Performance-Based Software Selection Session Number: 276

Transcription

1 Performance-Based Software Selection Session Number: 276 IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

2 Speakers: George Grieve, CastleBay Consulting Corp. George is the CEO and founder of CastleBay Consulting, a leading insurance consulting and services provider. George is an expert in core insurance software evaluation, selection and implementation. He is a frequent guest speaker and published author on a wide variety of insurance and technology topics. George is a contributing editor to the Insurance Technology Association Pro magazine. In 2012 George published the book Shop Talk dedicated to the domains of software vendors and legacy replacement projects. He has also been published in TechDecisions, Claims Magazine, Risk and Insurance, Insurance Networking News, National Underwriter and Canadian Insurance and is a regular speaker at national industry conferences and on industry webinars. You can follow or subscribe to CastleBay s newsletter The Illuminator. Prior to founding CastleBay George was a Consulting Principal with IBM specializing in large scale business and systems integration projects for leading US and Canadian insurers. Before he joined IBM, George worked in US P&C carriers as a CIO. 2

3 Speakers: Ken Mitchel Director of IT, Clements Worldwide Ken Mitchel joined Clements Worldwide in 2007, and is currently leading a n insurance core system replacement for the company. Clements Worldwide is a global MGA specializing in expatriate insurance for both P&C and L&H lines, and has policy holders in over 170 countries. Prior to joining the Clements team, Ken served as the Vice President of IT for a regional Mid-Atlantic auto carrier, where he successfully implemented a complete legacy systems replacement. 3

4 Speakers: Tim Thackaberry, IT Director, New Mexico Mutual Tim Thackaberry has 15 years experience in the IT world, the last 10 as Director if Information Technology at New Mexico Mutual (NMM). At NMM Tim has overseen the complete overhaul of all company s systems, including the core (policy, billing and claims) production systems. He is a former chair of the American Association of State Compensation Insurance Funds (AASCIF) IT Committee and has spoken numerous times on his experiences with core system replacement. He holds the Certified Information Systems Auditor (CISA) certification. New Mexico Mutual was created in 1992, and is New Mexico s largest writer of workers compensation. 4

5 AGENDA The Verities The Story So Far In Retrospect Q & A George Grieve Tim Thackaberry Ken Mitchel Audience & Speakers 5

6 THE VERITIES 6

7 This is Not your Father s Software Market Not Your Father 7

8 This is Not your Father s Software Market You Not Your Father 8

9 This is Not your Father s Software Market Your Father's Options Line of Business Options Separate systems for PL & CL Separate systems for WC No systems for Specialty 9 Your Options One system for both PL &CL Same system for WC Same system for specialty Acquisition Options Initial License & Monthly Maintenance Initial License & Monthly Maintenance % of DWP % of DWP Lease Options Emerging Cloud Options ILC due at signing ILC can be spread Stance: Buyer Beware Stance: Trust & Verify Implementation Options Approach: Rip & Replace Methdology = Waterfall Enhancement & Maintenace = Coding Approach: Rip & Replace Best of Both Methodology = Agile Enhancement & Maintenace = Configuration

10 Flexibility Low High This is Not your Father s Software Market Modern Vendors Good News for Carriers Legacy Vendors Low Functionality 10 High

11 This is Not your Father s Software Market 11

12 This is Not your Father s Software Market 12

13 This is Not your Father s Software Market Why You Care: More & Better Choices Successful Vendors are BUSY 13

14 This is Not your Father s Software Market Why You Care: More & Better Choices Successful Vendors are BUSY More Vendors Better Software - Configurability Better Acquisition Options More Implementation Options Higher Success Rate Happier Business Users More Maintainable/Lower Cost 14

15 This is Not your Father s Software Market Why You Care: More & Better Choices Successful Vendors are BUSY More Vendors Better Software - Configurability Better Acquisition Options More Implementation Options Higher Success Rate Happier Business Users More Maintainable/Lower Cost Conclusion: There has never been a better time to buy third party core insurance software 15

16 This is Not your Father s Software Market Why You Care: More & Better Choices Successful Vendors are BUSY More Vendors Better Software - Configurability Better Acquisition Options More Implementation Options Higher Success Rate Happier Business Users More Maintainable/Lower Cost Conclusion: There has never been a better time to buy third party core insurance software 16

17 This is Not your Father s Software Market Why You Care: More & Better Choices Successful Vendors are BUSY More Vendors Better Software - Configurability Better Acquisition Options More Implementation Options Higher Success Rate Happier Business Users More Maintainable/Lower Cost Be Organized Look Serious Start with a Shortlist Be mindful of Vendor Constraints Follow Methodology but Be Flexible Make the Vendors Perform Conclusion: There has never been a better time to buy third party core insurance software 17

18 Software Selection RoadMap CastleBay Consulting: Software Selection Methodology Define Selection Criteria Select Vendor Short List Build and Issue Company Requirements Review Vendor Responses Prepare Vendor Risk Profiles Interview Vendor Clients Visit Vendors Execute Scripted Demo Select Vendor Execute POC Review and Finalize Deal Execute Project 18

19 Software Selection RoadMap 4 to 5 wks in; 4 to 5 vendors CastleBay Consulting: Software Selection Methodology Define Selection Criteria Select Vendor Short List Build and Issue Company Requirements Review Vendor Responses Prepare Vendor Risk Profiles Interview Vendor Clients Visit Vendors Execute Scripted Demo Select Vendor Execute POC Review and Finalize Deal Execute Project 19

20 How will you compare vendors? Summary Vendor Evaluation Scorecard Criteria Assessment Area Weighting Vendor #1 Vendor #2 Vendor #3 Un-Weighted Scores Vendor #4 Vendor #1 Vendor #2 Vendor #3 Weighted Scores Vendor #4 Vendor Risk Profile 7% Software Business Functionality 25% Software Technology 19% Enhancement Toolkit 17% Implementation Track Record 8% Production Support 12% Pricing and Terms: 6% Partnership Fit 6% Average Totals 100%

21 Software Selection RoadMap Make Vendors Perform Focus on your Interests CastleBay Consulting: Software Selection Methodology Define Selection Criteria Select Vendor Short List Build and Issue Company Requirements Review Vendor Responses Prepare Vendor Risk Profiles Interview Vendor Clients Visit Vendors Execute Scripted Demo Select Vendor Execute POC Review and Finalize Deal Execute Project 21

22 Software Selection RoadMap CastleBay Consulting: Software Selection Methodology What is Vendor like to work with? Learn enough to do the deal. Is there a wizard behind the curtain? Define Selection Criteria Select Vendor Short List Build and Issue Company Requirements Review Vendor Responses Prepare Vendor Risk Profiles Interview Vendor Clients Visit Vendors Execute Scripted Demo Select Vendor Execute POC Review and Finalize Deal Execute Project 22

23 Selection Methodology Conclusions Follow a Methodology: Look (and be) organized and serious Know where you are, how you got there and what is next Control the conversation Be consistent Be able to document/defend your conclusions 23

24 Selection Methodology Conclusions Follow a Methodology: Look (and be) organized and serious Know where you are, how you got there and what is next Control the conversation Be consistent Be able to document/defend your conclusions But, be flexible: Account for Vendor Differences Learn/change as you Go Remain consistent (& fair) 24

25 Some Things to Remember: There is no perfect solution The best decision is the best compromise The final choice may be less important than knowing as much as possible about your choice The more you know the better deal you can make and the more accurately you can estimate the implementation The worst time to learn unexpected facts about your vendor is during the implementation In the end software selection is about risk mitigation and buyer beware 25

26 The Story So Far - Tim Thackaberry 26

27 New Mexico Mutual Private mutual company in business since Mono-line, mono-state workers compensation carrier New Mexico s largest work comp writer, with approximately 30% market share Annual Written Premium: $90M 27

28 THE STORY SO FAR Starting Point 2 nd go-around with core system replacement Had some not-so-great implementation experiences Very low risk tolerance but want to have ultra-modern technology Matter of finding the right balance 28

29 THE STORY SO FAR Starting Point Why replace core system again? Business outgrew the systems Needs changed in unexpected ways Why use a consultant? It s not what we re best at (obviously) Want to ensure we make all new mistakes Risk mitigation 29

30 THE STORY SO FAR Beginning in May, 2013, did preliminary interviews with 9 consulting firms Narrowed it down to 3 2 main things we wanted: Insurance knowledge Business and technical savvy Selected Castle Bay Consultant Selection Started CBC engagement in February,

31 THE STORY SO FAR Initial Process Did a series of general, lay of the land meetings Determined the NMM personnel to work on project All functional areas represented Need to know what we do now and what we want to do later Set up core management groups Started doing detailed requirements meetings 31

32 THE STORY SO FAR Detailed requirements gathering Vendor shortlist filters Process Discussions of risk tolerances Criteria weighting (e.g., functionality vs. vendor implementation track record) Quantify as much as possible while leaving our options open 32

33 THE STORY SO FAR Lessons So Far Perspective from the middle of the process Know what you do (processes) Get the right people on the teams Have to look at things 2 different ways simultaneously: What do you do now? What do you want to do later? 33

34 THE STORY SO FAR More Lessons So Far Executive buy-in Time-intensive process Requirements work applicable for implementation Requirements gathering a great educational opportunity Time spent now pays off in many ways 34

35 IN RETROSPECT - Ken Mitchel 35

36 Clements Worldwide Privately owned MGA in business since 1947 Serving insurance needs for expatriates living and working outside of their home country. One stop shop, providing solutions for P&C and L&H Provide custom solutions for commercial lines clients, including relief and aid organizations, NGOs, and international schools Policyholders in over 170 countries worldwide Annual Written Premium: $100M 36

37 In Retrospect No guarantees, even using a textbook approach RFP and weighted scorecard? Vendor and client visits Scripted demos Past life short list results: 1 st Choice: X FAILED 2 nd Choice: X Out of business 3 rd Choice: Succeeded! 37

38 In Retrospect Our Key Selection Criteria: Strong implementation track record zero failed implementations Flexible, modern architecture MGA serving P&C and L&H in 170+ countries Growing and financially stable Invests in R&D 38

39 In Retrospect You are Buying a Marriage: Likely going to be a year commitment at least The system may go out of style in a few years, but you ll still be left with a partner critical to your company s ongoing success. A selection matrix only gets you so far trust, stability, and fit are critical 39

40 In Retrospect RFP Ingredients for Success: Use cases for vendor to walk through with system Proof of Concept Lite List and samples of implementation toolset artifacts. Measures of vendor stability and long term viability 40

41 In Retrospect RFP Review: Timelines and availability matter Bring your team to the vendor s location to go over the RFP Walk through use cases and discuss gaps Discuss future plans yours and theirs 41

42 In Retrospect References: Discuss implementation process and lessons learned Site visit see system in production and get end user feedback Attend vendor user groups, if available 42

43 In Retrospect Contracts: Win/Win: Avoid squeezing last dollar out of the deal -- when choppy waters come, there won t be any goodwill Be careful using incentives/penalties Build reasonable contingency into contract Especially important with agile methodology Build outs into the contract Recommend out after requirements phase 43

44 In Retrospect Implementation Status: Started development March 2013 All product lines and components developed and tested Expected live date September

45 Questions & Answers: 45

46 Please Complete the Session Evaluation Form on the Conference App and Include Your Conference Registration ID# to be Included in a Drawing for a Free Conference Registration for the 2014 Annual Conference! NOTE: Your Conference Registration ID# is Located at the Bottom Left Hand Corner of Your Badge. IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW