In a market that calls on insurers to be agile and digitize at scale, an insurer’s mainframe can both catalyze or inhibit progress. While the mainframe was as soon as a precious core technological operate, many legacy mainframes lack the agility to fulfill the calls for of buyer expectations and speedy digital progress.
The name for mainframe modernization
Insurers wish to attain a digital end-state and embed the enabling capabilities they should carry out within the cloud utilizing a route that’s sooner, 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 take 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 spread of things, from increased inflationary setting bills for insurance coverage operations and rising claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest price setting and future predicted volatility, prices want to come back down, and one of many prices that’s rising 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 must concentrate on advertising 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 present not attainable as a result of plenty of that logic is embedded within the mainframe. Therefore, the main focus is on modernizing the mainframe to allow digital channels. Group and Retirement insurers are present process a compressed transformation – that means that the sector requires reimagined operations from the bottom up in an effort to enhance buyer relationships and achieve a aggressive benefit – with Group hurting on margins, and Retirement hurting on margins and scale. Finally, Group and Health insurers are being challenged to drive down the fee foundation, and drive development, for instance, by including a wellness layer to their providing.
From a value perspective, the case for mainframe modernization is obvious. The demand positioned on the insurance coverage infrastructure is rising, with enterprise functionality wants driving up Million-Instructions-Per-Second (MIPS) utilization and value. A legacy mainframe additionally has an affect on expertise, as devoted employees will probably be required to supply upkeep and maintenance – a diminishing skillset as increasingly more senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise danger.
Modernizing the mainframe isn’t just about general agility, however securing a basis for essential technological transformation. In a current report on Transforming Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative know-how and significant differentiator within the insurance coverage trade when utilized in tandem with people. However, 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 presents some compelling advantages. By working in a cheaper setting, working prices are drastically lowered, and using a extra fashionable platform dramatically reduces platform useful resource prices. Together, this can lead to a 40 % discount in working bills. While this financial savings is important, it isn’t the one profit. Most importantly, mainframe modernization – by agility, flexibility and entry to essential mainframe knowledge – has a robust affect on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are in a position to leverage their mainframe knowledge, which might include a long time of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the essential position the modernization of the mainframe performs in closing the abilities hole – it may possibly counter the issue many firms are dealing with as their mainframe specialists attain retirement age and may also appeal to new expertise thinking about modernizing core enterprise workloads.
Modernization additionally presents the flexibility to deploy new options, merchandise and capabilities a lot faster and along side interoperable functions, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities akin to the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages might be caused by conservative changes, or an entire system transformation. It all relies on the strategic and development 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 is pushed by the distinctive market wants of the insurer and the strategic intent of the enterprise. There is a large spectrum of decisions out there to modernize at a tempo that’s snug and mandatory for the insurer. Today’s mainframe migration know-how helps this, permitting for automated, quick, and low-cost migration to the cloud. This know-how contains SaaS options, Cloud maturity and advances in migration applied sciences.
In phrases of approaches, insurers can roll out the next interventions, which all range in scale and depth:
- Re-platform: Migrating an software with out altering the programming language to a different platform / Operating System
- Re-factor: Harnessing Accenture’s language migration toolkit to remodel from legacy to fashionable programming language code, utilizing (semi) automated tooling to mitigate danger regarding legacy abilities, enhance agility and scale back prices
- Replace: Identifying a managed service/software that may present required performance, together with extracting and migrating knowledge to a brand new system to scale back complexity and prices
- Reimagine: Reimagining the enterprise fully with rewritten and rationalized functions
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 know-how used. The software relies on whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small business and enormous business. However, 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 brought on by working on the mainframe?
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- Identifying funds constraints
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- a. What is the funds out there at this time?
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- b. What is the period out there to understand ROI?
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- Determining capability for transformation
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- a. What is the IT staff’s capability for transformation?
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- b. Are there sources out there?
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- c. Is there plenty of different change occurring?
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Following this course of leads to a singular mainframe modernization plan.
Accenture’s insurance coverage mainframe modernization methodology will enable you develop a journey aligned together with your objectives. Contact us to get began.
Fuel the way forward for insurance coverage: Technology modernization, akin to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile development each by rising revenues and reducing prices.
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