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Legacy Insurance System vs Modern System - what choose?

Assessing the impact on your business and evaluating the benefits of investing in modern technology are essential considerations for many insurers. At begin, we should understand technical debt and its financial implications.

Legacy Insurance System vs Modern System

Technical Debt (TD) describes the consequences of short-term solutions that result in higher costs or limitations in the long term. As customers demand immediate access to services and superior customer experiences, outdated legacy systems struggle to keep pace. Legacy systems often compartmentalize data, hindering seamless service delivery and falling short of meeting evolving customer expectations.

Assessing the Cost of Maintaining Legacy Systems

The maintenance of legacy systems poses significant operational and financial burdens, affecting adaptability and growth. In the United States government alone, technological debt reached $7 billion by 2018, with 75% of the budget allocated to maintaining legacy systems. Globally, banks and insurance companies also spend a significant portion of their IT budgets on legacy maintenance, hampering innovation and hindering market responsiveness.

Recognizing the Challenges and Risks of Migration

Migration or modernization efforts are not without challenges. Obsolete hardware, costly maintenance, integration difficulties, and limitations in evolving functionality are common hurdles. Additionally, maintaining unsupported software poses security risks and escalates operational costs. It's essential to consider these challenges when strategizing migration efforts.

Outsourcing data migration within the insurance sector proves vital owing to the intricate nature of such endeavors. As evidenced by client feedback, although sizable insurance firms may boast adequate infrastructure, they often lack the specialized proficiencies and hands-on experience requisite for seamless data migration. Given the infrequency of such tasks within the industry, sourcing professionals with tangible expertise in this domain poses a formidable challenge.

Enterprises like Decerto, boasting a track record of successful migrations, offer a unique amalgamation of technical prowess, industry-specific IT acumen, and pragmatic migration know-how. This amalgam is both rare and arduous to cultivate internally. Data migration in insurance presents notable hurdles, such as dealing with incomplete or discordant data sets.

Each policy, embodying an individual client's particulars, mandates meticulous transferal to the new system, irrespective of its complexity. Absent a well-honed methodology and specialized utilities, the process risks protraction and may fall short of comprehensive success. Thus, entrusting experienced firms with this pivotal operation ensures streamlined execution, precision, and regulatory adherence.

Choosing the Right Approach to Modernization

Incremental modernization, service-oriented architecture (SOA), rehosting, replatforming, refactoring, data modernization, and the use of APIs are alternative approaches to entire system migration. Each approach offers unique benefits and challenges, requiring careful consideration based on your organization's specific needs and goals.

Strategizing for Legacy System Modernization

Embarking on a legacy system modernization journey necessitates a strategic approach. Prioritizing core business logic, assessing technical debt, and devising a roadmap for modernization are essential steps. Moreover, executing a successful digital transformation requires a comprehensive plan that considers data migration, regulatory compliance, and business continuity.

In conclusion, while legacy systems have served their purpose, the time for modernization is now. By evaluating the costs and benefits, understanding technical debt, and strategizing for modernization, organizations can pave the way for a successful digital transformation that supports growth and competitiveness in the evolving digital landscape.

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