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 invaluable core technological operate, many legacy mainframes lack the agility to fulfill the calls for of buyer expectations and speedy digital progress.
The decision 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 quicker, higher, and cheaper. Modernizing the mainframe is the final mile in the 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 business, 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 setting bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest charge 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 must be extra agile, however have to concentrate on advertising and marketing factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement business will profit from unlocking distribution, a feat which is at the moment not doable as a result of plenty of that logic is embedded within the mainframe. Due to this fact, the main focus 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 price 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-Directions-Per-Second (MIPS) utilization and value. A legacy mainframe additionally has an influence on expertise, as devoted employees can be required to offer upkeep and maintenance – a diminishing skillset as an increasing number of senior staff 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 essential technological transformation. In a latest report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative know-how and important differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation just isn’t doable if an insurer has not dismantled and up to date mainframe platforms first.
Mainframe modernization outcomes
Modernizing the mainframe provides some compelling advantages. By working in a inexpensive setting, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this may end up in 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 way of agility, flexibility and entry to essential mainframe information – has a robust influence on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are capable of leverage their mainframe information, which may comprise many years of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog publish additionally illustrates the essential position the modernization of the mainframe performs in closing the abilities hole – it will probably counter the issue many corporations are dealing with as their mainframe consultants attain retirement age and can even appeal to new expertise desirous about modernizing core enterprise workloads.
Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities akin to the power to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages might be led to by conservative changes, or a whole system transformation. All of it will depend on the strategic and development priorities of the insurance coverage enterprise.
New platforms and migration applied sciences enable for compressed transformations
Mainframe modernization just isn’t 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 decisions obtainable to modernize at a tempo that’s snug and needed for the insurer. At the moment’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.
When it comes to approaches, insurers can roll out the next interventions, which all differ 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 trendy programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy abilities, enhance agility and cut 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 cut back complexity and prices
- Reimagine: Reimagining the enterprise completely with rewritten and rationalized purposes
How insurance coverage corporations 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 appliance will depend 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. Nevertheless, there are three key steps that decide the course of each mainframe modernization journey:
- Defining enterprise priorities
- a. What are the very best priorities for the enterprise?
- b. How do these align to the important thing issues brought on by working on the mainframe?
- Figuring out finances constraints
- a. What’s the finances obtainable in the present day?
- b. What’s the length obtainable to understand ROI?
- Figuring out capability for transformation
- a. What’s the IT crew’s capability for transformation?
- b. Are there sources obtainable?
- c. Is there plenty of different change occurring?
Following this course of ends in a singular mainframe modernization plan.
Accenture’s insurance coverage mainframe modernization methodology will assist you to develop a journey aligned together with your objectives. Contact us to get began.
Gas the way forward for insurance coverage: Expertise modernization, akin to AI and cloud-fueled information analytics, helps insurers ship worthwhile development each by way of rising revenues and slicing prices.
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