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 satisfy the calls for of buyer expectations and fast 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 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 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 spread of things, from larger inflationary surroundings bills for insurance coverage operations and growing claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest charge surroundings and future predicted volatility, prices want to come back down, and one of many prices that’s growing 12 months over 12 months is upkeep of the mainframe.
Zooming in on sectors inside insurance coverage, this want for agility is manifested in several methods. Property and Casualty (P&C) insurers not solely must be extra agile, however must concentrate on advertising factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement business will profit from unlocking distribution, a feat which is presently not potential as a result of a whole lot 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 in an effort 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 associated fee foundation, and drive progress, for instance, by including a wellness layer to their providing.
From a price perspective, the case for mainframe modernization is obvious. The demand positioned on the insurance coverage infrastructure is growing, 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 workers will likely be required to supply upkeep and maintenance – a diminishing skillset as an increasing number of senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise danger.
Modernizing the mainframe isn’t just about total agility, however securing a basis for vital technological transformation. In a current report on Transforming Claims and Underwriting with AI, Accenture illustrates with widespread industry research that AI has emerged as the transformative technology and critical differentiator in the insurance industry when applied in tandem with humans. However, AI transformation is not possible if an insurer has not dismantled and updated mainframe platforms first.
Mainframe modernization outcomes
Modernizing the mainframe offers some compelling benefits. By running in a less expensive environment, operating costs are drastically lowered, and the use of a more modern platform dramatically reduces platform resource costs. Together, this can result in a 40 percent reduction in operating expenses. While this savings is significant, it is not the only benefit. Most importantly, mainframe modernization – through agility, flexibility and access to critical mainframe data – has a powerful impact on business value. As a recent Accenture blog, Mainframes: The last frontier of cloud migration emphasizes, clients are capable of leverage their mainframe knowledge, which may include many years 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 vital function the modernization of the mainframe performs in closing the talents hole – it could counter the issue many firms are going through as their mainframe consultants attain retirement age and may also appeal to new expertise occupied with modernizing core enterprise workloads.
Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and along side interoperable purposes, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities similar to the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages could be led to by conservative changes, or a whole system transformation. All of it depends upon the strategic and progress priorities of the insurance coverage enterprise.
New platforms and migration applied sciences permit for compressed transformations
Mainframe modernization 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 broad spectrum of selections obtainable to modernize at a tempo that’s comfy and essential for the insurer. At this time’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise contains SaaS options, Cloud maturity and advances in migration applied sciences.
By way of 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 remodel from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate danger regarding legacy expertise, improve agility and scale back prices
- Substitute: Figuring out a managed service/utility 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 totally with rewritten and rationalized purposes
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 expertise used. The appliance depends upon whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and enormous business. Nonetheless, 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 very 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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- Figuring out funds constraints
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- a. What’s the funds obtainable at present?
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- b. What’s the length obtainable to understand ROI?
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- Figuring out capability for transformation
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- a. What’s the IT workforce’s capability for transformation?
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- b. Are there sources obtainable?
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- c. Is there a whole lot of different change taking place?
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Following this course of ends in a novel 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, similar to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile progress each by means of rising revenues and slicing prices.
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