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A leap of faith

02 August 2007

Changing IT system providers is often a drawn out process that takes significant time and effort, but can the benefits of getting up to speed with technology be worth the hassle? Martin Friel explores what brokers should be considering before they dive into anything new.

Considering a new IT systems provider? Getting high-tech and having cutting-edge applications is all very well, but what of the practicalities of taking the leap? After all, this is a drawn-out process, one that will have a disruptive impact on any business and can take up to a year before full implementation is achieved.

So why would any business even consider swapping their IT systems with all the accompanying grief and disruption that this brings? The reasons for changing and the range of choices available to those pondering such an undertaking are endless, but there are some common themes that can be applied.

To start with, there are several providers offering their wares to an increasingly dynamic and technology-savvy industry - Open GI, Acturis, Software Solutions Partners (SSP) and CDL to name but a few - and they all have their own unique business offerings, strengths and weaknesses. However, having plenty of choice can bring its own problems.

Putting choice aside for the moment, is it possible to identify the main drivers behind brokers changing their IT system?

The most popular reason in the past couple of years has been the onslaught of regulation and the added responsibilities that contract certainty, client money rules and initiatives such as Treating Customers Fairly have brought to the average broker's table. In order to be in-line with these regulatory changes, brokers have been forced to update whatever IT system they are using to ensure they are fully up to date and able to comply with Financial Services Authority requirements.

Change in direction

Another impetus for change has been the wholesale consolidation that has occurred in the broker market, both among insurers and within the IT sector. In terms of brokers, consolidation can easily lead to a change in IT provider as they may be obliged to do so. However, they may also choose to change upon joining a network, in order to get access to products that are available on a particular platform.

Finally, businesses have been changing providers to better align themselves with insurers and improve what has been called their 'insurer connectivity'. Furthermore, it has been suggested that some insurers will not trade with brokers unless they can operate a suitable IT system within their firm.

Surprisingly, however, the message from providers is that brokers should only change if they feel that it will tangibly improve their business. Simon Ronaldson, sales and marketing director at Acturis, is unequivocal in his belief that brokers should be thinking hard about any potential change, and should be also be considering any long-term factors.

"Brokers really need to figure out what it is they want from a system - they also need to factor in what they currently work with and what they will need in the future. They should be looking at what it is they want the system to achieve, and try to put that in financial terms," he explains.

Mr Ronaldson's counterpart at Sequel, Mike Graham, agrees but takes the idea a step further: "Changing your IT system is a business decision, not a technological one. Brokers should acknowledge that it is a business project. If I was a buyer, I would want to know what the long-term future of my organisation is, and find a software solution to fit around that," he advises.

It appears that it is less about fitting a business to a system and more aligned with taking an objective view of the company's future, where it should be placed in the medium term and finding the IT platform that will allow a company to meet its business goals. However, once the decision to change has been made and the long-term reasons for this have been thoroughly considered, what about the practicalities of the swap?

It is almost universally acknowledged to be a rather painful process. Debbie Baker, business unit director, insurance, at Kewill Systems, says transferring the information that brokers store "can be an absolute nightmare" and stresses that it should not be a decision taken lightly.

However, she believes that there are many benefits of going ahead with the process: "Brokers should be considering switching in order to gain access to as many products as possible. They need to invest in technology to remain competitive, and gaining access to these products will ensure that they will be able to do this."

One broker who has changed systems twice and is aware of these benefits is Richard Benson, director at Benson Financial. The broker first sided with Misys (now Open GI) but moved to Sirius after a few years. That process, he readily admits, was painful but not so painful that he was unwilling to change again in 2005, this time migrating to Acturis.

"Many people are put off by scare stories, although the key thing for them to consider is the data transfer. They need to manage their own expectations, as you are never going to get everything transferred immediately," he says.

The length of time the process takes also depends on the size of the project at hand, as well as what a brokerage wishes to achieve with its IT system. Phil Ashton, director of intermediary, sales and marketing at SSP, comments: "The lower end of the market - four or five users - is generally looking for an 'out of the box' solution but bespoke tailoring of the system becomes more important and complicated when it gets to more than 20 or 30 users.

"It can take as little as 10 weeks or as much as 12 months to fully implement a new system - it depends on the size and complexity of the broker," he adds.

However, with technology advancing at break-neck speed and a growing acceptance that the number of providers in the market will be whittled down to three or four major players in the medium-term, how can a broker know that it is making the right choice?

More than a system

Mike Barr, managing director at Watertrace Consulting, advises that brokers should consider their options carefully, as they are choosing a business partner, not just a system. He explains that when deciding, brokers need to take into account three key elements:

• Look at the company itself - is it financially stable?
• Is there a global or pan-European aspect to the company - will it be able to handle future growth?
• Look at the software - does it deliver what is required?

Or, as Mr Ashton suggests, "it is always prudent to go with a recommendation".

This is not a decision to be taken lightly but, as the whole industry becomes more technology focused, it is rapidly becoming apparent that brokers have to make a decision sooner or later about what IT system will work for them.

Accept from the outset that it is likely to be a painful undertaking. However, if the right decision is made for the business and all permutations have been considered and managed. Brokers can then open up a host of business opportunities purely by selecting and fully implementing the IT provider that suits their business best. It may be all about choice but ultimately, it is about the right choice.

Insurance Age


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