Gary Tessendorf, Regional Director at Sapiens Sub Saharan Africa
Tony: A big question nowadays, with technology being such a major driver of our industry, is whether you put the big bucks in and build a new system, or whether you just modernise what you’ve got. How do you see as the difference between modernising and building?
Gary: Modernisation is essentially a plethora of different themes. Essentially one of the major themes being what we call total over legacy. So it’s essentially keeping your underlying tech stack in place, leveraging some form of API orchestration layer, and then obviously exposing the site into a digital front for a client, an agent or a customer out in the market space.
So essentially, you’re not re-platforming, you’re leveraging what you already have in place, but putting a new fancy digital front end to engage with customers and agents out in the market. So that’s the first one. The second one, obviously, and this is the probably the wholesale transformation piece. This is the re-platform, taking an existing legacy platform and bringing in a new age, open, architected, new age system that’s built for new levels of engagement and the like.
Tony: So in terms of the difference between those two and making that decision, are there certain benefits and challenges to consider?
Gary: Essentially it comes down to budget and appetite. As a direct result of COVID, obviously, digital is front and it will continue to be. The reality is that there has been, what I call a digital deficiency in the market space, especially with some of the larger more legacy abound players. Essentially, what we’re seeing is they’re being forced to, whether they like it or not, to modernise or to re-platform. The question is down to budget, I think it’s one of the main constraints and, in the COVID environment, essentially a lot of the executives are being very, very cautious about budgetary spend.
The second is the impact on business. So the reality is, any type of replatforming exercise, is a transformation exercise also and, obviously, some executives are loath to take that decision in the current environment. Others are seeing it as a perfect storm, essentially looking to replatform in the midst of COVID, whilst most of the market is in a dormant space. They are looking to leapfrog what we see as more traditional players out there that are bound by legacy constraints. So what I’m seeing is budget and obviously, appetite are the two main drivers for the decision.
You know, what I’ve also seen on the back end of that is the two types of executives that are coming into play right now. The ones that are cautious, very careful, and the others that are saying, listen, it’s time now, we’ve kicked the proverbial can down the road for too long now, and it’s time now for us to engage on a modernisation drive, including replatforming.
Tony: Yes, we discussed this in length with other insurers as well at the insurtech conference. Can you give us a brief guideline as to when you start making this decision about replacing, building, modernising, where do you start deciding on which of the routes work?
Gary: Going question again Tony. Look, I think the reality is, we’re seeing this at various levels within the local market, both the PNC and the life wealth, retirement space. Now essentially, a lot of the insurance companies out there have got to a stage where they be trying to orchestrate digital in a certain way in a certain manner. And the reality is they have got to that point where they can go no further, the legacy constraints have hampered the business significantly, and so they’re looking to replatform.
This is the re-platform, taking an existing legacy platform and bringing in a new age, open, architected, new age system that’s built for new levels of engagement and the like.
Now, obviously, a lot of the benefits about re-platforming is obviously speed of change, the open architecture and the ecosystem readiness. The advent of customer centricity, the buzzword of the moment, is the low code, no code, self sufficiency, focus. I think those are the key drivers as to why you would engage on this type of re-platforming exercise. But essentially, those are some of the more technical aspects. What I’m seeing is the willingness to actually wholesale transform the business and how we engage with customers and how we engage internally?The change management aspect behind this can never be doubted as transformation has a significant impact across the entire business, which feeds down literally towards the customer at the tail end. What has to be the sole focus is the customer.
We have also seen the advent of cloud, with cloud ready, and cloud native solutions with a lot of cloud capabilities in the likes of zero, AWS and the like, being leveraged by large scale organisation. So again, this is another benefit behind the new age system as compared to some of the older platforms, which have significant constraints.
Essentially, it comes to a point in the road where customers or large scale insurers are deciding whether they should replatform now or delay and just focus on the digital space for now, knowing fully knowing and expecting they going to have to address the legacy constraints at a further point down the road?
a lot of the insurance companies out there have got to a stage where they be trying to orchestrate digital in a certain way in a certain manner. And the reality is they have got to that point where they can go no further, the legacy constraints have hampered the business significantly, and so they’re looking to replatform
Tony: At the end of the day, if you make the wrong decision and choose the wrong supplier, or you go the wrong route, the repercussions are huge.
Gary: I’m seeing one more option, which is even better. What I call the tactical deployment. So what they do is to focus on the digital front end for now, knowing fully well, within the next year and a half, two years, three years, they’re going to have to replatform. So it’s a pure tactical play, to focus on the digital front end in the immediate future, knowing fully well that, you know, in the medium term, there will be replatforming. Therefore the best the tactical decision, in the medium term, is to replatform and re-architect on the new open ended architectural solution is probably the best I’m actually seeing out the market in the current environment.
Tony: That is very exciting Gary, thank you so much, that was great. Looking forward to the second episode in this series.