the bottom of companies’ to-do lists, suddenly found themselves greenlighted.
“Every year, they’d be the part of the budget that got cut, but now they’re in the top tier of our programme prioritisation going forward,” says David Germain from insurer RSA. He’s one chief information officer who’s been building an IT strategy fit for just such a Damascene event.
“RSA has been around since the 17th Century, so our brands are very well known. But we have technology that’s been around a hell of a long time, too (maybe not quite that long!). Trying to modernise that technology, build new products, create a bimodal architecture that can work with the old and the new, is really challenging,” he says.
“We need a strategy that ensures we’re continuously moving at pace, making the right smart investments, aligning ourselves with the right smarttech/insurtech partners – which we’ve done more of in the last year than at any point in our history. And then building those partnerships, because we can’t do it alone – we’re not an in-house development organisation. We want to be a Cloud-first adopter; where it makes sense, we want to build a low-code environment that’s API driven; and we want our stack to be microservices-driven. So, we’re trying to put ourselves in a position where the partnerships we have, the architectures we drive, the ecosystem we’re a part of, all work together well.”
This approach has been proven by the world coming to a standstill in 2020.
“Our thinking, right now, is that we’ll exploit any platform opportunity that allows us to accelerate an outcome for the organisation, and not become the victim of the business process because our organisation thinks it can only be done a certain way,” says Germain.
“A lot of platforms come with out-of-the-box functions that you can tweak, and that has to be the focus. Take the Guidewire claims programme we’re using. If you’re smart around how you deliver that tech, move it on, so you don’t have an issue with creating infrastructure around it, and use the Guidewire Cloud, or software as a service (SaaS) solution, you’re then into a low-code configuration environment.”
Such solutions have an exponential effect on the tech transformation timeline. What’s sometimes slow to catch up is the culture of the organisation running it.
“I’ve spent a fair few years doing large-scale, core system transformations, whether it’s Guidewire, Duck Creek, Salesforce or any of the customers and brokers,” says Nigel Walsh, who leads on insurance and insurtech for Deloitte. “What I’ve found is that there will always be technical debt – something you put in yesterday is out of date tomorrow – so, yes, you need to make the system flexible, through Cloud, microservices or APIs. But I also see a lot of operating model debt – legacy ways of working.
“Our industry is very quick to blame technology as the prohibitor when it comes to the speed at which we can move, but technology is never normally a barrier. There might be a cost issue and you might be moving through what a friend of mine calls ‘the valley of the shadow of death’, when you have old and new technology running simultaneously and you’re trying to get stuff turned off – which we’re terrible at, in insurance. But you can hustle your way through that.
“The things that take longer to change are the mindsets and attitudes towards the new operating model. We all talk agile, but very few people can actually say ‘we’ve got our business folks working side by side, desk-to-desk with our technology folks. If they want a change done, we can use DevOps tools, and whatever else, to push stuff out to market in real time. And that’s where the insurtechs have done really well. They don’t have any technical debt and, at the same time, don’t have any operating model debt, either.”
Germain agrees: “It’s the toughest thing in the world to change your operating model. Where you have function leaders who are resistant to change and people who feel they’re becoming less empowered, and no one really understands the squad-type construct [of change management]. In that case, it’s really hard to bring a group of individuals together – with a scrum master, an architect, an infrastructure lead, and a couple of SMEs – to run some kind of sprint, and then iterate and increment change around it.
Because they’ll ask ‘where’s the management layer?’, ‘where’s the business case?’, ‘where’s the myriad of management overhead that we need to lead it?’, ‘how do we know you’re spending the money wisely?’, ‘what do you mean by a backlog… that just means you haven’t delivered the sprint, surely?’. You get into these conversations, which are really hard to get out of, because it’s an education process and, even after that education process, sometimes people still don’t get it. So, going from zero to one is really difficult, and going through the maturity curve even more so.”
As a technologist of 30 years’ experience, Netcall’s Richard Farrell has arrived at the same conclusion.
“I can talk to you about instructions per second, and David and I can have a great chat about infrastructure … but the culture, the operating models, the processes are far more important than the tech,” he says.
“In fact, at Netcall we try to keep the technology ‘til last when we’re talking to clients. First, we want to understand their ways of working and processes. We want to know what business outcome is required. For example, we did a recent piece of work with an underwriting firm and its driver for change was twofold. It was looking at operational efficiency – saving money and getting more throughput – but its other key metric was Net Promoter Score, and making sure it was improving customer experience at the same time. The task was to look at existing complex processes and journeys, not a new service or shiny new product. It was to ask ‘what are the processes that cause us pain, and cost us a lot of money?’ and ‘what process should we get to, and then implement?’.
“We look on design thinking as a sort of philosophy,” he adds. “We’re constantly talking about stakeholder involvement and so, if an organisation comes to us, that has already set up multifunctional teams and is already clear about the business outcomes it wants to achieve, that’s great. If somebody’s just looked at a Forrester Wave report and wants to talk technology, that’s probably the wrong audience at the wrong time.”
David Germain’s advice to anyone trying to minimise the shock of the new and gain buy-in from the top is to ‘start with something small’.
“That’s what I did – you have to prove you can get stakeholders to believe in it,” he says. “When you start with something small and the outcome is fantastic for the sponsor – it’s grown his or her op plan, their revenue line, etc – they start to believe in it, and then you can increment. But you can’t take an organisation through a huge transformation and expect to move from basic waterfall processes to something so profoundly different in one leap. I’ve done it in big banks, and it’s imploded on me.
“So, in this organisation, we’ve done it in small steps and we’re still doing it – we’re not there yet. In time, it changes the culture. Also, think about the people you hire – people who are more progressive in their mindset. That really does help the business embrace change.”
“We use a slogan here quite a lot, which is ‘think big, start small, act quickly’,” adds Walsh. “It’s just a polite way of saying ‘we’re not trying to tell you don’t have a great vision around horizon two or horizon three thinking. But there’s no point spending all our time talking about horizon two and horizon three, and not actually executing something’.
“I remember my first large-scale claims programme, which was a five-year programme, and I think I was one of the last people standing from the original team, because people churn so often on those projects, which makes them really hard to do. By contrast, those I’ve been involved in over the last couple of years have been around 12 weeks to minimum viable product: iterate, next iteration, release one, release two. They’re short, sharp bursts. And that echoes David’s point. You need that to build belief and earn the respect and trust of others across the organisation. Then you can go ‘hey, we did this! This is what we said you were going to get, and we’ve delivered it. Let’s do the next batch right now, or work through the backlog’.
“Also, this isn’t just about the management and IT departments, it’s about getting everyone on board. It’s also not about having your own legal or procurement people involved. There’s no point dropping back into a standard procurement process, that’s going to take 12 weeks, for example, if you’re trying to accomplish a six-week project.”
Since the events of last year, there is evidence to suggest that visionary chief technology officers and others within an organisation with responsibility for digital transformation, won’t have quite such a hard time justifying a new approach.
“We do some work with the London Market at Lloyd’s, and that’s had 300 years of face-to-face engagement and using paper. And all of a sudden, on one day, that changes, and it breaks,” say Farrell. “I think we’ve seen two things as a result of that. One is that there’s been a desire to adopt different processes as a reaction to the reality of different ways of working. The other is that larger customers told us they were prioritising our projects. So, we saw a reaction, but also a reaffirmation that this is the right long-term strategy: that there needs to be more digital, and there needs to be more engagement.”
Netcall, which works across sectors, including government and health, was at the sharp end in experiencing demand for agile solutions in an environment where speed couldn’t have mattered more.
“We have seen some real, cutting-edge, vaccine and testing use cases for technology solutions. We’ve had entire applications that have been delivered in five days from scratch. These proof points are something we will bring back into other sectors, for more evidence of how these technologies can really radically alter a process and be implemented quickly,” says Farrell.
David Germain recalls how, back in April 2020: “Our challenge wasn’t digital solutions delivered into brokers, or digital solutions for consumers. Our challenge was getting our business to work remotely.
“We did not have an appropriate remote setup for our organisation. We had to deliver thousands of laptops – we had to buy thousands of laptops before we could deliver them! – to get our back-office staff and contact centres to be able to work from home. We had to deliver more capacity on our network, because we didn’t have enough to support the business under this new, homeworking model. And we didn’t have the right collaboration tools. In other words, we didn’t have a digital workplace strategy. Ensuring business continuity became my primary activity. But that was a really positive moment for our organisation, because a number of things that we always said would never work if we had a geographically- dispersed, remote-working organisation, so we wouldn’t do it – well, we were doing it or we wouldn’t have a business.
“So, having busted that myth, let’s look at doing payroll runs, let’s look at doing end of months, let’s look at how we do video livestreaming chats with claims customers. We’ve had to do a number of things to demonstrate digital processes can work remotely. That’s learning number one. Just the fact we’ve managed to myth-bust, over the past several months, has been really important. That’s given our execs confidence that, actually, we can do more with this now.
“The second is to do with partnerships: they’ve allowed us to build programmes more efficiently, they’ve allowed us to accelerate projects which were never in the top 10, 20 or 30 on our list before. Every year, they’d be the part of the budget that got cut, but now it’s in the top tier of our programme prioritisation going forward.”
Nigel Walsh agrees that the pandemic has been ‘a massive accelerant for things that we already knew about’.
“My biggest fear is that we haven’t rethought the process, or actually applied too much ingenuity or thought around why we are doing it in the first place. I get it: when you’re told to move a whole organisation, globally, to homeworking overnight, you don’t get a choice; you do what you know. But I do think, as this starts to settle down now, we should start questioning the steps that we’ve digitised, to make them more optimal, or just get rid of them entirely.”
Key to that judgment call, in many instances, might well be how the industry improves its data gathering and data handling.
“With insurance, the main issue around selecting the right data, and the right integrations, has been speed – speed of case handling,” says Farrell. “Data enables you to improve processes, and then allows for continuous improvement.”
Walsh is cautious of the ‘more data the better’ argument, though.
“In fact, I’m always quoted as saying that data lakes are where people are going to drown and we want to try to avoid that. In financial services, we make – physically – nothing. Just data. And we keep adding more, thinking it’s going to solve problems.
“I would caution against us getting too excited about what we can do with all the variants of data that are out there, because, of course, you can rate things to your heart’s content, and know so much – but, often, by looking so far ahead, we miss the basics. There is so much out there and I think insurers will be playing catchup to work out how they leverage it into their propositions, to go from reactive to proactive, which, ultimately, reduces claims. Artificial intelligence and machine learning will help with that.”
David Germain agrees that it has to start with the basics.
“It has to start with good relationship management, building up the right 360-degree view of your clients or your customers; understanding how you’re going to better market and sell those products; build the data stack up appropriately, so that you get information you can use, and work with your data scientists on getting insights into that data. But it has to start with the lineage of the data. And most organisations really struggle with that, because they honestly believe you can do a mashup and pull it in, and you’ll get some insights, and you can’t really.”
All agree that the industry has taken a decisive step forward over the past year.
“If there’s anything good that’s happened with this pandemic – and it’s been hell for all of us – it’s the green shoots of positivity that it’s brought to business, organisations, operating models and ways of working,” says Germain. “And I don’t think the world will go back. None of us are going to regress our businesses. We can only go forward from here.”
“Insurance can’t go back,” says Walsh. “It would be a travesty of our industry.”
This article was published in The Insurtech Magazine #05, Page 14-16
People In This Post
- New R&D Tax Credit Could Leave Lots to Be Desired for Struggling UK SME’s Read more
- Leading Insurance Franchisor Reaches $1 Billion Milestone, Earns Industry Accolades Read more
- RISE Announces Winners of $1.5 Million Flood Insurance of the Future Challenge Read more
- Newgen Partners with Mambu to Streamline End-to-end Lending Processes Read more
- BayPort Credit Union Wins Two CUNA Diamond Awards for Creative Excellence in Marketing Read more