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 fast digital progress.
The decision for mainframe modernization
Insurers wish to attain a digital end-state and embed the enabling features they should carry out within the cloud utilizing a route that’s sooner, 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 take a look at the market forces shaping the broader business, insurers are being referred to 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 larger inflationary setting bills for insurance coverage operations and rising claims, to the impression 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 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 have to be extra agile, however must give attention to 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 present not attainable as a result of a variety of that logic is embedded within the mainframe. Due to this fact, the main target 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 to be able 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 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 evident. The demand positioned on the insurance coverage infrastructure is rising, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an impression on expertise, as devoted workers will probably be required to offer upkeep and maintenance – a diminishing skillset as increasingly more 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 necessary 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 in a position to leverage their mainframe knowledge, which may comprise many years of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog submit additionally illustrates the necessary function the modernization of the mainframe performs in closing the abilities hole – it will possibly counter the issue many firms are going through as their mainframe consultants attain retirement age and can even entice new expertise fascinated with modernizing core enterprise workloads.
Modernization additionally affords the power to deploy new options, merchandise and capabilities a lot faster and together with interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities comparable to the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages may be led to by conservative changes, or an entire system transformation. All of it relies 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 accessible to modernize at a tempo that’s comfy and obligatory for the insurer. Right now’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise consists of 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 software 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 regarding legacy expertise, improve agility and cut back prices
- Exchange: Figuring out a managed service/software that may present required performance, together with extracting and migrating knowledge to a brand new system to cut back complexity and prices
- Reimagine: Reimagining the enterprise solely 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 applying relies on whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small business and huge business. Nonetheless, there are three key steps that decide the path 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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- Figuring out funds constraints
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- a. What’s the funds accessible as we speak?
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- b. What’s the period accessible to comprehend 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 assets accessible?
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- c. Is there a variety 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 to develop a journey aligned along with your targets. Contact us to get began.
Gas the way forward for insurance coverage: Expertise modernization, comparable to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile development each by way of rising revenues and slicing prices.
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