Disaster Recovery

One of the observations offered in this blog is the opinion that there is a new and better breed for vendor in our market space and that as a direct result of their success the “legacy” vendor have upped their game.  Both trends are good news for the carriers that buy software and services.  So the vendors, I believe, are getting better, but what about the carriers?  Are they getting any better at selecting and implementing appropriate software and services?  Hard data is all but non-existent in our market but generally accepted estimates are that more than 50% of all core - PAS, Claims, Billing - system implementations fail either partially or completely.  Obviously neither the carriers, nor the vendors, are interested in publishing their failures let alone offering them for future learning so it’s hard to know whether there are fewer disasters than before. 

But, although there is no evidence to support the view, I get the sense that carriers are getting better at selecting and implementing core insurance systems.  As much as anything I base this on a lack of data; that is, a lack of disaster stories circulating in the industry.  In past years there have always been several protracted failures widely known amongst the vendor community.  Obviously you have to be careful in buying into these anecdotes because vendors are only too happy to pass alone the failures of a competitor, especially to those of us who influence carrier buying decisions.  However, it has not proved difficult in the past to independently verify disaster rumors and by and large they have been shown to be substantive.  So, where are today’s disasters?  You know the ones where the carrier wastes millions, nothing gets implemented and the CIO loses his job.  The answer is: “Apparently, no where to be found”.  I still hear of troubled implementations and unhappy carriers, but the “Titanics” of our industry seem to have slipped over the horizon. 

I do know of one carrier that, in the rush to do too many things at once, made an inappropriate PAS selection.  However, in that instance a failed proof of concept saved the day and avoided a costly implementation debacle.  I think this story is instructive.  Carriers are getting better at recognizing and mitigating the risks inherent in major software acquisition and implementation projects.  More carriers use formal vendor selection methods, employ project based risk mitigators such as proof of concept, and negotiate contract based mitigators such as pay for performance to control the operational and financial risks.

If there are there fewer major project failures, is it because the carriers are getting smarter?  The answer is an unqualified “partially”.  Certainly, the trends identified above play a significant role but the other major factor is the point we started out with, which is that the vendors in general are better at software delivery and project execution than at any time before.  So, the reality is that improvement on both sides of the selection and implementation process, supported by a much stronger “partnership” orientation seems to have significantly reduced the number of project disasters in our market.