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<\/a><\/p>\nHowever, many insurers make the mistake of assuming that they need to completely fill that twenty percent gap in functional requirements that the larger platform won\u2019t meet. They therefore assume that their decision process for a particular feature or function to address the twenty percent gap must be to buy a product that usually has more than they need, and that often leads to unintentional \u2013 but very real \u2013 damage to the overall project. There are many reasons for this, but the primary drivers usually are:<\/p>\n
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- A deep analysis is not done on products that address a specific solution<\/li>\n
- The cost of the decision is often viewed as a non-factor as it is often a miniscule part of the overall modernization budget<\/li>\n
- The product(s) chosen to address the required solution have more features than are needed<\/li>\n
- The product features of most value still need to be tweaked to meet the functional requirement.<\/li>\n<\/ul>\n
The following schematic is illustrative of the above points:<\/p>\n
![](\"https:\/\/www.insurance-canada.ca\/wp-content\/uploads\/2019\/05\/xby2-software-accelerators-graphic-2-300x167.gif\")
<\/a><\/p>\nBut there is another way. For specific functions and features, insurers should consider using \u201csoftware accelerators.\u201d Accelerators are created and maintained in-house, are typically more bareboned than a product, and may or may not be a complete solution in and of themselves. But they can provide insurers with an effective and less expensive way to fill the functional gap. And while cost may not be an issue at this stage of a modernization project, any accrued cost savings can be utilized in building a more full-functioning solution from the initial software accelerator when and if that becomes necessary. The benefit is that accelerator solutions are often more aligned to the insurer\u2019s needs than general solutions in the marketplace and can be easily customized to provide a specific functional need without making a larger investment of time, money, and resources in an off the shelf solution that will never be fully utilized.<\/p>\n
If there is a downside to software accelerators, it is that such an approach has the risk of turning into a maintenance problem. However, the money spent on any accelerator maintenance is often far less than the licensing and\/or renewal cost of an off the shelf product. And even if the costs were somehow equalized, using software accelerators written in-house provides an insurer with a more precise functional solution than any generalized solution purchased from a provider possibly could.<\/p>\n
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<\/a><\/p>\nBy way of a specific example, it\u2019s often the case that in the process of building analytical and reporting solutions, insurers tend to spend a lot of money and effort in acquiring and implementing an ETL tool that ends up being underutilized \u2013 often just for data ingestion and metadata. In a similar vein, most core systems modernization efforts in insurance, financial, heath care include purchasing full-function products that they use to just to do specific tasks like master data management, auditing, and data quality. In any of these scenarios it would have been worthwhile to evaluate the pros and cons of creating in-house accelerators to provides these functions.<\/p>\n
Using software accelerators is an idea that insurers may want to consider. Among other things, software accelerators have the potential to allow insurers flexibility and control over that elusive twenty percent of functional needs without over-spending and adding complexity to their technology environments. In the end it might be a better way for insurers to optimize and manage their software portfolio, while not settling for an overkill product solution where most of the functionality is never fully utilized. For insurers in a race to modernize to stay competitive, that\u2019s not a bad deal.<\/p>\n
About the Author
<\/strong><\/p>\nSaifuddin Bhagat is a senior consultant at X by 2, a technology consultancy focused on the practice of architecture in the insurance and healthcare industries. For the last five years, he has been working closely with medical provider organizations on architecting, building, and implementing advanced analytical data warehouses. Previously, he was doing similar work with insurance carriers. Bhagat holds BS in Computer Science from Madras University, India.<\/p>\n
About X by 2<\/strong><\/p>\n
Founded in 1998 and with offices in the US and Canada, X by 2 is a technology consultancy focused on the practice of application and data architecture in the insurance industry. Whether Property and Casualty, Life, or Health, X by 2\u2019s Architects and Program Leaders understand the insurance business and have proven experience planning and delivering core insurance systems, strategic business applications, and enterprise integrations. For more info, please visit xby2.com<\/a>.<\/p>\n
Source: X by 2<\/i><\/p>\n